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

The overallocated balance means that the actual overhead incurred was less than the overhead applied to jobs. To close the Manufacturing Overhead account, the overallocated amount of $5,000 needs to be removed. This is done by debiting the Manufacturing Overhead account for $5,000 and crediting the Cost of Goods Sold account for $5,000. Therefore, choice A is the correct answer.

Matthew Company Uses a Job Cost System