Question

Actual costs incurred by Ore Company in March for all its jobs are as follows.

Direct materials	$ 113,000
Factory lease	$16,000
Direct labor	$107,000
Property taxes: factory building	$7,000
Other factory overhead costs	$2,550

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Ore Company uses a job-order costing system and applies $21,950 in overhead cost based on a PDOH rate.

Which of the following will be part of the journal entry to close the Overhead Control account at the end of the period?

Answers:	a. Debit: Overhead Control $1,050
	b. Credit: Overhead Control $3,600
	c. Debit: Overhead Control $3,600
	d. Credit: Overhead Control $1,050

Answer 1

	Actual overhead cost
	Factory lease				16,000
	property taxes:factory building				7000
	other factory overhead cost				2,550
	total actual overhead cost				25,550
	applied overhead				21,950
	overhead under applied				3,600
	Journal entry
	Accounting titles				Debit	Credit
	Cost of goods sold				3,600
	overhead control					3,600
	hence )	Answer option b
		overhead control		$3,600