Portside Watercraft uses a job order costing system. During one month Portside purchased $153,000 of raw materials on credit; issued materials to production of $164,000, of which $24,000 were indirect. Portside incurred a factory payroll cost of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the application of factory overhead to production is:
A. Debit Work in Process Inventory $95,000; credit Factory Payroll $95,000.
B. Debit Work in Process Inventory $119,000; credit Factory Overhead $119,000.
C. Debit Work in Process Inventory $161,500; credit Factory Overhead $161,500.
D. Debit Factory Overhead $119,000; credit Work in Process Inventory $119,000.
E. Debit Work in Process Inventory $55,800; credit Factory Overhead $55,800.
Answer: B
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