This topic contains a solution. Click here to go to the answer

Author Question: Explain the procedure how overhead indirect costs become a part of work-in process inventory. ... (Read 104 times)

asd123

  • Hero Member
  • *****
  • Posts: 557
Explain the procedure how overhead indirect costs become a part of work-in process inventory.
 
  What will be an ideal response?

Question 2

Why does the manufacturing overhead control account (debit) need to equal the manufacturing overhead allocated account (credit)?
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

ririgirl15

  • Sr. Member
  • ****
  • Posts: 385
Answer to Question 1

Answer: The overhead (indirect) costs cannot be easily traced to individual jobs. Manufacturing overhead costs, therefore, are first accumulated in a manufacturing overhead account and then allocated to individual jobs. As manufacturing overhead costs are allocated, they become part of work-in-process inventory.

Answer to Question 2

Answer: If these accounts do not equal, then overhead has either been overallocated or underallocated. Either situation means that the cost of the cost object has not been correctly estimated during the period. Evaluation of profitability will be incorrect depending on the materiality of the difference between the two accounts.




asd123

  • Member
  • Posts: 557
Reply 2 on: Jul 5, 2018
Gracias!


aruss1303

  • Member
  • Posts: 314
Reply 3 on: Yesterday
Great answer, keep it coming :)

 

Did you know?

After a vasectomy, it takes about 12 ejaculations to clear out sperm that were already beyond the blocked area.

Did you know?

There are immediate benefits of chiropractic adjustments that are visible via magnetic resonance imaging (MRI). It shows that spinal manipulation therapy is effective in decreasing pain and increasing the gaps between the vertebrae, reducing pressure that leads to pain.

Did you know?

Astigmatism is the most common vision problem. It may accompany nearsightedness or farsightedness. It is usually caused by an irregularly shaped cornea, but sometimes it is the result of an irregularly shaped lens. Either type can be corrected by eyeglasses, contact lenses, or refractive surgery.

Did you know?

Opium has influenced much of the world's most popular literature. The following authors were all opium users, of varying degrees: Lewis Carroll, Charles, Dickens, Arthur Conan Doyle, and Oscar Wilde.

Did you know?

Essential fatty acids have been shown to be effective against ulcers, asthma, dental cavities, and skin disorders such as acne.

For a complete list of videos, visit our video library