Multiple Choice QuestionThe journal entry to record indirect materials in production is to:Multiple choice question.debit Factory Overhead and credit Raw Materials Inventorydebit Work in Process Inventory and credit Factory Overheaddebit Raw Materials Inventory and credit Work in Process Inventorydebit Work in Process Inventory and credit Raw Materials Inventory
Question
Multiple Choice QuestionThe journal entry to record indirect materials in production is to:Multiple choice question.debit Factory Overhead and credit Raw Materials Inventorydebit Work in Process Inventory and credit Factory Overheaddebit Raw Materials Inventory and credit Work in Process Inventorydebit Work in Process Inventory and credit Raw Materials Inventory
Solution
The correct answer is: debit Factory Overhead and credit Raw Materials Inventory.
Here's why:
Indirect materials are those materials used in the production process but are not directly traceable to the product. For example, glue used in the production of a chair.
When indirect materials are used in production, they are recorded as part of the factory overhead. The cost of these indirect materials is then transferred from the Raw Materials Inventory to the Factory Overhead.
So, the journal entry to record this would be to debit (increase) Factory Overhead and credit (decrease) Raw Materials Inventory. This reflects the decrease in raw materials and the increase in factory overhead costs.
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