The Ogunquit Company Uses a Predetermined Overhead Rate -Refer to the Figure

question 154

Multiple Choice

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

• A)\(\begin{array}{lr}
• \text { Cost of Goods Sold}&\$12,000\\
• \text {Manufacturing Overhead }&&\$12,000\\
• \end{array}\)
• B)\[\begin{array} { c c }
• \text { Manufacturing Overhead }& \$ 12,000 \\
• \text { Cost of Goods Sold }&&\$ 12,000
• \\
• \end{array}\]
• C)\[\begin{array} { l l l }
• \text { Manufacturing Overhead } & \$ 12,000 & \\
• \text { Raw Materials } & & \$ 2,000 \\
• \text { Work in Process } && \$ 4,000 \\
• \text { Finished Goods } & &\$ 1,000 \\
• \text { Cost of Goods Sold } && \$ 5,000
• \end{array}\]
• D)\[\begin{array} { c c c }
• \text { Manufacturing Overhead } & \$ 12,000 & \\
• \text { Work in Process } & & \$ 4,800 \\
• \text { Finished Goods } && \$ 1,200 \\
• \text { Cost of Goods Sold } && \$ 6,000
• \end{array}\]

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Definitions:

Waive Warranties

involves the voluntary relinquishment of certain guarantees or assurances, typically regarding the condition or quality of goods and services, by a buyer or recipient.

Implied Warranties

Unspoken, unwritten assurances that a product or service meets certain quality standards and is fit for the purpose sold, even though not expressly stated.

Express Warranties

Explicit assurances provided by the seller about the quality, performance, or condition of a product.

Implied Warranty Of Merchantability

A legal presumption that goods sold by a merchant are fit for the general purpose for which they are sold.