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Factory Overhead is debited for indirect materials $400, indirect labor $300, utilities $350, maintenance $200, insurance $150 and depreciation $100. What running balance does the account show?
A$1,250
B$1,500
C$1,400
D$1,650
Answer & Solution
Correct answer: B. $1,500
1. Every actual factory cost is debited to Factory Overhead as it is incurred.
2. The six debits are $400, $300, $350, $200, $150 and $100.
3. Their sum is $1,500, which is the running debit balance in the account.
4. That balance may still be incomplete, because bills for the period may not all have arrived.
5. $1,400 stops one entry short, at the insurance debit, so it misses the depreciation charge.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 2.1 Introduction_
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