A company has overallocated manufacturing overhead by $1,500. The entry to close manufacturing overhead account would be to

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Quizplus · Accepted Answer

When manufacturing overhead is overallocated, it means that more overhead was applied to jobs than was actually incurred. To close the manufacturing overhead account, you need to decrease the cost of goods sold by the overallocated amount, which is done by debiting manufacturing overhead and crediting cost of goods sold.

A Company Has Overallocated Manufacturing Overhead by $1,500