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

question 125

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 overapplied and considered material, what is the journal entry?

• A) Cost of Goods Sold $12,000 Manufacturing Overhead $12,000
• B) Manufacturing Overhead $12,000 Cost of Goods Sold $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:

Lose-Lose Strategy

A strategy in which everyone gives up something, and the focus is on compromise.

Compromise

An agreement or settlement of a dispute that is reached by each side making concessions.

Industrial Economy

A system characterized by large-scale, automated manufacturing, capital-intensive production, and the significant role of the industry sector in economic activities.

Service-Dominated Economy

An economy primarily focused on the provision of services rather than goods production.