The Cherokee Company Uses a Predetermined Overhead Rate $\begin{array} { l }\text { Cost of Goods Sold } & \$ 12,000\\\text { Manufacturing Overhead }&\$12,000\end{array}$

question 179

Short Answer

The Cherokee Company uses a predetermined overhead rate. The following accounts have these unadjusted balances: Raw Materials $20,000
Work in Process $40,000
Finished Goods $10,000
Cost of Goods Sold $50,000
If Manufacturing overhead was $12,000 underapplied and considered material, what is the journal entry? a. $\begin{array} { l }\text { Cost of Goods Sold } & \$ 12,000\\\text { Manufacturing Overhead }&\$12,000\end{array}$

b. Work in Frocess $\$ 4,800$
Finished Goods $\$ 1,200$
Cost of Goods Sold $\$ 6,000$
Manufacturing Overhead $\$ 12,000$

c. Manufacturing Overhead $\$ 12,000$
Raw Materials $\$ 2,000$
Work in Frocess $\$ 4,000$
Finished Goods $\$ 1,000$
Cost of Goods Sold $\$ 5,000$

d. Raw Materials $\$ 2,000$
Work in Frocess $\$ 4,000$
Finished Goods $\$ 1,000$
Cost of Goods Sold $\$ 5,000$
Manufacturing Overhead $\$ 12,000$

e. Manufacturing Overhead $\$ 12,000$
Work in Process $\$ 4,800$
Finished Goods $\$ 1,200$
Cost of Goods Sold $\$ 6,000$

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Definitions:

Market-to-Book Ratio

A comparison of a company's current market value to its book value, used to assess whether a stock is under or overvalued.

Price-Earnings Ratio

A valuation metric for companies, calculated by dividing the current market price of a stock by its earnings per share, indicating how much investors are willing to pay per dollar of earnings.

Book Value Per Share

Book value per share is a financial measure that quantifies the actual value of a company’s stock based on historical costs, expressed as the company's total net assets divided by the number of outstanding shares.

Price Earnings Growth Ratio

A valuation ratio that considers a stock's earnings growth rate in addition to its price-earnings ratio, providing a more complete picture of its value.