ACC 212 Exam #1 Review
conversion costs=?
Direct Labor + Manufacturing Overhead
Indirect costs are allocated using ________
POHR
when identical or similar units of products or services are mass-produced, process costing is used to calculate ___________
an average production cost for all units produced
The accounting records of Dixon Company revealed the following costs: direct materials used, $250,000; direct labor, $425,000; manufacturing overhead, $375,000; and selling and administrative expenses, $220,000. Dixon's product costs total: A. $1,050,000. B. $830,000. C. $895,000. D. $1,270,000
1,050,000
The following information pertains to the Emerald Corp: Beginning work-in-process inventory $ 75,000 Ending work-in-process inventory 85,000 Beginning finished goods inventory 175,000 Ending finished goods inventory 200,000 Cost of goods manufactured 1,200,000 What is cost of goods sold? A) $1,210,000 B) $1,175,000 C) $1,185,000 D) $1,225,000
1,175,000
Job WR53 at NW Fab, Inc. required $200 of direct materials and 10 direct labor hours at $15 per hour. Estimated total overhead for the year was $760,000 and estimated direct labor hours were 20,000. What is the budgeted manufacturing overhead rate, which is based on the estimated direct labor hours?
38
Macht Company uses a budgeted manufaturing overhead rate based on direct labor hours (DLHs) to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $200,000 and DLHs would be 20,000. The actual figures for the year were $215,000 for manufacturing overhead and 21,000 DLHs. What is the amount of over- or underapplied overhead for the year?
5,000 underapplied
Tiger, Inc. had actual manufacturing overhead costs of $1,210,000 and a predetermined overhead rate of $4.00 per machine hour. Tiger, Inc. worked 290,000 machine hours during the period. Tiger's manufacturing overhead is: a. $50,000 overapplied. b. $50,000 underapplied. c. $60,000 overapplied. d. $60,000 underapplied.
50,000 overapplied
Bernard Company's budgeted manufacturing overhead is $3,300,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 60,000. What is the manufacturing overhead rate? A) $47.00 B) $56.00 C) $75.00 D) $55.00
55
The ALG Manufacturing Company has gathered the following information for the month of September: • 6,000 units in the beginning Work-in-Process Inventory (75% complete as to materials, 1/3 complete with respect to the conversion costs). • 60,000 units were started into production. • 50,000 units were completed and transferred to the next department. • The ending Work-in-Process Inventory is complete as to materials but only 3/8 complete with respect to conversion costs. What are the equivalent units of production (EUP) for materials in the month of September assuming ALG uses weighted-average process costing? A. 52,000 B. 64,500 C. 66,000 D. 61,500
66,000
PearCo's actual overhead for the year was $650,000 with a total of 170,000 direct labor hours worked on jobs. How much total overhead was applied to PearCo's jobs during the year? Use PearCo's predetermined overhead rate of $4.00 per direct labor hour.
680,000
Job WR53 at NW Fab, Inc. required $200 of direct materials and 10 direct labor hours at $15 per hour. Estimated total overhead for the year was $760,000 and estimated direct labor hours were 20,000. Predetermined overhead rate is based on direct labor hours. What is the total manufacturing cost of job WR53?
730
Vision Enterprises manufactures digital video equipment. For each unit, $3,000 of direct material is used and there is $2,000 of direct manufacturing labor at $20 per hour. Manufacturing overhead is applied at $25 per direct manufacturing labor hour. Calculate the profit earned on 50 units if each unit sells for $9,000. A) $65,000 B) $80,000 C) $75,000 D) $2,500
75,000
Summit Manufacturing had $10,000 of direct materials on hand at the beginning of the year and $9,000 on hand at the end of the year. During the year, the company purchased $42,000 of direct materials, and incurred $22,000 of direct labor and $17,000 of manufacturing overhead. The company had $26,000 of inventory in work in process at the beginning of the year and $12,000 at the end of the year. What is the cost of goods manufactured for the year? A)$68,000 B)$82,000 C)$94,000 D)$96,000
96,000
COGS adjusted=?
COGS + or - under/over applied overhead
prime costs=?
Direct Materials + Direct Labor
Reasons to Calculate Product or Service Costs(5)
For decision making For deciding what to sell For setting prices For knowing the cost of goods sold For knowing the cost of inventory
Classify each cost listed below as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. Plant manager's salary at Buffalo, New York, stamping plant, which manufactures auto and truck subassemblies Depreciation on Flat Rock, Michigan, assembly plant Leather to be used on vehicles that have leather interiors Property taxes on the Dearborn, Michigan, headquarters building Vice president of human resources' salary
MOH MOH direct materials administrative cost administrative cost
We can use two or more allocation bases to allocate_______
MOH to products
3 cases of process costing
No beginning or ending work-in-process inventories. No beginning work-in-process inventory and some ending work-in-process inventory. Both beginning and ending work-in-process inventories are present.
number of equivalent units=?
Number of partially Completed Units * Percentage of the Process completed
overhead applied=?
POHR*actual amount of allocation base incurred
why use estimates?
Products need to have costs applied during the period
contribution margin=?
Sales - Variable costs
5 step process costing allocation
Summarize the flow of physical units of output. Compute output in terms of equivalent units. Summarize total costs to account for. Compute cost per equivalent unit. Assign total costs to units completed and to units in ending work-in-process.
how to derive equivalent units
Takes the quantity of each input in units completed and in unfinished units of work in process and Converts the quantity of input into the amount of completed output units that could be produced with that quantity of input
underapplied is _______ to COGS whereas overapplied is __________
added subtracted
The underapplied or overapplied overhead is eliminated in the end-of-period ____________ it is written off to __________________
adjusting entry process COGS
Includes all costs associated with the general management of an organization. Administrative costs can be either direct or indirect costs.
administrative costs
Examples of companies that would use job-order costing include
aircraft manufacturing movie production
Which of the following companies will use a process costing system? A) an oil refining company B) a manufacturer of ships C) a custom watch manufacturer D) an advertising firm
an oil refining company
actual costs will almost never equal ___________
budgeted costs
Which of the following is an example of a cost that is variable with respect to the number of units produced? A) Rent on the administrative office building. B) Rent on the factory building. C) Direct labor cost, where the direct labor workforce is adjusted to the actual production of the period. D) Salaries of top marketing executives.
c
separates costs into fixed and variable categories.
contribution approach
net operating income=?
contribution margin-fixed costs
how a cost will react to changes in the level of business activity. Variable costs Fixed costs
cost behavior
Process-costing systems separate costs into _________ according to when costs are introduced into the process. 1. Direct materials are usually added ____________ 2. Conversion costs are generally added __________ along the production process.
cost categories at the beginning of the production process, or at the start of work in a subsequent department down the assembly line. equally
to provide information about costs relevant for decision making.
cost management system
When the level of activity decreases, variable costs will: A) increase per unit. B) increase in total. C) decrease in total. D) decrease per unit.
decrease per unit
Butler Hospital wants to estimate the cost for each patient stay. It is a general health care facility offering only basic services and not specialized services such as organ transplants. Classify each of the following costs as either direct or indirect with respect to each patient. Electronic monitoring Meals for patients Nurses' salaries Parking maintenance Security
direct cost direct cost indirect cost indirect cost indirect cost
Costs that can be easily and conveniently traced to a product or department. Example: cost of paint in the paint department of an automobile assembly plant
direct costs
Labor costs that can be easily traced to individual units of product (also called touch labor). Example: Wages paid to automobile assembly workers
direct labor
Raw materials that become an integral part of the finished product and whose costs can be conveniently traced to it. Example: A radio installed in an automobile
direct materials
Indicate whether the following costs would be classified as direct materials cost, direct labor cost, or factory overhead cost: Scents and fragrances used in making soaps and detergents Depreciation on the Auburn, Maine, manufacturing plant Plant manager salary for the Iowa City, Iowa, plant Wages of production line employees at the Pineville, Louisiana, soap and detergent plant
direct materials MOH MOH direct labor
Classify each cost listed below as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. Touch-screen Assembly labor Salary of Tim Cook Sales-force salary Factory supervisor salary
direct materials direct labor administrative cost selling cost MOH
total manufacturing cost=?
direct materials+direct labor+MOH applied
3 classifications of manufacturing costs
direct materials, direct labor, manufacturing overhead
The exact amount of indirect costs are not known until the _________
end of the period
a measure of the amount of work done during a period expressed in terms of fully complete units of output
equivalent units
POHR=?
estimated total MOH cost/estimated allocation base
True or False? 1. Conversion cost equals product cost less direct labor cost. 2. Direct labor is a part of prime cost, but not conversion cost. 3. Conversion cost is the sum of direct labor cost and direct materials cost. 4. Product costs are recorded as expenses in the period in which the related products are sold.
false false false true
True or False? 1. The traditional format income statement provides managers with an income statement that clearly distinguishes between fixed and variable costs and therefore aids planning, control, and decision making. 2. The contribution format is widely used for preparing external financial statements.
false false
concerned with reporting financial information to external parties such as stockholders, creditors, and regulators
financial accounting
products completed and ready for sale
finished goods
COGS=?
finished goods inventory BOY ADD COGM COG available for sale deduct finished goods inventory EOY COGS
When using process costing without any beginning or ending work-in-process inventory, all costs that were introduced to the process during the period will be assigned to the___________
finished units leaving work-in-process inventory at the end of the period.
A cost that remains constant, in total, regardless of changes in the level of the activity. However, if expressed on a per unit basis, the average fcost per unit varies inversely with changes in activity.
fixed cost
Costs that must be allocated in order to be assigned to a product or department. Example: cost of national advertising for an airline is indirect to a particular flight.
indirect costs
Product costs (manufacturing costs) are first reported as __________ on a balance sheet when they are incurred and then expensed as ___________on an income statement when products are sold. Another term for product cost is __________ cost.
inventory COGS inventoriable
An accounting system that traces costs to individual units or to specific jobs, contracts, or batches of goods. (custom homes, movies, services)
job costing
Distinct, identifiable units of a product or service Examples: Custom-made machines, houses
job costing systems
Used for production of large, unique, high-cost items. Built to order rather than mass produced. Many costs can be directly traced to each job.
job-order costing
concerned with providing information to managers for use within the organization.
managerial accounting
Includes all manufacturing costs except direct materials and direct labor. These costs cannot be easily traced to specific units produced. Examples: Indirect materials and indirect labor
manufacturing overhead
Which of the following statements is (are) true regarding product costing? (A) Twenty cans of paint that are 25% full are equivalent to four cans of paint that are completely full. (B) The equivalent unit concept refers to the actual amount of work during the period stated in terms of whole units. 1. Only A is true. 2. Only B is true. 3. Both A and B are true. 4. Neither A nor B is true.
only b is true
If Actual Overhead < Applied Overhead Cost, this is called
overapplied overhead
___________ is applied to jobs using a ____________ based on estimates made at the beginning of the accounting period
overhead predetermined overhead rate
costs that are expensed during the time period in which they are incurred.
period costs
An accounting system used when identical units are produced through a series of uniform production steps. (corn flakes, facial tissues, paint)
process costing
a system where the unit cost of a product or service is obtained by assigning total costs to many identical or similar units of output
process costing
a system where the unit cost of a product or service is obtained by assigning total costs to many identical or similar units of output Unit costs are computed by dividing total costs incurred by the ________________-. Each unit receives the same or similar amounts of ______________.
process costing number of units of output from the production process direct materials costs, direct labor costs, and manufacturing overhead
Masses of identical or similar units of a product or service Examples: Food, chemical processing
process costing systems
The cost management system accumulates and reports costs about_____________
processes, products and services
raw material used=?
raw material inventory BOY Add purchase of raw materials raw material available for use deduct raw material inventory EOY Raw material used
COGM=?
raw material used direct labor total MOH total manufacturing costs Add WIP BOY subtotal deduct WIP EOY COGM
resources in-stock and available for use
raw materials
Net income=?
sales revenue less COGS gross margin selling and admin expenses income before taxes income tax expense net income
Contribution margin means: A) what remains from total sales after deducting fixed expenses. B) what remains from total sales after deducting cost of goods sold. C) the sum of cost of goods sold and variable expenses. D) what remains from total sales after deducting all variable expenses.
sales-variable expenses, d
Includes all costs necessary to secure customer orders and get the finished product into the hands of the customer. Selling costs can be either direct or indirect costs.
selling costs
equivalent units: Are calculated __________ for each input. (direct materials and conversion cost) When calculating equivalent units in step 2, focus on ______ and disregard dollar amounts until after the equivalent units are computed.
separately quantities
In a job-costing system, individual jobs use different quantities of resources, so it would be incorrect to cost each job at _______.
the same average production cost
which formats are used for external reporting and management?
traditional contribution
separates product costs as required for external reporting purposes from selling and administrative expenses. It does not focus on cost behavior.
traditional approach
True or False? 1. Selling costs can be either direct or indirect costs. 2. Manufacturing overhead can be easily traced to specific units produced. 3. A direct cost is a cost that cannot be easily traced to the particular cost object under consideration.
true false false
If Actual Overhead cost > Applied Overhead Cost, this is called
underapplied overhead
The difference between the applied overhead cost and the actual overhead costs of a period is termed either ________or___________
underapplied overhead overapplied overhead
Butler Hospital wants to estimate the cost for each patient stay. It is a general health care facility offering only basic services and not specialized services such as organ transplants. Classify each of the following costs as either fixed or variable with respect to hospital costs per day. Electronic monitoring Meals for patients Nurses' salaries Parking maintenance Security
variable variable fixed fixed fixed
A cost that varies, in total, in direct proportion to changes in the level of activity. However, vper unit is constant.
variable cost
total of all costs entering the work-in-process account divided by the total equivalent units of work done to date. The beginning balance of the work-in-process account (work done in a prior period) is _________ with current period costs.
weighted average cost blended in
Calculates cost per equivalent unit of all work done to date. (regardless of the accounting period in which it was done) Assigns this cost to equivalent units completed and transferred out of the process, and to equivalent units in ending work-in-process inventory.
weighted average method
products started but not yet completed
work-in-process