Acct 116: Midterm #1
The materials price variance for September is: $1,150 U $1,160 U $1,150 F $1,160 F
$1,160 U Materials price variance = AQ × (AP − SP) = 5,800 liters × ($7.20 per liter − $7.00 per liter) = 5,800 liters × ($0.20 per liter) = $1,160 U
Malt Company's Manufacturing overhead account showed a $14,000 underapplied overhead balance on December 31. Other accounts showed the following amounts of overhead applied from the current period in their ending balances: Work in process $ 24,000 Finished goods 60,000 Cost of goods sol d156,000 If the company allocates the underapplied overhead among Cost of goods sold, Work in process, and Finished goods, the amount allocated to Work in process was: Multiple Choice $1,460 $2,800 $1,260 $1,400
$1,400
Parker Company has provided the following data for the most recent year: net operating income, $41,000; fixed expense, $61,000; sales, $255,000; and CM ratio, 40%. The company's margin of safety in dollars is: (Round your intermediate and final answers to the nearest dollar amount.) $152,500 $41,000 $143,500 $102,500
$102,500 Dollar sales to break even = Fixed expenses of $61,000 ÷ CM ratio of .40 = $152,500 Margin of safety in dollars = Actual sales of $255,000 - Break even sales of $152,500 = $102,500
Douglas Company sold 1,300 units of its product during the current month. The selling price is $44 and the variable cost is $30 per unit. The company's fixed expense totals $7,200 per month. The company's profit is: $11,000 $50,000 $18,200 $46,200
$11,000 Profit = (Selling price per unit of $44 × Quantity sold of 1,300) - (Variable expenses per unit of $30 × Quantity sold of 1,300) - Fixed expenses of $7,200 = $11,000
The materials price variance for January is: $11,544 U $13,320 U $13,320 F $11,544 F
$13,320 F Materials price variance = AQ × (AP − SP) = 44,400 grams × ($1.70 per gram − $2.00 per gram) = 44,400 grams × (−$0.30 per gram) = $13,320 F
You are provided the following information: Salaries for assembly workers $31,000 Cost of materials $2,500 Lubricants for machines $1,100 Manager's salary $9,400 Supervisor's salary $6,700 Sales commissions $5,700 Determine the amount of period cost. $31,000 $40,400 $21,800 $15,100
$15,100 manager's salary and the sales commission
A total of $3,100 of the selling expenses and $1,050 of the administrative expenses are variable; the remainder are fixed. What is the company's contribution margin? $16,350 $2,150 $18,350 $20,500
$16,350 The contribution margin is calculated as sales minus variable costs. You should assume COGS are variable. Sales $51,000 Variable expenses: Cost of goods sold $30,500 Variable selling 3,100 Variable administrative 1,050 34,650 Contribution margin $16,350
A company's cost formula for maintenance is Y = $6,200 + $3.5X, where X is machine-hours. During a period in which 3,100 machine-hours are worked, the expected maintenance cost would be: $10,850 $21,700 $17,050 $6,200
$17,050
Vahedi Company manufactures a specialty line of silk-screened ties. The company uses a job-order costing system. During the month, the following costs were incurred on Job 1041: direct materials $55,400 and direct labor $21,350. In addition, selling and shipping costs of $27,000 were incurred on the job. Manufacturing overhead was applied at the rate of $25 per machine-hour (MH) and Job 1041 required 370 MHs. If Job 1041 consisted of 5,000 ties, the cost of goods sold per tie was: (Round your answer to 2 decimal places.) $22.60 $17.20 $50.00 $15.35
$17.20 Note that the selling and shipping costs should be ignored; these costs are operating costs, and, as such, are not a component of cost of goods sold.
In March, Espresso Express had electrical costs of $272.20 when the total volume was 4,510 cups of coffee served. In April, electrical costs were $277.40 for 4,770 cups of coffee. Using the high-low method, what is the estimated fixed cost of electricity per month? (Round your intermediate calculations to 2 decimal places.) $210.00 $272.20 $182.00 $260.00
$182.00
On January 1, Hessler Company's Work in Process account had a balance of $26,000. During the year, direct materials costing $36,000 were placed into production. Direct labor cost for the year was $61,000. The predetermined overhead rate for the year was set at 150% of direct labor cost. Actual overhead costs for the year totaled $93,500. Jobs costing $195,500 to manufacture according to their job cost sheets were completed during the year. On December 31, the balance in the Work in Process inventory account was: $19,000 $21,000 $10,500 $26,000
$19,000
The following information was given about Flag's costs for March: Salaries for line workers $21,000 Cost of fabric $1,500 Power for machines$600 Manager's salary$7,400 Supervisor's salary$5,700 Sales commissions$4,700 How much is Direct Labor? $34,100 $28,400 $38,800 $21,000
$21,000 Only the salaries for the line workers can be classified as Direct Labor. The manager and supervisor salaries are overheads and sales commissions are a selling cost.
Tarrington Company manufactured and sold 1,200 units of its product during the current month. The selling price is $64 and the variable cost is $42 per unit. The company's fixed expense is $17,000 per month. If the company sells one additional unit during the month, its total contribution margin will increase by: $64 $9,422 $9,400 $22
$22 For each additional unit the company sells during the month, its total contribution margin will increase by its unit contribution margin. Unit contribution margin = Sales per unit of $64 - Variable costs per unit of $42 = $22.
Lester Company has a single product. The selling price is $44 and the variable cost is $18 per unit. The company's fixed expense is $260,000 per month. What is the company's unit contribution margin? $26 $44 $62 $18
$26 Unit contribution margin = Unit selling price of $44 − Unit variable expenses of $18 = $26
What is the variable overhead rate variance for the month? $10,435 U $3,010 U $10,435 F $3,010 F
$3,010 U AH × AR = $130,720 Variable overhead rate variance = (AH × AR) − (AH × SR) = ($130,720) − (8,600 hours × $14.85 per hour) = $130,720 − $127,710 = $3,010 U
Harrington Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on machine hours in the Machining Department and on direct labor cost in the Assembly Department. At the beginning of the year, the company made the following estimates: Machining Assembly Direct labor hours 18,000 10,000 Direct labor cost $22,000 $16,000 Machine hours 8,000 2,000 Manuf. overhead $24,000 $20,000 What predetermined overhead rates would be used in the Machining and the Assembly Department, respectively? (Round your answers to 2 decimal places.) $3.00 and 80.00% $3.00 and 125.00% $5.00 and 80.00% $8.00 and 170.00%
$3.00 and 125.00% 24000/8000 (manufacturing overhead/machine hours) = $3 20000/16000 (manufacturing overhead/direct labor cost) = 1.25 = 125%
A machinist earns $10 per hour. During a given week he works 36 hours, of which he is idle 4 hours. For the week: $380 cost should be charged to direct labor and $20 cost should be charged to overhead. $40 cost should be charged to overhead $40 cost should be charged to overtime premium. $360 cost should be charged to direct labor.
$40 cost should be charged to overhead
Data concerning activity in the shipping department of Osan, Inc. are given below: Units Shipped Shipping Cost Monday 12 $560 Tuesday 17 $670 Wednesday 8 $540 Thursday 6 $500 Friday 8 $550 Saturday 4 $470 What is the fixed shipping cost per day using the least-squares regression method? (estimate using statistical software or see Appendix 2A for instructions concerning how to use Excel to compute this value.) (Do not round intermediate calculations and round final answer to the nearest whole dollar amount.) $420 $470 $403 $418
$418
Bumgardner Inc. has provided the following data concerning one of the products in its standard cost system. InputsStandard Quantity or Hours per Unit of OutputStandard Price or RateDirect materials8.0 liters$5.00 per liter The company has reported the following actual results for the product for April: Actual output 7,400unitsRaw materials purchased 65,400litersActual price of raw materials$5.70per literRaw materials used in production 59,210liters The direct materials purchases variance is computed when the materials are purchased. The raw materials price variance for the month is closest to: $41,447 F $41,447 U $45,780 U $45,780 F
$45,780 U Materials price variance = (AQ × AP) − (AQ × SP) = AQ × (AP − SP) = 65,400 liters × ($5.70 per liter − $5.00 per liter) = 65,400 liters × ($0.70 per liter) = $45,780 U
The raw materials price variance for the month is closest to: $45,780 F $41,447 U $41,447 F $45,780 U
$45,780 U Materials price variance = (AQ × AP) − (AQ × SP) = AQ × (AP − SP) = 65,400 liters × ($5.70 per liter − $5.00 per liter) = 65,400 liters × ($0.70 per liter) = $45,780 U
Juniper Company has provided the following data concerning its manufacturing costs and work in process inventories last month: Raw materials used in production $210,000 Direct labor 110,000 Manufacturing overhead 160,000 Beginning work in process inventory60,000 Ending work in process inventory90,000 The cost of goods manufactured for the month was: Multiple Choice $510,000 $450,000 $480,000 $630,000
$450,000
The cost of the raw materials used in production for the month was: $455,000 $485,000 $460,000 $400,000
$460,000 Beginning raw materials inventory$55,000 Add: Purchases of raw materials 430,000 Raw materials available for use 485,000 Deduct: Ending raw materials inventory 25,000 Raw materials used in production$460,000
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for August is: $580 U $640 F $580 F $640 U
$580 U Variable overhead rate variance = (AH × AR) − (AH × SR) = ($7,540) − (1,160 hours × $6.00 per hour) = $7,540 − $6,960 = $580 U
The labor rate variance for May is: $6,460 U $6,118 F $6,460 F $6,118 U
$6,118 F
Lester Company has a single product. The selling price is $55 and the variable cost is $33.00 per unit. The company's fixed expense is $275,000 per month. What is the company's break-even in sales dollars? (Do not round intermediate calculations.) $458,333 $412,500 $605,000 $687,500
$687,500 Unit contribution margin = Unit selling price of $55 - Unit variable expenses of $33.00 = $22.00Contribution margin ratio = Unit contribution margin of $22.00 ÷ Unit selling price of $55 = 0.40 or 40% Dollar sales to break even = Fixed expenses of $275,000 ÷ CM ratio of 0.40 = $687,500
Mundes Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in its Painting Department consisted of 2,000 units that were 60% complete with respect to materials and 40% complete with respect to conversion costs. The cost of the beginning work in process inventory in the department was recorded as $8,800. During the period, 8,000 units were completed and transferred on to the next department. The costs per equivalent unit for the period were $4.00 for material and $5.00 for conversion costs. The cost of units transferred out during the month was: $40,000 $72,000 $63,200 $80,800
$72,000
What is the variable overhead rate variance for the month? $768 U $2,724 U $3,492 U $840 F
$840 F Variable overhead rate variance = (AH × AR) - (AH × SR) = $40,740 - (2,100 hours × $19.80 per hour) = $40,740 - $41,580 = $840 F
Parker Company has provided the following data for the most recent year: net operating income, $48,000; fixed expense, $39,000; sales, $290,000; and CM ratio, 30%. What is the company's total contribution margin? $48,000 $242,000 $251,000 $87,000
$87,000 Sales$290,000 CM ratio×.30 Contribution margin$87,000
Last year, Barker Company's sales were $249,000, its fixed costs were $54,500, and its variable costs were $2 per unit. During the year, 80,900 units were sold. The contribution margin was: $208,550 $32,700 $249,000 $87,200
$87,200 Sales $249,000 Less variable cost: 80,900 units × $2 per unit = 161,800 Contribution margin $87,200
What is the labor efficiency variance for the month? $11,095 F $9,955 F $9,790 F $11,095 U
$9,955 F SH = 500 units × 8.7 hours per unit = 4,350 hours Labor efficiency variance = (AH - SH) × SR = (3,800 hours - 4,350 hours) × $18.10 per hour = (-550 hours) × $18.10 per hour = $9,955 F
The labor rate variance for the month is closest to: $920 U $1,020 U $1,020 F $920 F
$920 U Labor rate variance = (AH × AR) − (AH × SR) = AH × (AR - SR) = 2,300 hours × ($21.70 per hour - $21.30 per hour) = 2,300 hours × ($0.40 per hour) = $920 U
How many units are in ending work in process inventory in the first processing department at the end of the month? 1,900 900 7,700 1,100
1900 Units in ending work in process = Units in beginning work in process + Units started into production - Units transferred to the next department = 800 + 8,500 -7,400 = 1,900
Lester Company has a single product. The selling price is $48 and the variable cost is $36 per unit. The company's fixed expense is $192,000 per month. What is the company's contribution margin ratio? 12% 33% 75% 25%
25% Contribution margin ratio = Unit contribution margin of $12 ÷ Unit selling price of $48 = 0.25 or 25%
Astair, Inc. reported sales of $7,638,000 for the month and incurred variable expenses totaling $5,386,800 and fixed expenses totaling $1,528,800. The company has no beginning or ending inventories. A total of 80,400 units were produced and sold last month. What is the company's degree of operating leverage? 2.12 1.47 3.39 3.12
3.12 The company's degree of operating leverage is determined as follows. Degree of operating leverage = Contribution margin ÷ Net operating income Degree of operating leverage = $2,251,200 ÷ $722,400 = 3.12
Parker Company has provided the following data for the most recent year: net operating income, $36,000; fixed expense, $79,000; sales, $230,000; and CM ratio, 50%.What is the company's degree of operating leverage? 2.00 3.19 6.39 1.31
3.19 Contribution margin$115,000 Net operating income÷ $36,000 Operating leverage 3.19
The Assembly Department started the month with 24,000 units in its beginning work in process inventory. An additional 309,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 29,000 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month? 333,000 304,000 314,000 362,000
304,000 Units completed and transferred out = Units in beginning work in process inventory + Units started into production or transferred in - Units in ending work in process inventory Units completed and transferred out = 24,000 + 309,000 - 29,000 = 304,000
Parker Company has provided the following data for the most recent year: net operating income, $36,000; fixed expense, $79,000; sales, $230,000; and CM ratio, 50%. The margin of safety in percentage form is: (Round your intermediate and final answers to the nearest whole number.) 50% 69% 50% 31%
31% Dollar sales to break even = Fixed expenses of $79,000 ÷ CM ratio of 0.50 = $158,000 Margin of safety in dollars = Actual sales of $230,000 - Break even sales of $158,000 = $72,000 Margin of safety percentage = Margin of safety of $72,000 ÷ Actual sales of $230,000 = 31%
What were the equivalent units for conversion costs in the Lubricating Department for October? 29,200 33,280 31,780 32,200
33,280 Weighted-average method ConversionUnits transferred to the next department 32,200 Ending work in process: Conversion: 1,800 units × 60% 1,080 Equivalent units of production 33,280
If sales increase from $416,000 to $480,480, and if the degree of operating leverage is 4, net operating income should increase by: (Do not round intermediate calculations.) 31.00% 54.00% 15.50% 62.00%
62.00%
Herman Corp. has two products, A and B, with the following total sales and total variable costs: (Round your final answer to the nearest whole percent.) Product A Product B Sales$10,800 $32,000 Variable expenses$4,320 $9,600 What is the overall contribution margin ratio? 78% 33% 67% 90%
67%
Fabert Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 16,000 units in its beginning work in process inventory that were 40% complete with respect to conversion costs. An additional 60,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. During the month 65,000 units were completed in the Assembly Department and transferred to the next processing department. There were 11,000 units in the ending work in process inventory of the Assembly Department that were 50% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month? 65,000 55,000 64,100 70,500
70,500
Hiassen Company's predetermined overhead rate is based on direct labor costs. The company's Work in process inventory account has a balance of $4,856, which relates to the one job that was in process at the end of an accounting period. The related job cost sheet includes total charges of $1,176 for direct materials and $2,000 for direct labor. The company's predetermined overhead rate, as a percentage of direct labor costs, must be: 70%. 84%. 24%. 42%.
84% First, determine the amount of manufacturing overhead applied to the uncompleted job(s) as follows.
Astair, Inc. reported sales of $8,110,000 for the month and incurred variable expenses totaling $4,541,600 and fixed expenses totaling $2,068,000. The company has no beginning or ending inventories. A total of 81,100 units were produced and sold last month. How many units would the company have to sell to achieve a desired profit of $1,852,400? 123,200 units 89,100 units 47,000 units 128,100 units
89,100 units First, determine the contribution margin (CM) per unit as follows. Total contribution margin/Number of units sold = CM per unit $3,568,400/81,100 = $44 per unit Then, the total unit sales required to achieve the desired targeted profit is determined as follows. Break-even point in units = (Fixed expenses + Desired targeted profit) ÷ CM per unit Break-even point (in units) = ($2,068,000 + $1,852,400) ÷ $44 per unit = 89,100 units
Lester Company has a single product. The selling price is $45 and the variable cost is $30 per unit. The company's fixed expense is $142,500 per month. How many units would the company have to sell to break-even? 4,100 units 11,567 units 9,500 units 6,300 units
9,500 units Unit contribution margin = Unit selling price of $45 - Unit variable expenses of $30 = $15 Unit sales to break even = Target profit of $142,500 ÷ Unit CM of $15 = 9,500 units
Which of the following statements is (are) true? D. All of the above. A. Companies that produce many different products or services would use job-order costing systems. C. Costs are traced to departments and then allocated to units of product when job-order costing is used. B. Job-order costing systems cannot be used by service firms.
A. Companies that produce many different products or services would use job-order costing systems.
All of the following are product costs for financial reporting except: Advertising Rent on factory space Indirect materials Direct labor
Advertising
Production order processing is an example of a: Organization-sustaining activity. Unit-level activity. Batch-level activity. Product-level activity.
Batch-level activity--- performed each time a batch is handled or processed
T/F A job-order costing system would be best suited for production of a large quantity of a homogeneous product.
False
T/F If demand is insufficient to keep everyone busy and workers are not laid off, a favorable (F) labor efficiency variance often will be a result.
False
T/F In activity-based costing, as in traditional costing systems, manufacturing costs are not assigned to products.
False
T/F In process costing, the equivalent units computed for materials is generally the same as that computed for conversion costs.
False
T/F Organization-sustaining activities relate to specific customers and are not tied to any specific products.
False
T/F The labor rate variance measures the difference between the actual hourly rate and the standard hourly rate, multiplied by the standard hours allowed for the actual output.
False
T/F Unit-level activities are performed each time a batch is handled or processed.
False
T/F When combining activities in an activity-based costing system, batch-level activities should be combined with unit-level activities whenever possible.
False
T/F When materials are purchased in a process costing system, a work in process account is debited with the cost of the materials.
False
Marino Company is currently selling 10,700 units of its product per month at $17 per unit for total monthly sales of $181,900. The company's variable expenses are $8 per unit and its monthly fixed expenses total $10,700. An increase in the advertising budget of $4,700 is expected to increase its monthly sales by 1,700 units for total monthly sales of $210,800. This proposal will cause net operating income to: Increase by $10,600 Decrease by $10,600 Decrease by $15,300 Increase by $21,200
Increase by $10,600 Increase in sales of $28,900 (or $210,800 - $181,900) - Increase in variable costs of $13,600 (or 1,700 × $8 per unit) - Increase in fixed costs of $4,700 = Increase in net operating income of $10,600
Which of the following costs is not a period cost? Indirect materials Advertising Sales commissions Administrative salaries Shipping costs of finished goods
Indirect materials
Which of the following would be considered an indirect cost? Lubricants for a machine Wages for servers in a restaurant Manager's salary The cost of wood for the production of furniture
Lubricants for a machine
Which of the following costs is not part of overhead costs? Sales commissions Salary for supervisor Lubrication Salary for factory forklift operator
Sales commissions
Which of the following would be considered a direct cost? Lubricants for a machine The cost of wood for the production of furniture Manager's salary Wages for servers in a restaurant
The cost of wood for the production of furniture
T/F : A traditional cost system is generally easier to set up and run than an activity-based costing system.
True
T/F In calculating cost per equivalent unit under the weighted-average method, prior period costs are combined with current period costs.
True
T/F Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances.
True
T/F The labor efficiency variance is labeled favorable (F) if the actual hours used is less than the standard hours allowed for the actual output.
True
T/F The units in beginning work in process inventory plus the units started into production must equal the units transferred out of the department plus the units in ending work in process inventory.
True
T/F When a company shifts from a traditional cost system in which manufacturing overhead is applied based on direct labor-hours to an activity-based costing system with batch-level and product-level costs, the unit product costs of high volume products typically decrease whereas the unit product costs of low volume products typically increase.
True
T/F When the materials price variance is recorded at the time of purchase, raw materials are recorded as inventory at standard cost.
True
Jurden Company bases its predetermined overhead rates on machine-hours. At the beginning of the year, the company estimated $72,000 of manufacturing overhead and 40,000 machine-hours for the year. Actual manufacturing overhead for year amounted to $80,000 and the actual machine-hours totaled 42,000. Manufacturing overhead for the year was: (Round your intermediate calculations to 2 decimal places.) Overapplied by $8,000 Underapplied by $3,600 Underapplied by $4,400 Overapplied by $3,600
Underapplied by $4,400 The predetermined overhead rate is $72,000 ÷ 40,000 hours = $1.80 per hour.
All of the following statements are correct except: Within the relevant range, a change in activity results in a change in the per unit variable cost. A variable cost changes in total as activity changes but remains constant on a per unit basis over the relevant range. A cost that is classified as variable with respect to one measure of activity could be classified as fixed with respect to a different measure of activity. Within the relevant range, a change in activity results in a change in the per unit fixed cost.
Within the relevant range, a change in activity results in a change in the per unit variable cost.
Suppose $46,000 of raw materials is withdrawn from the storeroom to be used in production. Of this amount, $28,000 consists of direct materials and $18,000 consists of indirect materials. What account or accounts will be debited? Manufacturing overhead $28,000 and Work in process $18,000 Work in process $28,000 and Raw materials $18,000 Raw materials $28,000 and Manufacturing overhead $18,000 Work in process $28,000 and Manufacturing overhead $18,000
Work in process $28,000 and Manufacturing overhead $18,000 The journal entry would debit Work in process for 28,000, debit Manufacturing overhead for 18,000, and credit Raw materials for 46,000.
Suppose a total of $30,000 of overhead is applied to jobs. What account will be debited? Cost of goods sold $30,000 Manufacturing overhead $30,000 Finished goods $30,000 Work in process $30,000
Work in process $30,000 The journal entry would debit Work in process for $30,000 and credit Manufacturing overhead for $30,000.
The ending Finished goods account balance is determined by adding the beginning balance to the: cost of goods sold and then subtracting the cost of goods manufactured. cost of goods manufactured and then subtracting the cost of goods sold. direct materials, direct labor, and overhead applied. actual amount of overhead and the subtracting the amount of overhead applied.
cost of goods manufactured and then subtracting the cost of goods sold.
If the activity level increases, one would expect the fixed cost per unit to: increase none of these decrease remain unchanged
decrease
In multiple product companies, a shift in the sales mix from less profitable products to more profitable products will cause the company's break-even point to: none of these increase not change decrease
decrease---- shift to more profitable products would result in an increase in the overall CM ratio. Thus, fewer sales would be needed to cover the fixed costs and the break-even would therefore decrease.
If the activity level drops by 12%, variable costs should: drop in total by 12% decrease per unit cost of product increase per unit cost of product remain constant in total
drop in total by 12% By definition, total variable cost changes in proportion to changes in the activity level.
A long-established practice in industry is to determine the predetermined overhead rate as follows: estimated total manufacturing overhead cost divided by estimated or budgeted activity at capacity. estimated total manufacturing overhead cost at capacity divided by estimated or budgeted activity. estimated total manufacturing overhead cost divided by estimated or budgeted activity. estimated total manufacturing overhead cost at capacity divided by estimated or budgeted activity at capacity.
estimated total manufacturing overhead cost divided by estimated or budgeted activity. Determining the predetermined overhead rate by dividing estimated total manufacturing overhead cost by estimated or budgeted activity is a long-established practice in industry.
The cost of warranty repairs is an example of: internal failure cost appraisal cost prevention cost external failure cost
external failure cost
Redford, Inc. has provided the following data: Sales price $205 per unit Sales 6,250 units Fixed cost $305,000 Variable cost $110 per unit If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will: increase by $59,375. increase by $120,375. decrease by $61,000. increase by $409,125.
increase by $120,375.
Traditionally, the predetermined overhead rate is based on the estimated total amount of the allocation base for the next year. If demand falls due to a recession or other reason, the estimated total amount of the allocation base: is likely to increase. is likely to stay the same. is likely to decrease. may change in any manner.
is likely to decrease. If demand falls due to a recession or other reason, the estimated total amount of the allocation base is likely to fall (or decrease).
The cost of quality training is an example of: external failure cost appraisal cost prevention cost internal failure cost
prevention cost
In a job-order costing system, the basic document for accumulating costs for a specific job is: the materials requisition form the Work in Process inventory account the labor time ticket the job cost sheet
the job cost sheet --- used to accumulate direct materials, direct labor, and overhead costs.
When switching from a traditional costing system to an activity-based costing system that contains some batch-level costs: the unit product costs of high volume products typically decrease and the unit product costs of low volume products typically increase. the unit product costs of both high and low volume products typically decrease. the unit product costs of both high and low volume products typically increase. the unit product costs of high volume products typically increase and the unit product costs of low volume products typically decrease.
the unit product costs of high volume products typically decrease and the unit product costs of low volume products typically increase.
An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because: under activity-based costing the sum of all product costs does not equal the total costs of the company. activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours. under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products. activity-based costing has not been approved by the United Nation's International Accounting Board.
under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.
Unit product cost information is used for: determining nonmanufacturing costs. valuing unsold units in ending inventory and for determining cost of goods sold. raw materials used in production. manufacturing overhead costs.
valuing unsold units in ending inventory and for determining cost of goods sold.
A process costing system is employed in those situations where: where manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis. full or absorption cost approach is not employed. many different products, jobs, or batches of production are being produced each period. a service is performed such as in a law firm or an accounting firm.
where manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis.
