Question

In a process costing system, the application of factory overhead usually would be recorded as an increase in: (CPA adapted) A. Finished goods inventory controlB. Factory overhead controlC. Cost of goods soldD. Work-in-process inventory control

Answer 1

Answer: Factory overhead control

Explanation: Factory overhead is the account where the amount of cost incurred while manufacturing a product is recorded and no direct labour or material is recorded. When the manufactured goods are finished and produced they are recorded as expenses when the goods are sold as manufactured finished products.

All the expenses related to the factory are included in this account such as rent, utility, electricity, supplies, tools. Factory overhead is known as manufacturing burden or expenses.