What account is affected when additional manufacturing overhead is incurred and paid?

When additional manufacturing overhead is incurred and paid, the correct account affected is the actual manufacturing overhead account. This account tracks the costs that are actually incurred for manufacturing overhead, which includes expenses such as utilities, depreciation on production equipment, and factory salaries that are not directly tied to the production of specific products.

When manufacturing overhead is incurred, it increases the balance in the actual manufacturing overhead account, recognizing those costs that need to be assigned to the cost of goods manufactured. This accounting treatment is essential because it allows for accurate tracking of overhead costs that contribute to the overall cost of production. Once these costs are incurred, they will later be allocated to work in process during the production process.

The work in process account records costs associated with products that are in production but not yet completed. However, additional manufacturing overhead does not immediately impact this account until the overhead is applied or allocated to specific jobs in progress. Therefore, while the work in process account may eventually reflect these costs, it is not directly affected at the point of incurrence. Similarly, the finished goods account pertains to products that are completed and ready for sale, and the raw materials account reflects the costs of materials purchased for use in production, neither of which relate directly to the payment of manufacturing overhead that has