accounting 2 test 14-17

Sound Company reported the following amounts for May: Raw materials purchased $254,000 Beginning raw materials inventory 12,000 Ending raw materials inventory 7,900 Direct labor incurred 51,000 Indirect materials requisitioned and used 4,000 Actual manufacturing overhead costs 36,800 Beginning work-in-process inventory 15,100 Ending work-in-process inventory 12,000

$254,100.

Sound Company reported the following amounts for May: Raw materials purchased $254,000 Beginning raw materials inventory 12,000 Ending raw materials inventory 7,900 Direct labor incurred 51,000 Indirect materials requisitioned and used 4,000 Actual manufacturing overhead costs 36,800 Beginning work-in-process inventory 15,100 Ending work-in-process inventory 12,000 How much is the cost of direct materials used in production?

$254,100. Beginning raw materials inventory $ 12,000 Raw materials purchased 254,000 = Materials available for use $266,000 Less ending raw materials inventory (7,900) Less indirect materials used (4,000) Direct materials used in production $254,100

Minton Company provided the following information from its accounting records for 2017: Expected production 60000 labor hours Actual production 56000 labor hours Budgeted overhead $1800000 Actual overhead $1740000 How much is the overhead application rate if Minton Company bases it on direct labor hours?

$30.00 per hour

Dougan, Inc. allocates overhead based on a predetermined overhead rate of $2.40 per direct labor hour. Employees are paid $12.00 per hour. Job 24 requires 4.2 pounds of direct materials at a cost of $15.00 per pound. Employees worked a total of 17.5 hours to complete the job. Actual manufacturing overhead costs totaled $80,000 for the year for the company. How much is the cost of Job 24?

$315. Direct materials (4.2 x $15) $ 63 Direct labor ($12 x 17.5) 210 Manufacturing overhead ($2.40 x 17.5) 42 Total job cost $ 315

Norman Company manufactures customized desks. The following pertains to Job No. 953: Direct materials used $22800 Direct labor hours worked 600 Direct labor rate per hour $16.00 Machine hours used 400 Applied factory overhead rate per machine hour $30.00 What is the total manufacturing cost for Job No. 953?

$44400

Kushman Combines, Inc.has $20000 of ending finished goods inventory as of December 31, 2013. If beginning finished goods inventory was $10000 and cost of goods sold was $50000, how much would Kushman report for cost of goods manufactured?

$60000

Knight Company reports the following costs and expenses in May. Factory utilities $15,500 Direct labor $69,100 Depreciation on factory equipment 12,650 Sales salaries 46,400 Depreciation on delivery trucks 3,800 Property taxes on factory building 2,500 Indirect factory labor 48,900 Repairs to office equipment 1,300 Indirect materials 80,800 Factory repairs 2,000 Direct materials used 137,600 Advertising 15,000 Factory manager's salary 8,000 Office supplies used 2,640

(A) Factory utilities $15,500 Depreciation on factory equipment 12,650 Indirect factory labor 48,900 Indirect materials 80,800 Factory manager's salary 8,000 Property taxes on factory building 2,500 Factory repairs 2,000 Manufacturing overhead $170,350 (B) Direct materials $137,600 Direct labor 69,100 Manufacturing overhead 170,350 Product costs $377,050 (C) Depreciation on delivery trucks $3,800 Sales salaries 46,400 Repairs to office equipment 1,300 Advertising 15,000 Office supplies used 2,640 Period costs $69,140

Barry's BarBQue incurred the following costs: $1,400 for ribs, 45 hours of labor to cook the ribs at $10 per hour, $50 for seasoning and sauce, $300 for signs to advertise the ribs, $150 to clean the grill after cooking the ribs, and $100 of administrative costs. How much are total product costs?

2,050 $1,400 + (45*$10) + $50 + $150 = $2,050

Klinger Company estimates that annual manufacturing overhead costs will be $4,800,000 for 2017. The actual overhead costs at the end of 2017 are $4,980,000. Activity base information for 2017 follows: Activity Base Estimated Actual Direct Labor Cost $3,000,000 $3,150,000 Direct Labor Hours 200,000 212,000 Machine Hours 150,000 152,000

(A) Predetermined overhead rate as a % of direct labor cost: $4,800,000 ÷ $3,000,000 = 160% Predetermined overhead rate per hour of direct labor: $4,800,000 ÷ $200,000 = 24 per hour Predetermined overhead rate per machine hour used: $4,800,000 ÷ $150,000 = $32 per machine hour (B) Overhead applied as a % of direct labor cost: $3,150,000 × 1.60 = $5,040,000 Overhead applied per hour of direct labor: 212,000 × $24 = $5,088,000 Overhead applied per machine hour used: 152,000 × $32 = $4,864,000 (C) Direct labor cost ($5,040,000 - $4,980,000 = $60,000 Overapplied) Direct labor hours ($5,088,000 - $4,980,000 = $108,000 Overapplied) Machine hours ($4,864,000 - $4,980,000 = $116,000 Underapplied)

Lopez Corporation incurred the following costs while manufacturing its product. Materials used in product $120,000 Advertising expense $45,000 Depreciation on plant 60,000 Property taxes on plant 14,000 Property taxes on store 7,500 Delivery expense 21,000 Labor costs of assembly-line workers 110,000 Sales commissions 35,000 Factory supplies used 23,000 Salaries paid to sales clerks 50,000 Work in process inventory was $12,000 at January 1 and $15,500 at December 31. Finished goods inventory was $60,000 at January 1 and $45,600 at December 31.

(A) Work-in-process, 1/1 $12,000 Direct materials used $120,000 Direct labor 110,000 Manufacturing overhead Depreciation on plant $60,000 Factory supplies used 23,000 Property taxes on plant 14,000 Total manufacturing overhead 97,000 Total manufacturing costs 327,000 Total cost of work-in-process 339,000 Less: ending work-in-process 15,500 Cost of goods manufactured $323,500 (B) Finished goods, 1/1 $60,000 Cost of goods manufactured 323,500 Cost of goods available for sale 383,500 Less: Finished goods, 12/31 45,600 Cost of goods sold $337,900

Edwards Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $1,800,000 for the year, and machine usage is estimated at 200,000 hours. In January, $186,000 of overhead costs are incurred and 22,000 machine hours are used. For the remainder of the year, $1,940,000 of additional overhead costs are incurred and 214,000 additional machine hours are worked.

(A) $9 per machine hour ($1,800,000 ÷ 200,000) (B) Incurred $186,000 Applied ($9 × 22,000) 198,000 Overapplied overhead $12,000 (C) Incurred ($186,000 + $1,940,000) $2,126,000 Applied ($9 × 236,000) 2,124,000 Underapplied overhead $2,000

Francum Company has the following data: direct labor $209,000, direct materials used $180,000, total manufacturing overhead $208,000, and beginning work in process $25,000.

(A) Direct materials used $180,000 Direct labor 209,000 Total manufacturing overhead 208,000 Total manufacturing costs $597,000 (B) Beginning work in process $25,000 Total manufacturing costs 597,000 Total cost of work in process $622,000

In March, Kelly Company had the following unit production costs: materials $10 and conversion costs $8. On March 1, it had no work in process. During March, Kelly transferred out 22,000 units. As of March 31, 4,000 units that were 40% complete as to conversion costs and 100% complete as to materials were in ending work in process.

(A) 0 (Work in process, March 1) + 26,000 *(Started into production) = 26,000 *22,000 + 4,000 = 26,000 (B)Units transferred out 22,000 22,000 Work in process, March 31 4,000 1,600 (4,000 × 40%) Total 26,000 23,600 (C) Transferred out = (22,000 × $18) = $396,000 Materials = (4,000 × $10) = $40,000 Conversion costs = (1,600 × $8) = $12,800

In Mordica Company, total material costs are $33,000, and total conversion costs are $54,000. Equivalent units of production are materials 10,000 and conversion costs 12,000.

(A) Total materials costs ÷ Equivalent units of materials = Unit materials cost $33,000/10,000 $3.30 Total conversion costs ÷ Equivalent units of conversion costs = Unit conversion cost $54,000/12,000 $4.50 (B) Unit materials cost + Unit conversion cost = Total manufacturing cost per unit $3.30 + $4.50 $7.80

Direct Materials Used Direct Labor Used Manufacturing Overhead Total Manufacturing Costs Work in Process 1/1 Work in Process 12/31 Cost of Goods Manufactured (1) $117,000 $140,000 $87,000 $ (a) $33,000 $ (b) $360,000 (2) (c) 200,000 132,000 450,000 (d) 40,000 470,000 (3) 80,000 100,000 (e) 265,000 60,000 80,000 (f) (4) 70,000 (g) 75,000 288,000 45,000 (h) 270,000

(a) $117,000 + $140,000 + $87,000 = $344,000 (b) $344,000 + $33,000 - $360,000 = $17,000 (c) $450,000 - ($200,000 + $132,000) = $118,000 (d) $40,000 + $470,000 - $450,000 = $60,000 (e) $265,000 - ($80,000 + $100,000) = $85,000 (f) $265,000 + $60,000 - $80,000 = $245,000 (g) $288,000 - ($70,000 + $75,000) = $143,000 (h) $288,000 + $45,000 - $270,000 = $63,000

Stock Company has 2,000 units in beginning work in process inventory, 20% complete as to conversion costs, 23,000 units transferred out to finished goods, and 3,000 units in ending work in process 33 1/3% complete as to conversion costs. The beginning and ending inventory is fully complete as to materials costs. Equivalent units for materials and conversion units are, respectively

26,000, 24,000. The equivalent units for materials are 26,000 (23,000 units transferred out plus 3,000 in ending work in process inventory). The equivalent units for conversion costs are 24,000 (23,000 transferred out plus 33 1/3% of the ending work in process inventory or 1,000).

Which one of the following correctly describes a document used in recording job cost sheet information?

A materials requisition to request materials from the company warehouse.

Which of the following is a true statement about process cost systems?

A process cost system has one work in process account for each process.

Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2017. Activity Cost Pools Estimated Overhead Expected Use of Cost Drivers per Activity Ordering and receiving $84,000 12,000 orders Food processing 480,000 60,000 machine hours Packaging 1,760,000 440,000 labor hours For 2017, the company had 11,000 orders and used 50,000 machine hours, and labor hours totaled 500,000.

Activity Cost Pools Estimated Overhead ÷ Expected Use of Cost Drivers per Activity = Activity-Based Overhead Rates Ordering and receiving $84,000 12,000 orders $7.00 per order Food processing 480,000 60,000 machine hours $8.00 per machine hour Packaging 1,760,000 440,000 labor hours $4.00 per labor hour Cost Drivers × Overhead Rates = Total Overhead Applied 11,000 orders $7.00 $77,000 50,000 machine hours $8.00 400,000 500,000 labor hours $4.00 2,000,000 $2,477,000

Which of the following is a limitation of activity-based costing?

Activity-based costing can be expensive to use.

Which of the following managerial accounting techniques attempts to allocate manufacturing overhead in a more meaningful fashion?

Activity-based costing.

Which of the following manufacturing cost elements occurs in a process cost system?

All of these.

Dartmouth Company has two process departments, machining and assembly, that produce products. At what point can the company add manufacturing overhead costs to the products?

As the production takes place in each of the two process departments.

Which of the following is the proper classification of the two activities listed? Value-Added Activity Non-Value-Added Activity Packaging Storing Assembly Inspection Testing Storage Receiving Machining

Assembly Inspection

How are equipment setups classified?

Batch-level activity

A manufacturing company calculates cost of goods sold as follows:

Beginning FG inventory + cost of goods manufactured - ending FG inventory.

Cost of goods manufactured is calculated as follows:

Beginning WIP + direct materials used + direct labor + manufacturing overhead - ending WIP.

Buxmont Manufacturing reported the following year-end balances: Beginning work in process inventory, $40,000; beginning finished goods inventory, $60,000; ending work in process inventory, $20,000; ending finished goods inventory, $30,000; direct materials used, $240,000; direct labor, $250,000; manufacturing overhead, $150,000; selling expenses, $50,000; and administrative expenses, $350,000. How much would Buxmont Manufacturing report as cost of goods manufactured at year-end?

Cost of goods manufactured = beginning work in process ($40,000) + total manufacturing costs [direct materials used ($240,000) + direct labor ($250,000) + manufacturing overhead ($150,000)] or $640,000 - ending work in process ($20,000) = $660,00

Which group of costs consists of only product costs?

Direct labor, indirect labor, factory utilities

When incurred, factory labor costs are debited to

Factory Labor

Which one of the following is true concerning manufacturing and merchandising companies' inventories on the balance sheet?

Finished goods is to a manufacturer what merchandise inventory is to a merchandiser.

Which of the following statements is true about managerial accounting?

It provides more detailed information than financial accounting does.

A company has three processing departments and uses a process costing system. When the company assigns manufacturing overhead costs to production, which account is affected?

Manufacturing Overhead is credited.

One key difference appears when comparing the income statements of a manufacturing company to a merchandising company. What is that difference?

Manufacturing companies use cost of goods manufactured and merchandising companies use cost of goods purchased.

For Eckstein Company, the predetermined overhead rate is 130% of direct labor cost. During the month, Eckstein incurred $100,000 of factory labor costs, of which $85,000 is direct labor and $15,000 is indirect labor. Total manufacturing overhead incurred, including the indirect labor, was $115,000.

Manufacturing overhead applied = 130% x $85,000 = $110,500 Underapplied manufacturing overhead = $115,000 - $110,500 = $4,500

The formula for the predetermined overhead rate is estimated annual overhead costs divided by an expected annual operating activity.

True

For which of the following activities will direct labor hours and direct labor cost be an appropriate cost driver?

Painting

Which of the following are considered to be management's three broad functions?

Planning, directing, and controlling

Washburn Company produces earbuds. During the year, manufacturing overhead costs are expected to be $200,000. Expected machine usage is 2,500 hours. The company assigns overhead based on machine hours. Job No. 551 used 90 machine hours.

Predetermined overhead rate $200,000 ÷ 2,500 hours = $80.00 Overhead assigned . 90 hours × $80.00 = $7,200

Bangor Company manufactures two products, Velveeto and Fondant. Bangor has estimated overhead costs as follows: setting up machines ($160,000), machining ($300,000) and inspecting ($100,000). Information on the two products follows: Velveeto Fondant Direct labor hours 60,000 100,000 Machine setups 2,400 1,600 Machine hours 96,000 104,000 Inspections 3,000 2,000 If Bangor uses ABC, how much overhead will be applied to Velveeto?

Setups: [$160,000/ (2,400 + 1,600)] X 2,400 = $96,000 Machining: [$300,000/ (96,000 + 104,000)] X 96,000 = $144,000 Inspecting: [$100,000/ (3,000 + 2,000)] X 3,000 = $60,000 Total = $96,000 + $144,000 + $60,000 = $300,000

Which of the following is not an element of manufacturing overhead?

Sales manager's salary.

The Mixing Department's output during the period consists of 20,000 units completed and transferred out, and 5,000 units in ending work in process 60% complete as to materials and conversion costs. Beginning inventory is 1,000 units, 40% complete as to materials and conversion costs. Assuming the weighted-average method, the equivalent units of production are

The equivalent units of production is the sum of units completed and transferred out (20,000) and the equivalent units of ending work in process inventory (5,000 units X 60%) or 20,000 + 3,000 = 23,000 units.

Which of these best reflects a distinguishing factor between a job order cost system and a process cost system?

The number of work in process accounts.

Pharmco incurred the following costs while manufacturing its product: Materials used in production, $120,000; factory depreciation, $60,000; property taxes on the administrative offices, $12,000; labor costs of assembly-line workers, $95,000; factory supplies used, $8,000; advertising expense, $13,000; property taxes on the factory, $20,000; delivery expense, $23,000; salaries of the sales staff, $53,000; and sales commissions, $17,000. The total product costs for Pharmco are

Total product costs = direct materials + direct labor + manufacturing overhead = materials used in production ($120,000) + labor costs of assembly-line workers, ($95,000) + factory depreciation ($60,000) + factory supplies used ($8,000) + property taxes on the factory ($20,000). $303,000.

A job order cost system identifies costs with a particular job rather than with a set time period.

True

Cost accounting is primarily concerned with accumulating information about product costs.

True

Direct materials requisitioned from the storeroom should be charged to the Work In Process Inventory account and the job cost sheets for the individual jobs on which the materials were used.

True

In a job order cost system, each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets.

True

Managerial accounting applies to all types of businesses, including service, merchandising, and manufacturing, as well as to all forms of business organizations.

True

Which of the following is the proper classification of activities according to activity level for a computer manufacturing company? Assembly Maintenance Unit Facility Product Unit Batch Product Product Facility

Unit Facility

Harry Carey Hats had the following department data: Work in process, physical units, April 1 7,000 Completed and transferred out physical units 72,000 Work in process, physical units, April 30 8,000 Materials are added at the beginning of the process. Conversion costs are added evenly throughout the process. The incomplete units are 30% completed as to conversion costs. What is the total number of equivalent units for conversion costs during April using the weighted-average method?

Units transferred out plus (72,000) equivalent units for ending work in process (2,400) = the total number of equivalent units (74,400) for conversion costs. Work in process, April 1 7,000 Started in production 73,000 Total units 80,000 Units transferred out 72,000 Work in process, April 30 8,000 Total units 80,000 Equivalent Units Materials Conversion Costs Units transferred out 72,000 72,000 Work in process, April 30 8,000 x 100% 8,000 8,000 x 30% 2,400 Total equivalent units 80,000 74,400

Which of the following statements is false concerning the use of ABC in service industries?

When using ABC for service industries, special methods must be used to identify cost pools and cost drivers due to the unique nature of the services offered.

Which of the following is correct regarding cost systems? Job Order Process

Work in process account one one for each process

Checker Clackers, Inc. manufactures clackers. Checker's transactions and accounts included the following during June: Raw materials inventory, beginning $1,200 Raw materials inventory, ending 1,400 Work in process inventory, beginning 7,100 Work in process inventory, ending 6,800 Raw materials acquired 27,800 Cost of direct materials used in production 27,600 Sales commissions to sell clackers 2,100 Direct labor cost 20,000 Total manufacturing overhead 28,900 How much is cost of goods manufactured for June?

Work in process inventory, beginning $7,100 Direct materials used in production $27,600 Direct labor cost 20,000 Manufacturing overhead cost 28,900 Total manufacturing costs 76,500 Less: Work in process inventory, ending (6,800) Cost of goods manufactured $76,800

Bergeron Co. manufactures two printers, Pronto and Speedy. Total overhead of $1,260,000 is incurred by three departments: Setups $80,000; Machining $880,000; and Shipping $300,000. The company also incurs $400,000 of direct labor. Information concerning the two product lines is shown below: Pronto Speedy Machine setups 25 25 Machine hours 6,500 3,500 Orders shipped 225 375 Direct labor costs $100,000 $300,000 Using activity-based costing, how much overhead is assigned to Speedy?

[(25 / 50) × $80,000] + [(3,500 / 10,000) × $880,000] + [(375 / 600) × $300,000] = $535,500.

In a process cost system,

a Work in Process account is maintained for each process.

Under just-in-time processing

all of the above.

Manufacturing overhead is applied to each job

by means of a predetermined overhead rate.

In Mynex Company, Job No. 26 is completed at a cost of $4,500 and later sold for $7,000 cash. A correct entry is

debit Finished Goods Inventory $4,500 and credit Work in Process Inventory $4,500.

The predetermined overhead rate is

determined at the beginning of the year.

Manufacturing overhead includes all of the following except

direct materials.

The primary objective of just-in-time processing is to

eliminate or reduce all manufacturing inventories.

When a job is completed in a job order cost accounting system, the cost of the job is transferred to

finished goods inventory.

If annual overhead costs are expected to be $750000 and direct labor costs are expected to be $1000000, then if the activity base is direct labor costs:

for every dollar of direct labor, 75.0 cents of manufacturing overhead will be assigned.

All of the following are distinguishing features of managerial accounting except

independent audits.

A primary driver of overhead costs in continuous manufacturing operations is

machine hours.

In calculating a predetermined overhead rate, a recent trend in automated manufacturing operations is to choose an activity base related to

machine hours.

At the end of the year a company has a $1,200 debit balance in Manufacturing Overhead. If this amount is considered immaterial, the company will

make an adjusting entry by debiting Cost of Goods Sold for $1,200 and crediting Manufacturing Overhead for $1,200.

Managerial accounting applies to each of the following types of businesses except

managerial accounting applies to all types of firms.

The labor costs that have been identified as indirect labor should be charged to

manufacturing overhead.

A process cost system would be used for all of the following products except

motion pictures.

In a manufacturing company, the cost of factory labor consists of all of the following except

net earnings of factory workers.

The flow of costs in job order costing

parallels the physical flow of materials as they are converted into finished goods

A process cost system would be used for all of the following except the

printing of wedding invitations.

The major reporting standard for presenting managerial accounting information is

relevance

Raw materials are assigned to a job when

the materials are issued by the materials storeroom

In a process cost system

the unit cost is total manufacturing costs for the period divided by the units produced during the period.

A distinguishing feature of managerial accounting is

very detailed reports.

The cost applicable to units that have been started into production but not completed is shown as

work in process inventory.

When the company assigns factory labor costs to jobs, the direct labor cost is debited to

work in process inventory.

In a process cost system, costs are assigned only to

work in process, finished goods, and cost of goods sold.