In process costing direct material , direct labor and manufacturing overhead are applied to work in process and transferred from one to another department.
Debit Credit
(1) work in process - cutting department Raw material
(2) work in process -shaping department Manufacturing Overheads
(3) work in process - shaping department work in process - cutting department
(4) Finished Goods inventory Work in process- shaping department
(5) cost of goods sold Finished Goods inventory
What is Overhead ?
Overhead refers to the continued business prices no longer directly attributed to creating a service or product. it's miles important for budgeting purposes however also for figuring out how much a company should charge for its products or services to make a earnings. In short, overhead is any rate incurred to guide the business even as not being directly associated with a specific service or product.
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