Question

When manufacturing overhead costs are assigned to production in a process cost system, they are credited to

Select one:

a. a Manufacturing Overhead account.

b. none of these types of accounts.

c. a Work in Process account.

d. a Finished Goods Inventory account.

e. Cost of Goods Sold.

Answer 1

When manufacturing overhead costs are assigned to production in a process cost system, they are credited to Manufacturing overhead account. Hence option a is correct.

The flow of entries under process costing system will be like this:-

a. Work in process account....Dr.

To Manufacturing overhead account

b. Finished goods inventory account ...Dr.

To work in process account

c. Cost of Goods sold account ....Dr.

To Finished goods inventory account

Hence, on the basis of above explained flow of entries it can be conclude that all other options are incorrect and option a is the correct answer.