Matthew Company uses a job cost system. The overhead account shows a $5800 overallocated balance at the end of the year. Actual overhead incurred was $100,300. 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 $5800 overallocated balance at the end of the year. Actual overhead incurred was $100,300. Other balances are:  The entry to close manufacturing overhead would include a

Quizplus · Accepted Answer

The overallocated Manufacturing Overhead account balance indicates that the company applied more overhead to production than it actually incurred. To close out this account, the overallocated amount must be debited to Manufacturing Overhead, reducing the account balance to zero. Therefore, the correct entry to close manufacturing overhead would include a debit to the Manufacturing Overhead account for the overallocated amount of $5800.

Matthew Company Uses a Job Cost System