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Explain the journal entry for the allocation of overhead. What accounts are affected? Are they increased or decreased?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter5: Process Cost Accounting—general Procedures

Section: Chapter Questions

Problem 9Q

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Question

Explain the journal entry for the allocation of overhead. What accounts are affected? Are they increased or decreased?

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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Why is the manufacturing overhead account debited as expenses are recognized and then credited when overhead is applied?
What is the predetermined overhead rate, and when is it typically estimated?
Before automation became more prevalent, overhead was often calculated and allocated as a function of direct labor costs or direct labor hours. Why was this the case, and has this pattern changed?
If a job order cost system tracks the direct materials and direct labor, why doesn't It track the actual overhead used for a specific job?
Which is not a task typically associated with ABC systems? A. calculating the overhead application rate for each cost pool B. applying a single cost rate C. identifying a cost driver D. more correctly allocating overhead costs
How do the job cost sheets act as a subsidiary ledger for the work in process inventory if journal entries are not made to the job cost sheets?
Which is not a step in analyzing the cost driver for manufacturing overhead? A. Identify the cost B. identify non-value-added costs C. analyze the effect on manufacturing overhead D. identify the correlation between the potential driver and manufacturing overhead
Describe how the over or under application of overhead should be corrected in the accounting records.
What approach allocates overhead by multiplying a predetermined overhead rate × actual activity?
Explain the treatment of over and under absorption of overheads in cost accounts?
Describe an important cost-benefit issue involving accuracy versus timeliness in accounting for overhead.
Which of the following journal entries is used to record fixed overhead costs allocated? O A. Fixed Overhead Allocated Work-in-Process Control C) B. 0 D. Fixed Overhead Allocated Fixed Overhead Control Work-in-Process Control Fixed Overhead Allocated 0 D. Fixed Overhead Control Work-in-Process Control