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23 November, 23:00

n Crawford Company, the predetermined overhead rate is 80% of direct labor cost. During the month, $210,000 of factory labor costs are incurred, of which $180,000 is direct labor and $30,000 is indirect labor. Actual overhead incurred was $200,000. The amount of overhead debited to Work in Process Inventory should be:

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  1. 24 November, 02:32
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    WIP 144,000 debit

    Factory Overhead 144,000 credit

    Explanation:

    210,000 labor cost

    30,000 indirect labor

    180,000 direct labor

    The rate is based on direct labor cost, so we use this figure.

    180,000 x 80% = 144,000

    Remember, the rate is calculate using a given cost driver. So it only this cost driver matters.
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