Matthew Company uses a job cost system. The overhead account shows a $5,000 overallocated balance at the end of the year. Actual overhead incurred was $100,000. Other balances are: The entry to close manufacturing overhead would include a

Question

Matthew Company uses a job cost system. The overhead account shows a $5,000 overallocated balance at the end of the year. Actual overhead incurred was $100,000. Other balances are:  The entry to close manufacturing overhead would include a

Quizplus · Accepted Answer

Since there is an overallocated balance, it means that the manufacturing overhead was applied more than the actual overhead incurred. To close the manufacturing overhead, we need to adjust the balance by debiting it by the overallocated amount, which is $5,000. Therefore, the correct entry would be to debit manufacturing overhead for $5,000.

Matthew Company Uses a Job Cost System