Manufacturing Overhead Has an Underallocated Balance of $6,200; Raw Materials

question 188

Multiple Choice

Manufacturing overhead has an underallocated balance of $6,200; raw materials inventory balance is $50,000; work in process inventory is $30,000; finished goods inventory is $20,000; and cost of goods sold is $100,000. Using this information, which account would have an opening credit balance?

• A)Raw materials inventory
• B)Finished goods inventory
• C)Work in process inventory
• D)None of the above

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Definitions:

Capital Rationing

A financial strategy employed by companies to limit or restrict the amount of new investments or projects they undertake due to limited resources.

Investment Capital

Funds invested in a business by its owners or shareholders with the expectation of generating a return, used for acquiring assets or financing operations.

Investment Funds

Pooled funds from multiple investors used to collectively invest in securities such as stocks, bonds, and other assets, managed by financial professionals.

Present Value

The value today of a sum of money to be received in the future, after accounting for a certain return rate.