If the predetermined overhead allocation rate is 245% of direct labor cost, and the Baking Department's direct labor cost for the reporting period is $10,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

Work in Process Inventory, Baking Dept

24,500

Factory Overhead 24,500

True

False

True

Explanation:

The given entry is correct as it shows a debit to Work in Process Inventory, Baking Dept 24,500 and credit to Factory Overhead 24,500

The applied factory overhead account is closed to the actual factory overhead control account at the end of the accounting period by debiting the applied factory overhead and crediting factory overhead control account.

It is common practice to use an applied factory overhead account because it keeps applied costs and actual costs in separate accounts. Some companies do not use applied factory overhead account and post credit directly to factory overhead control account.

Work in Process Inventory, Baking Dept 24,500 Dr

Factory Overhead 24,500 Cr

This entry eliminates the transfer of applied expenses to actual expenses