In: Accounting
In the Excel, or spreadsheet, approach to recording financial transactions, manufacturing overhead applied is recorded as an increase in the Work in Process column and as a decrease in the Manufacturing Overhead column.
True or False
Solution : The above statment is true. The application of manufacturing overhead is done by transferring budgeted amount and not the actual amount to work in Process account. This would reduce the manufacturing overhead column and add to the work in process column. The actual amounts of overheads are added to the manufacturing overhead account.
Example Below : | |||
Dr | Manufacturing Overhead A/c | Cr | |
Actuals | 100,000 | Applied | 90,000 |
(payments made for | Transferred to WIP | ||
overheads) | |||
Under applied | 10,000 | ||
100,000 | 100,000 | ||