Which of the following statements is true for a standard cost system?

A) Applied fixed manufacturing overhead is recorded as a debit to the manufacturing overhead account.
B) Overapplied fixed overhead is always debited to cost of goods sold.
C) Underapplied fixed overhead is always credited to finished goods inventory.
D) Applied fixed manufacturing overhead is recorded as a debit to the work in process inventory account.

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Ph??ng Uyên Nguy?n Nh?t · Accepted Answer

Final Answer : D, Explanation :  In a standard cost system, applied fixed manufacturing overhead is recorded as a debit to the work in process inventory account. This is because the fixed manufacturing overhead is applied to the products as they are being produced, and work in process inventory represents the costs incurred in production that have not yet been completed. Option A is incorrect because it does not specify where the debit is recorded. Option B is incorrect because overapplied fixed overhead is credited, not debited, to cost of goods sold. Option C is incorrect because underapplied fixed overhead can be credited to several different accounts, depending on the company's accounting method.

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