Question

When manufacturing overhead is applied to production, it is added to: A) the Cost of Goods Sold account B) the Raw Materials account. C) the Work in Process account. D) the Finished Goods inventory account.

Answer 1

Answer:

The answer is C) the Work in Process account.

Explanation:

Manufacturing overhead is indirect costs incurred during the production and is added to Work in Process account in order to later fully and correctly account for Finished Good and Cost of Good Sold.

A) is incorrect because Cost of Good Sold account is derived from Finished Goods account.

B) is incorrect because only the direct cost incurred to Raw Material is added to Raw Material Account while Overhead is all the indirect cost ( depreciation, indirect material to name a few) that is not apply to Raw Material Account.

D) is incorrect because Finished Goods account is derived from Work in Process account.