In accounting for factory overhead, the Factory Overhead account is ______ for actual overhead costs incurred during the period.

• A. debited
• B. closed
• C. credited
• D. reconciled

Answer: (A)

Verified step by step guidance

1. Understand the concept of factory overhead: Factory overhead refers to the indirect costs incurred during the production process, such as utilities, depreciation, and maintenance of factory equipment.
2. Recognize the nature of the Factory Overhead account: In accounting, the Factory Overhead account is used to track these indirect costs. It is a temporary account that accumulates overhead costs during the period.
3. Determine the treatment of actual overhead costs: When actual overhead costs are incurred, they are recorded as debits in the Factory Overhead account. This is because expenses increase on the debit side in accounting.
4. Learn about the closing process: At the end of the accounting period, the Factory Overhead account is closed by transferring its balance to the Cost of Goods Manufactured or Work-in-Process accounts, depending on the company's accounting practices.
5. Understand reconciliation: Reconciliation involves comparing the actual overhead costs with the applied overhead costs to ensure accuracy. Any difference is adjusted through over-applied or under-applied overhead entries.