Matthew Company Uses a Job Cost System

question 92

Multiple Choice

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

• A)debit to Manufacturing Overhead account for $5,000.
• B)debit to Work-in-Process Inventory account for $5,000.
• C)debit to Cost of Goods Sold account for $5,000.
• D)credit to Work-in-Process Inventory account for $5,000.

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Definitions:

Overhead Expenses

Costs that are not directly associated with the production of goods or services, such as rent, utilities, and administrative expenses.

Operating Profit

The income generated from the primary activities of a business before subtracting any tax and interest expenses.

Retail Selling Price

The price at which goods or services are sold to the final consumer, including any markups applied by retailers.

Profit

The financial gain obtained when the revenue generated from a business activity exceeds the expenses, costs, and taxes associated with it.