Question

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SES Practice Question 16 Marco Company has two processing departments and uses a process costing system, which account is debited when the company assigns factory labor costs to production? Manufacturing Overhead is debited. Work in Process is debited. Factory Labor is debited. Cost of Goods Sold is debited.

Answer 1

Q16. The SECOND option is correct.

Work In Progress Is Debited

The Journal Entry Would Be

Work in progress .......... Debit

Factory Labor ..............Credit

Q17. The THIRD option is correct.

An ABC costing system expensive to implement and some companies may not perceive its full and true benefits.

Explanation: ABC Costing system needs a detailed analysis of the company's process system because ABC costing system bifurcates costs on the basis of various activities which may be more expensive to complex manufacturing entities. Hence many companies are not ready to invest ABC stsyem immediately.