Manufacturing overhead applied to production is always recorded on the side of the manufacturing overhead account and the side is always used to record the actual manufacturing costs incurred. True or false?.

Respuesta :

True, Manufacturing overhead applied to production is always recorded on the side of the manufacturing overhead account and the side is always used to record the actual manufacturing costs incurred.

The actual manufacturing overhead costs incurred during a period are recorded as debits within the manufacturing overhead account. For instance, assume Custom company places $4,200 in indirect materials into production on May 10. The overhead account is debited for the particular overhead costs as incurred.

The overhead account is credited for the overhead costs applied to production within the work-in-process account. The Manufacturing Overhead account is credited when overhead cost is applied to figure in Process. Generally, the number of overhead applied won't be the same because the amount of actual cost incurred, since the predetermined overhead rate, which is employed in applying overhead, relies on estimates.

(However, the corporate may opt to allocate the manufacturing overhead for internal pricing decisions or to accommodate a government contract.) Manufacturing overhead is an element of a company's manufacturing operations, specifically, the prices incurred outside of these associated with the price of direct materials and labor. This can be why manufacturing overhead is additionally called an indirect cost.

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