Question

Sheffield’s Manufacturing calculated its predetermined overhead rate to be 200% of direct materials costs. For the month of July, the company incurred $119100 of raw material costs, of which $90500 were direct materials, and $30000 were indirect materials. Actual overhead incurred was $175400. What would be the debit entry to the Work in Process Inventory account for July with respect to manufacturing overhead?

$175400

$181000

$238200

$zero, the account should be credited

Answer 1

Answer: $zero, the account should be credited

Explanations:

Manufacturing Overhead applied = Direct materials x 200% = $90,500 x 200% = $181,000

Manufacturing Overhead account
Actual	$175,400	Applied	$181,000
Work-in-process inventory	$5,600
[181,000-175,400]

Journal entry:

Account title	Debit	Credit
Manufacturing overhead	$5,600
Work-in-process inventory		$5,600

Hence, Debit is zero because it should be credited to '$5,600'.