Figure 4-7 The Cherokee Company Uses a Predetermined Overhead Rate. the Following

question 155

Multiple Choice

Figure 4-7
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
-Refer to Figure 4-7. If Manufacturing overhead was $12,000 underapplied and considered material, what is the journal entry?

• A) Cost of Goods Sold $12,000 Manufacturing Overhead $12,000
• B) Work in Process $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 Process $4,000
• Finished Goods $1,000
• Cost of Goods Sold $5,000
• D) Raw Materials $2,000 Work in Process $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:

Supply Curve

A graph showing the relationship between the price of a good and the quantity of that good that suppliers are willing to produce and sell.

Price Elasticity

A measure indicating the extent to which the demand for a merchandise changes following a price adjustment.

Short Run

A period in economics during which at least one input is fixed and cannot be changed by the firm.

Long Run

A period in which all factors of production and costs are variable and companies can enter or exit an industry.