ACCOUNTING2 Test
If the costs of direct materials, direct labor, and factory overhead were $60,000, $35,000, and $25,000, respectively, for 20,000 equivalent units of production, the conversion cost per equivalent unit was $6. True False
false Conversion Cost per Equivalent Unit = Total Conversion Costs for the Period/Total Equivalent Units of Conversion Costs = (Direct Labor + Factory Overhead)/Total Equivalent Units of Conversion Costs = ($35,000 + $25,000)/20,000 units = $3 per unit
Which of the following products would be manufactured using a job order costing system? a. graduation invitation b. recliner c. highlighter pen d. cell phone
graduation invitation
Which of the following manufacturing costs is an indirect cost of producing a product? a. memory chips for a microcomputer manufacturer b. commissions for sales personnel c. oil lubricants used for factory machinery d. hourly wages of an assembly worker
oil lubricants used for factory machinery
The cost system best suited to industries that manufacture a large number of identical units of commodities on a continuous basis is a. departmental b. first-in, first-out c. job order d. process
process
The amount of time spent by an employee in the factory is usually recorded on
time tickets
A cost object indicates how costs are related or identified. True False
true
Direct costs can be specifically traced to a cost object. True False
true
Indirect labor would be included in factory overhead. True False
true
Managerial accounting provides useful information to managers on product costs. True False Feedback
true
The FIFO method separates work done on beginning inventory in the previous period from work done on it in the current period. True False
true
The amount journalized showing the cost added to finished goods is taken from the cost of production report. True False
true
ob cost sheets can provide information to managers on unit cost trends, the cost impact of continuous improvement in the manufacturing process, the cost impact of materials changes, and the cost impact of direct materials price or direct labor rate changes over time. True False
true
The controlling account for the cost ledger is a. Work in Process b. Finished Goods c. Cost of Goods Sold d. Materials
work in progress
Process manufacturing usually reflects a manufacturer that produces small quantities of unique items. True False
false
Department S had 500 units 60% completed in process at the beginning of the period, 9,000 units completed during the period, and 600 units 30% completed at the end of the period. What was the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories? Assume the completion percentage applies to both direct materials and conversion cost. a. 8,700 b. 8,880 c. 9,300 d. 9,000
Equivalent Units = (500 × 40%) + (9,000 - 500) + (600 × 30%) = 8,880 units
Department G had 3,600 units, 40% completed at the beginning of the period, 12,000 units were completed during the period, 2,000 units were 20% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period: Work in process, beginning of period $60,000 Costs added during period: Direct materials (10,400 units at $9.8365) 102,300 Direct labor 79,800 Factory overhead 25,200 Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first-out method of inventory costing is used, determine the equivalent units for direct materials and conversion costs, respectively. a. 10,400 and 10,240 b. 14,000 and 13,600 c. 14,000 and 12,160 d. 10,400 and 10,960 Feedback
Equivalent Units for Direct Materials = (12,000 - 3,600) + 2,000 = 10,400 units Equivalent Units for Conversion Costs = (3,600 × 60%) + (12,000 - 3,600) + (2,000 × 20%) = 10,960 units
Carmelita Inc. has the following information available: Costs from Beginning Inventory Costs from Current Period Direct materials $2,000 $ 22,252 Conversion costs 6,200 150,536 At the beginning of the period, there were 500 units in process that were 60% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,500 units were started and completed. Ending inventory contained 340 units that were 30% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method. The equivalent units of production for direct materials and conversion costs, respectively, were a. 4,902 for direct materials and 4,802 for conversion costs b. 4,840 for direct materials and 4,802 for conversion costs c. 5,340 for direct materials and 4,902 for conversion costs d. 4,602 for direct materials and 4,802 for conversion costs Feedback
Equivalent Units for Direct Materials = Number of Units of Direct Materials Added during Period = 4,500 + 340 = 4,840 units Equivalent Units for Conversion Costs = (500 × 40%) + 4,500 + (340 × 30%) = 4,802 units
armelita Inc. has the following information available: Costs from Beginning Inventory Costs from Current Period Direct materials $4,600 $23,200 Conversion costs 5,200 142,000 At the beginning of the period, there were 600 units in process that were 41% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,600 units were started and completed. Ending inventory contained 300 units that were 28% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method. The equivalent units of production for direct materials and conversion costs, respectively, were a. 4,900 for direct materials and 5,038 for conversion costs b. 4,600 for direct materials and 5,038 for conversion costs c. 5,038 for direct materials and 5,038 for conversion costs d. 5,038 for direct materials and 4,900 for conversion costs
Equivalent Units for Direct Materials = Number of Units of Direct Materials Added during Period = 4,600 + 300 = 4,900 units Equivalent Units for Conversion Costs = (600 × 59%) + (4,600) + (300 × 28%) = 5,038 units
The debits to Work in Process—Assembly Department for May, together with data concerning production, are as follows: May 1, work in process: Materials cost, 3,000 units $ 8,000 Conversion costs, 3,000 units, 66.7% completed 6,000 Materials added during May, 10,000 units 30,000 Conversion costs during May 31,000 Goods finished during May, 11,500 units 0 May 31 work in process, 1,500 units, 50% completed 0 All direct materials are placed in process at the beginning of the process, and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for May is a. $2.92 b. $2.31 c. $3.80 d. $3.00
Materials Cost per Equivalent Unit = $30,000/10,000 = $3.00
60% completed at the beginning of the period at a cost of $7,000. During the period, 4,000 units of direct materials were added at a cost of $8,200 and 4,500 units were completed. At the end of the period, 500 units were 40% completed. All materials are added at the beginning of the process. Direct labor was $28,700, and factory overhead was $4,510. The cost of the 500 units in process at the end of the period if the first-in, first-out method is used to cost inventories was a. $5,175 b. $2,569 c. $3,240 d. $2,645
Number of Equivalent Units for Conversion Costs during Period = (1,000 × 40%) + (4,500 - 1,000) + (500 × 40%) = 4,100 units Direct Materials Cost in Work in Process Inventory = 500 × $2.05 = $1,025 Total Conversion Cost in Work in Process Inventory = ($33,210/4,100) × (500 × 40%) = $1,620 Total Cost of Departmental Work in Process Inventory at End of Period = $1,025 + $1,620 = $2,645
Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. During the period, 14,000 units of direct materials were added at a cost of $28,700 and 15,000 units were completed. At the end of the period, 3,000 units were 75% completed. All materials are added at the beginning of the process. Direct labor was $32,450, and factory overhead was $18,710. The number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories was a. 14,650 b. 14,850 c. 14,150 d. 15,650
Number of Equivalent Units for Conversion Costs during Period = (4,000 × 60%) + (15,000 - 4,000) + (3,000 × 75%) = 15,650 units
Department M had 2,000 units 40% completed in process at the beginning of June, 12,000 units completed during June, and 1,200 units 25% completed at the end of June. What was the number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories? a. 10,000 units b. 11,200 units c. 11,500 units d. 15,200 units
Number of Equivalent Units of Production for Conversion Costs for June = (Inventory in Process, June 1 × % of Completion in June) + Started and Completed in June + (Inventory in Process, June 30 × % of Completion in June) = (2,000 units × 60%) + (12,000 units - 2,000 units) + (1,200 units × 25%) = 11,500 units
Department M had 3,000 units 60% completed in process at the beginning of June, 13,100 units completed during June, and 900 units 28% completed at the end of June. What was the number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories? a. 11,552 units b. 14,252 units c. 13,352 units d. 10,100 units
Number of Equivalent Units of Production for Conversion Costs for June = (Inventory in Process, June 1 × % of Completion in June) + Started and Completed in June + (Inventory in Process, June 30 × % of Completion in June) = (3,000 units × 40%) + (13,100 units - 3,000 units) + (900 units × 28%) = 11,552 units
The job order costing system is not used by service organizations. True False
false
The details concerning the costs incurred on each job order are accumulated in a work in process account and supported by a a. stock ledger b. cost ledger c. creditors ledger d. materials ledger
cost ledger
A performance report that identifies the amount of employee downtime is a financial accounting report.
false
Cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost. True False
false
Custom-made goods would be accounted for using a process costing system. True False
false
Managerial accounting uses only past data in reports to aid management in the decision-making process. True False
false
Prime costs are the combination of direct labor costs and factory overhead costs. True False
false