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 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 $55,800; credit Factory Overhead $55,800.
B) Debit Work in Process Inventory $161,500; credit Factory Overhead $161,500.
C) Debit Work in Process Inventory $119,000; credit Factory Overhead $119,000.
D) Debit Factory Overhead $119,000; credit Work in Process Inventory $119,000.
E) Debit Work in Process Inventory $95,000; credit Factory Payroll $95,000.
C) Debit Work in Process Inventory $119,000; credit Factory Overhead $119,000.
Explanation: $70,000 * 1.7 = $119,000
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