Coat-All Paint Company Used a Predetermined Overhead Allocation Rate to Allocate

question 12

Multiple Choice

Coat-All Paint Company used a predetermined overhead allocation rate to allocate $80,000 and $50,000 of indirect costs to the Coloring Department and the Mixing Department,respectively.The journal entry to record the allocation of overhead costs to the Coloring Department is ________.Process costing is used.

• A) debit Manufacturing Overhead, $80,000; credit Work-in-Process Inventory-Mixing, $80,000
• B) debit Work-in-Process Inventory-Coloring, $80,000; credit Manufacturing Overhead, $80,000
• C) debit Work-in-Process Inventory-Coloring, $50,000; credit Manufacturing Overhead, $50,000
• D) debit Manufacturing Overhead, $50,000; credit Work-in-Process Inventory-Mixing, $50,000

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Definitions:

Time To Maturity

The duration remaining until the final payment date of a loan, bond, or other financial instrument, at which point the principal (and usually the final interest payment) is due to be paid.

Interest Rate Risk

The risk that the value of an investment will decrease due to a change in interest rates.

High Coupon Bond

A bond that offers a relatively high interest rate (or coupon rate) compared to the current prevailing rates of other similar bonds.

Interest Rate Sensitivity

A measure of how much the price of an investment, particularly bonds, changes in response to changes in interest rates.