ACC 302- Ch 11,14/22,16,17
The challenge of a production facility that is producing several products is how to allocate the joint costs that are incurred
before the split off point
Flexible budget contribution margin is equal to
budgeted contribution margin per unit times actual units sold of each product
In a process-costing system average unit costs are calculated
by dividing total costs in a given accounting period by total units produced in that period
Chapter 16 Quiz
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Chapter 17 Quiz
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Chapter 14/22 Quiz
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Chapter 11 Quiz
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While allocating corporate costs to divisions
allocate both variable and fixed costs to divisions and then to customers
Assembly department of Zahra Technologies had 200 units as work in process at the beginning of the month. These units were 45% complete. It has 300 units which are 35% complete at the end of the month. During the month, it completed and transferred 500 units. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. Calculate the total equivalent units in ending inventory for assignment of conversion costs?
105 units 300*0.35=105
A golf shoe manufacturer makes and sells thousands of golf shoes each year through two channels: wholesale to sporting good stores and direct to consumers through it's custom portal. Customers can specify modifications to 6 basic golf shoe models including spiked or spikeless, traditional or casual, even laced or other closures. From there, customers can specify many details to their preferred model such as size and width (different for each foot), favorite colors for the base, saddle, accents and laces. A customer can choose to embroidered a name or initials or include the logo of their favorite MLB, NFL, NHL or NCAA team. Which of the following costing systems would make the most sense for the custom golf shoe operation and the main product operation (not customized/wholesale)?
operation-costing and process costing
If management takes a multipleminus−year view in the decision model and judges success according to the current year's results, a problem will occur in the ________.
performance evaluation model
Which of the following is the costing system used for mass produced like or similar units of products?
process-costing systems
Determining which products should be produced when the plant is operating at full capacity is referred to as a(n)
product- mix decision
For companies in which full allocation is not followed, which of the following is true of corporate sustaining costs?
subtracted as a lump sum amount after aggregating operating incomes of the divisions
Which of the following customer related costs are NOT economically feasible to trace but are related to a customer?
the allocation of the cost of travel, lodgings, and meals that result from visiting customers at their locations
When the cost pools are homogeneous which of the following will be true?
the costs in the cost pool have a similar causeminus−andminus−effect or benefitsminus−received relationship with the costminus−allocation base
The purpose of the equivalent-unit computation is to :
use a common metric to estimate the amount of work done on units in a period
Dartmouth Building Products Inc. provides the following information. Corporate advertising costs = $850,000 Division A minus− $5,000,000 Division B minus− $20,000,000 Number of ads run relevant on Divsion A products 500 Number of ads run relevant to Division B products 3,667 Assume that customers with higher revenues benefited more from corporate advertising costs than customers with lower revenues. What is the allocated corporate costs for Division A?
170,000 5,000,000/25,0000 * 850,000
Genent's Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars. For this makeminus−orminus−buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars: Direct materials $0.57 Direct labor 0.06 Unitminus−related support costs 0.22 Batchminus−related support costs 0.33 Productminus−sustaining support costs 0.45 Facilityminus−sustaining support costs 0.62 Total cost per jar $2.25 The relevant cost per jar is ___
2.25 per jar
Torid Company processes 18,025 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $5 per gallon and Product Y, the main product, sells for $170 per gallon. The following information is for December: Beginning Ending Production Sales Beg Inventory End Inventory Product X: 5,800 5,700 0 100 Product Y: 10,075 10,180 125 20 The manufacturing costs totalled $26,000. Under production method, Product X NRV would be offset against the costs of Product Y by how much?
29,000 (5700*5)+(100*5)
Vital Industries manufactured 2,400 units of its product Huge in the month of April. It incurred a total cost of $132,000 during the month. Out of this $132,000, $45,700 comprised of direct materials used in the product and the rest was incurred because of the conversion cost involved in the process. Vital had no opening or closing inventory. What will be the total cost per unit of the product, assuming conversion costs contained $10,000 of indirect labor?
55 132000/2400
Torid Company processes 18 comma 20018,200 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $10 per gallon and Product Y, the main product, sells for $170 per gallon. The following information is for December: X: Production 5775, Sales: 5700 Beg Inv 0, End Inv 75 Y: Production 10275, Sales: 10290, Beg Inv: 25, End Inv: 10 The manufacturing costs totaled $30,000. Under production method, Product X NRV would be offset against the costs of Product Y by how much?
57,750 Take Sales for Product X: 5700*10 +75*10
Salesminus−mix variance= $300,000(F), salesminus−volume variance= $470,000(U), flexibleminus−budget variance= $230,000(F), marketminus−size variance= $34,000(U), calculate the salesminus−quantity variance.
770,000(U) 300,000+470000
Assembly department of Zahra Technologies had 200 units as work in process at the beginning of the month. These units were 45% complete. It has 300 units which are 25% complete at the end of the month. During the month, it completed and transferred 600 units. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. What is the number of equivalent units of work done during the month with regards to direct materials?
900 units (600+300)
Sunk costs are
Costs that are unavoidable and cannot be changed no matter what action is taken
Which of the following companies is most likely to use process costing?
Dental Bright Inc., a company manufacturing and selling toothpaste on a large scale
Which of the following is an irrelevant cost when considering where to drop a customer?
Depreciation
A relevant revenue is revenue that is a(n)
Future revenue and differs among alternative courses of action
Flash City Inc. manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year. With a 75minus−cent price increase, demand is expected to fall by 7,000 units. Demand 77,000 , 70,000 units (current, projected) Selling Price: 9, 9.75 (current, projected) Incremental cost per unit: 4.80 , 4.80 (current, projected) If the price increase is implemented, operating profit is projected to
Increase by 23,100 a)77000*9.00-77000*4.80 b)70000*9.75-70000*4.80 Take a-b to get increase or decrease in profits
Which of the following statements best define split off point in joint costing?
It is the juncture in a joint production process when two or more products become separately identifiable.
When the selling prices of all products at the split-off point are unavailable, the ________ is the best alternative for allocating joint costs.
NRV method
Which of the following statements is true of the methods for allocating joint costs?
Sales value at split-off method uses the sales value of the entire production of the accounting period to allocate costs
Relevant data in a makeminus−orminus−buy decision of a part include which of the following?
Some portion of fixed costs that would be saved if the product is outsourced
Which of the following best describes transferred-in costs in process costing?
These costs are incurred in previous departments that are carried forward to subsequent departments
Which of the following is not true with regards to relevant costs and relevant revenues?
They are sunk costs and historical revenues
Which of the following companies is most likely to use an operation-costing system?
a company that makes suits for which the basic design is same, but depending on specifications, each batch of suits varies somewhat from other batches
How does the sales value at split-off method allocate joint costs?
allocates joint costs to joint products on the basis of the relative total sales value at the split-off point
Which of the following is true of corporate minus−sustaining costs?
are common to all individual customers
Which of the following best describes transferred-in costs?
costs incurred in a previous department or process that are carried forward as the product's cost as that product moves to another department or process in the production cycle
Which of the following classifications would costs incurred to handle each unit sold fit into?
customer output unit-level cost
To reduce distributionminus−channel costs, a company could
eliminate distribution to retailers and only service wholesalers
Dropping an unprofitable customer will
eliminate most short-run costs assigned to that customer
Which of the following is true regarding estimates of completion of units in a process costing system?
estimating the degree of completion with regards to direct materials is usually easier and more accurate than estimating the degree of completion with regards to conversion costs
A decision model involves a(n)
formal method of making a choice that often involves both quantitative and qualitative analyses
A product may be passed from one subunit to another subunit in the same organization. The product is known as a(n)
intermediate product
What is the name of a cost of production process that yields multiple products simultaneously?
joint
When a single manufacturing process yields two products, one of which has a relatively high sales value compared to the other, the two products are respectively known as:
main product and byproducts
Negotiated transfer prices are often employed when
market prices are volatile
The salesminus−quantity variance can be decomposed into ________.
market- share variance and market- size variance
Allocation of corporateminus−sustaining costs is useful for which of the following?
motivating division managers to examine how corporate costs are planned and controlled
Colonial North Manufacturing, Inc. is considering eliminating one of its product lines. The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance. What financial effects occur if the product line is discontinued?
net income will decrease by the amount of the contribution margin of the product line being discontinued
Which of the following is a market-based approach to allocating joint costs?
net realizable value
Managers are examining a possible replacement of a machine decision and generate the following numbers: Book value of old machine $1,00,000 Current disposal value of old machine $50,000 Loss on disposal of old machine $300,000 Cost of new machine $600,000 In performing an analysis and in attempt to answer the question, "should we replace the old machine", which of the following statements would be true?
the cost of the new machine and the current disposal value of the old machine are relevant
The weighted-average process-costing method calculates the equivalent units by:
the equivalent units completed during the current period plus the equivalent units in ending inventory
When a product is the result of a joint process, the decision to process the product past the splitminus−off point further should be influenced by which of the following measures?
the incremental operating income earned past the split-off point
Which of the following would not be a GAAP or managerial accounting reason for allocating joint costs?
to avoid generating negative revenue when disposal costs are considered
An example of allocating joint costs using physical measures is allocating joint costs based on the:
volume of the products produced
Which of the following is not true of the joint allocation methods?
when selling prices are at the split-off point are available but further processing is necessary, the NRV method is the preferred allocation method
Which of the following is true about discontinuing an unprofitable customer?
will not eliminate all costs assigned to and may result in losing more revenues relative to costs saved
When a Bakery transfers goods from the Mixing Department to the Baking Department, the accounting entry would be:
Debit: Work in Process long dash— Baking Department Credit: Work in Process long dash— Mixing Department
