Refer to M2-11 for Kelly Company.

1. Prepare the journal entry to close the Manufacturing Overhead account balance to Cost of Goods Sold.

2. Explain whether the entry in requirement 1 will increase or decrease Cost of Goods Sold and why.

Data from M2-11

Refer to M2-10 for Kelly Company. Its actual manufacturing costs for the most recent period are summarized here:

1. Post the preceding information to Kelly Company’s Manufacturing Overhead T-account.

2. Compute over- or underapplied manufacturing overhead.

Data from Kelly Company

Kelly Company’s payroll costs for the most recent month are summarized here:

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Item Hourly labor wages Description 750 hours $25 per hour 200 hours for Job 101 = 300 hours for Job 102 = 250 hours for Job 103= $5,000 Total Cost Factory supervision Production engineer Factory janitorial work General and administrative salaries Total payroll costs 7,500 6,250 $18,750 4,250 6,000 2,000 8,000 $39,000