The Balance in White Company's Work in Process Inventory Account

question 21

Multiple Choice

The balance in White Company's Work in Process inventory account was $15,000 on August 1 and $18,000 on August 31.. If the sum of the debits to the Manufacturing Overhead account total $28,000 for the month, and if the sum of the credits totalled $30,000, then:

• A)Manufacturing Overhead was underapplied by $2,000 at the end of the month.
• B)Finished Goods was debited for $85,000 during the month.
• C)Finished Goods was debited for $82,000 during the month.
• D)Finished Goods was credited for $83,000 during the month.

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Definitions:

Lost Surplus

Refers to the reduction in the combined consumer and producer surplus, often caused by inefficiencies in a market, such as taxes, tariffs, or other forms of market intervention.

Market Failure

A situation in which market forces, such as supply and demand, fail to allocate resources efficiently, often justifying government intervention.

Pareto Efficiency

A situation where resources are distributed in such a way that improving the condition of any one individual or meeting a preference more fully would result in detriment to at least one other individual or preference.

Socially Efficient

A situation where resources are allocated in the most effective manner, maximizing overall social welfare.