Matthew Company Uses a Job Cost System

question 318

Multiple Choice

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

• A)debit to Manufacturing Overhead account for $5800.
• B)debit to Work-in-Process Inventory account for $5800.
• C)debit to Cost of Goods Sold account for $5800.
• D)credit to Work-in-Process Inventory account for $5800.

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Definitions:

Job-order Costing

A cost accounting system that assigns manufacturing costs to an individual product or batch of products, useful for customized orders.

Indirect Labor Cost

Wages and related expenses for workers who assist in or facilitate the production process but do not directly work on the product.

Direct Materials Cost

The expenditure on raw materials that are directly traceable to the production of a specific product.

Direct Labor Cost

Expenses associated with employees who directly contribute to the production of goods, such as wages for assembly-line workers.