CAF-5 · Chapter 5 · Question 8 of 10
When factory overheads are applied (absorbed) into the cost of production based on a predetermined overhead absorption rate, what is the corresponding double entry?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Debit: Work in Process (WIP) Control / Credit: Production Overheads Control
Explanation
Absorbed factory overheads are added to the cost of production. The entry transfers the cost out of the Production Overheads pool (Credit) and charges it to the active production account (Debit WIP Control).
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