In a process costing system, manufacturing overhead costs are applied to production by transferring them from the Manufacturing Overhead control account to the Work in Process (WIP) Inventory account for each specific department. The correct journal entry for this transaction is a debit to the Work in Process—Assembly account to increase the cost of the inventory being processed in that department. A corresponding credit is made to the Manufacturing Overhead account, which reduces the balance of the overhead control account as these indirect costs are allocated to production. This entry accurately reflects the flow of product costs into the assembly department.

A. This entry incorrectly reverses the flow of costs, moving value from Work in Process back to the Manufacturing Overhead account.

C. This entry records the purchase of goods or services on credit for the department, not the application of internal overhead costs.

D. This entry records the incurrence of an actual overhead cost (e.g., a utility bill), not the application of that overhead to production.

1. Heisinger, K., & Hoyle, J. B. (n.d.). Managerial Accounting. University of Minnesota Libraries Publishing. Chapter 4, Section 4.4, "Recording Costs in a Process Costing System." This section details the standard journal entry to apply manufacturing overhead, which is a debit to Work in Process Inventory and a credit to Manufacturing Overhead.

2. Walther, L. M., & Skousen, C. J. (2009). Managerial and Cost Accounting. Bookboon. Chapter 4, "Process Costing and Activity-Based Costing," Figure 4.4, "Flow of Costs Through Process Costing Accounts." The diagram explicitly illustrates that manufacturing overhead is applied (transferred) to the Work-in-Process accounts for each production department.

3. Franklin, M., Graybeal, P., & Cooper, D. (2018). Principles of Accounting, Volume 2: Managerial Accounting. OpenStax, Rice University. Chapter 4.3, "Record and Post the Journal Entries for a Process Costing System." This chapter provides examples of journal entries, showing that applying overhead requires debiting the departmental work in process account and crediting manufacturing overhead.