Daniel Company uses a job cost system. The overhead account shows a $4,500 overallocated balance at the end of the year. Actual overhead incurred was $95,000. Other balances are:

Ending raw materials $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$10,000
Work in process inventory at end of year $\quad $$\quad $30,000
Finished goods inventory at end of year $\quad $$\quad $45,000
Cost of goods sold for year $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$275,000

The entry to close manufacturing overhead would include a

Question

Daniel Company uses a job cost system. The overhead account shows a $4,500 overallocated balance at the end of the year. Actual overhead incurred was $95,000. Other balances are:

Ending raw materials $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$10,000
Work in process inventory at end of year $\quad $$\quad $30,000
Finished goods inventory at end of year $\quad $$\quad $45,000
Cost of goods sold for year $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$275,000

The entry to close manufacturing overhead would include a

Quizplus · Accepted Answer

DWhen closing the manufacturing overhead account with an overallocated balance, the account is debited to zero it out, and the corresponding credit is typically made to Cost of Goods Sold or allocated among the Work in Process, Finished Goods, and Cost of Goods Sold based on some basis of allocation. However, without specific instructions on how to allocate the overapplied overhead, the simplest approach is a direct adjustment to Cost of Goods Sold or the Manufacturing Overhead account itself. In this case, option A is correct because it involves debiting Manufacturing Overhead to remove the overallocated balance. Option D is also correct as it represents the credit side of the transaction needed to balance the entry.

Daniel Company Uses a Job Cost System \quad \quad

Daniel Company Uses a Job Cost System $\quad$ $\quad$