ACCT 302 - Exam 1 study guide
The budgeted indirect-cost rate is calculated ______
-at the beginning of the year
The plant has capacity for 5,000 tables and is considering expanding production to 5,000 tables. What is the total cost of producing 5,000 tables? Buildz Manufacturing currently produces 3000 tables per month. The following per unit data for 3000 tables apply for sales to regular customers: Direct materials - $70 Direct manufacturing labor 18 Variable manufacturing overhead 19 Fixed manufacturing overhead - 38 Total manufacturing costs - $145
= DM + Labor + overhead = 70+18+19= 107 *5000 = $535,000 Total fixed manuf overhead for 3000 = 38*3000= $114,000 = $535,000 + $114,000 = $649,000
The actual amount of manufacturing overhead costs incurred in October 2018 totals ________. Better Products Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirectcost rate of $20 per direct labor hour. The following data are obtained from the accounting records for October 2018: Direct materials - $370,000 Direct labor ( hours @ /hour) - 48,000 Indirect labor - 23,000 Plant facility rent - 59,000 Depreciation on plant machinery and equipment - 37,000 Sales commissions - 11,00 Administrative expenses 25,000
Actual amount of manufacturing overhead costs incurred = Indirect labor + Plant facility rent +
How much should a client be billed in a normal costing system when 700 professional labor hours are used? Elite Stationary employs 20 full time employees and 10 trainees. Direct and indirect costs are applied on a professional labor hour basis that includes both employee and trainee hours. Following is information for 2018: Indirect costs - B-$250,000 A-400,000 Annual salary of each employee - B-200,000 A-250,000 Annual salary of each trainee - B-40,000 A-45,000 Total professional labor hours - B-40,000 dlh A-50,000 dlh
Actual annual salary of 20 full time employees = 250,000 * 20 = 5,000,000 Actual annual salary of 10 trainees = 45,000 * 10 = 450,000 Total actual salary = 5,450,000 Actual per hour salary = Total actual salary (5,450,000) / total actual professional hour (50,000) = 109 per hour Budgeted indirect cost per hour = budgeted indirect costs (250,000) / total budgeted professional hours (40,000) = 6.25 Solution: Clients to be billed = (actual per hour salary + budgeted indirect cost per hour) * hours used = (109 + 6.25) * (700) = 80,675
For June 2018, manufacturing overhead is ________. Franklin Inc. manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect cost rate of $20 per direct labor hour. The following data are obtained from the accounting records for June 2018: Direct materials - $150,000 Direct labor (4800 hours @ /$9 hour) - 43,200 Indirect labor - 16,000 Plant facility rent - 32,000 Depreciation on plant machinery and equipment - 27,500 Sales commissions - 20,000 Administrative expenses - 34,000
Actual manufacturing overhead costs = Indirect labor + plant facility rent + depreciation on plant machinery and equipment Total actual manufacturing overhead = 16,000 + 32,000 + 27,500 = 75,500 B- Direct labor hours - 4800 hours C- Overhead application rate - $20 D= B * C = 4800 * 20 = 96,000 E= D-A = overapplied (underapplied) overheads = $20,500
Calculate the profit earned on 48 units if each unit sells for $8,500 X Industries manufactures 3D printers. For each unit, $2,500 of direct material is used and there is $2,100 of direct manufacturing labor at $10 per hour. Manufacturing overhead is applied at $15 per direct manufacturing labor hour
Calc of Cost - Direct materials + direct labor + manuf overhead (direct labor / $ direct manuf labor per hour) * (per direct manufacturing labor hour.) Cost of 1 printer = 2500 + 2100 + (2100/10)*15 = $7,750 Sales = 48 units * $8,500 = 408,000 Cost of 48 printers = 372,000 Profit earned = 408,000 - 372,000 = 36,000
If sales reduce to half of the amount in the next month, what is the projected operating income? Wonderful Products Manufacturing Corp. provided the following information for last month: Sales - $50,000 Variable costs - 19,000 Fixed costs - 10,000 Operating income - $21,000
Calculate Sales at half = $50,000 * .50 = $25,000 Less Variable costs at half = 19,000 * .50 = 9,500 Less Fixed costs = 10,000 Equals Operating Income = $5,500
What are the inventoriable costs per unit associated with Product FGS1156? Puritan Apparels is a clothing manufacturer. Unit costs associated with one of its products, Product FGS1156, are as follows: Direct materials - $160 Direct manufacturing labor - 50 Variable manufacturing overhead - 25 Fixed manufacturing overhead - 33 Sales commissions (2% of sales) - 12 Administrative salaries - 27 Total $307
Calculation of inventoriable cost per unit: Direct materials ($160) + Direct manuf Labor (50) + variable manuf Overhead (25) + fixed manuf overhead (33) = $268
Lancelot Manufacturing is a small textile manufacturer using machine hours as the single indirect cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Direct materials Company-$60,000 Case high school job- $2,400 Direct labor Company-15,000 Case high school job-600 Manufacturing overhead costs Company-50,000 Case high school job- Machine Hours Company- 100,000 Case high school job-1,000
Calculation of total manufacturing cost of the Case High School Job What are the total manufacturing costs of this job? Total manuf. Cost s= Direct materials + direct labor + manuf overhead (Case high school job machine-hours * Single indirect cost) = 2400+600+ (1000*.50) = 3,500 Single Indirect Cost rate = Total manufacturing overhead cost for the company / Total Machine hours = 50,000 / 100,000 = .50
What is the cost of goods manufactured for 2018? Beginning finished good, 1/1/2018 - $90,000 Ending finished goods, 12/31/2018 - 70,000 Cost of goods sold - 307,000 Sales revenue - 457,000 Operating expenses - 99,000
Cost of Goods Sold = Beginning Inventory + Cost of goods Manufatcured - Ending Inventory Cost of goods Manufactured = Cost of Goods Sold + Ending Inventory - Beginning finished good COGS = 90,000 + COGM (287,000) - 70,000 = $307,000 COGM = 307,000 + 70,000 - 90,000 = $287,000
What is All Rite Manufacturing's cost of goods sold? All Rite Manufacturing reported the following: Revenue - $460,000 Beginning inventory of direct materials, January 1, 2015 - 29,000 Purchases of direct materials - 154,000 Ending inventory of direct materials, December 31, 2015 - 19,000 Direct manufacturing labor - 23,000 Indirect manufacturing costs - 47,000 Beginning inventory of finished goods, January 1, 2015 - 49,000 Cost of goods manufactured - 234,000 Ending inventory of finished goods, December 31, 2015 - 41,000 Operating costs - 157,000
Cost of goods sold = Beginning finished goods + Cost of goods manufactured - Ending finished goods COGS = (49,000 + 234,000) - (41,000) = $242,000
The plant has a capacity for 5,000 bicycles and is considering expanding production to 4,000 bicycles. What is the per-unit cost of producing 4,000 bicycles? Ridez Manufacturing currently produces 3000 bicycles per month. The following per unit data apply for sales to regular customers: Direct materials - $52 Direct manufacturing labor - 11 Variable manufacturing overhead - 14 Fixed manufacturing overhead - 16 Total manufacturing costs - $93
Direct Materials + Direct Manuf Labor + Variable Manuf Labor + fixed manuf Labor (Variable manuf. Overhead * 3000) / (4000) = 52+11+14 = 77 + (16 *3000)/4000= 89
A manufacturer utilizes three separate indirect cost pools. Which of the following is true?
Each indirect cost pool utilizes a separate cost-allocation rate
How would the daily profit be affected if the daily volume of sales drops by 20%? Rally Synthesis Inc. manufactures and sells 90 bottles per day. Fixed costs are $21,000 and the variable costs for manufacturing 90 bottles are $27,000. Each bottle is sold for $1,400.
Fixed = 21,000 Variable = 27,000 Variable cost per bottle = $27,000(VC)/90=300 per bottle Selling price = $1,400 Contribution Margin = 1400-300 = 1100 Profit when 90 bottles sold in a day = 90*1400 - $27,000(VC) =$99,000 When sales drop by 20%, new sales = 90*.80=72 New Profit = 72*1400 - $21,000(FC)= $79,800 Decrease in profit: 105000-79,8900=25,200
Manufacturing overhead cost estimates for this special-order total _______ Manton Manufacturing applies manufacturing overhead costs to products at a budgeted indirect cost rate of $75 per direct manufacturing labor hour. A retail outlet has requested a bid on a special order of the Toy Bear product. Estimates for this order include: Direct materials of $53,000 ; 690 direct manufacturing labor hours at $20 per hour; and a 40% markup rate on total manufacturing costs.
Indirect cost cost rate $75 per direct labour hour = Indirect cost rate per direct labor hour * direct manuf. Labor hours = 75* 690 = 51,750
The ending balance of work in process inventory is ________. River Falls Manufacturing uses a normal cost system and had the following data available for 2018: Direct materials purchased on account - $153,000 Direct materials requisitioned - 89,000 Direct labor cost incurred - 126,000 Factory overhead incurred - 141,000 Cost of goods completed - 286,000 Cost of goods sold - 246,000 Beginning direct materials inventory - 31,000 Beginning WIP inventory - 65,0000 Beginning finished goods inventory - 51,000 Overhead application rate, as a percent of direct labor costs - 135%
Opening work in process + direct materials requisition + direct labor + manufacturing overheads - COGM = 65,000+89,0000 + (126,000 *135%) - 286,000 = 38,100
What is Expert's operating income? Expert Manufacturing reported the following: Revenue - $460,000 Beginning inventory of direct materials, January 1, 2015 - 28,000 Purchases of direct materials - 15,900 Ending inventory of direct materials, December 31, 2015 - 11,000 Direct manufacturing labor - 27,000 Indirect manufacturing costs - 43,000 Beginning inventory of finished goods, January 1, 2015 - 42,000 Cost of goods manufactured - 102,900 Ending inventory of finished goods, December 31, 2015 - 46,000 Operating costs - 157,000
Operating income = [(Revenue - COGS (Beg finished goods + COGM - Ending finished goods)] = Gross profit - operating cost = operating Income = $460,000 - (42,000+102,900-46,000) = 361,100 - 157,000 = $204,100
A single indirect cost rate based on direct manufacturing labor hours for the entire plant is ________. Sky High Company has two departments, X and Y. The following estimates are for the coming year: Direct manufacturing labor hours X-50,000 Y-60,000 Machine Hours X-60,000 Y-50,000 Manufacturing overhead X-300,000 Y-360,000
Single indirect cost rate = Total manufacturing overhead / Total direct manufacturing labor-hours = (300,000+330,000)/(60,000+50,000)= 5.72 ~ $6.00
The plant has a capacity for 4000 tires and is considering expanding production to 3000 tires. What is the total cost of producing 3000 tires? Swansea Manufacturing currently produces 2000 tires per month. The following per unit data for 2000 tires apply for sales to regular customers: Direct materials - $34 Direct manufacturing labor - 6 Variable manufacturing overhead - 9 Fixed manufacturing overhead - 20 Total manufacturing costs - $69
TOTAL VARIABLE COST PER UNIT OF Tires = Material cost + labour cost + variable mfg overhead =34+6+9= 49 Total Variable cost for 3000 tires = 49 * 3000 = $147,000 TOTAL FIXED MANUFACTURING OVERHEAD FOR 1000 Tires = 20 * 2000 = $40,000 Total cost of producing 3000 tires = Variable cost + total fixed cost = $147,000 + $40,000 = $187,000
Which of the following is true with activity based cost accounting ?
The focus is on activities that account for a sizable fraction of indirect costs .
What are the actual direct cost rate and the actual indirect cost rate, respectively, per professional laborhour? Smith and Jones CPA firm employs 12 accountants and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: Indirect costs B- $250,000 A-$260,000 Annual Salary of each attorney B- $110,000 A-120,000 Annual Salary of Each paraprofessional B-34,000 A- 36,000 Total Professional labor - hours B- 25,000 A- 40,000
Total Actual direct costs= 12*120,000+10*36,000= 1,800,0000 Total Actual professional labor hours=60000dlh= 40,000 Actual direct-cost rate= Total direct cost/total professional labor hours = 1,800,0000/40,000= 45 Actual indirect-cost rate= Actual Total indirect cost/total professional labor hours = 260,000/40,000= 6.50
What is the percentage of the total fixed costs per unit associated with Product ORD105 with respect to total cost? The East Company manufactures several different products. Unit costs associated with Product ORD105 are as follows: Direct materials - 86 Direct manufacturing labor - 30 Variable manufacturing overhead - 26 Fixed manufacturing overhead - 12 Sales commissions (2% of sales) - 22 Administrative salaries - 24 Total cost per unit $200
Total Fixed Cost per unit = Fixed Manufacturing Overhead + Administrative Salaries = $12 + 24 = $36 Total Fixed Cost per unit / Total Cost per unit = $36/200 = .18 = 18%
What are the indirect nonmanufacturing variable costs per unit associated with Product DCF130? Puritan Apparels is a clothing retailer. Unit costs associated with one of its products, Product DCF 130, are as follows: Direct materials - $160 Direct manufacturing labor - 40 Variable manufacturing overhead - 35 Fixed manufacturing overhead - 38 Sales commissions (2% of sales) - 9 Administrative salaries - 16 Total - 298
Total cost (298) - direct material (160) - direct manuf. Labor (40) - Variable Manuf overhead (35) - fixed manuf overhead (38) = Non Manuf Cost (25) - Fixed Non manuf. Cost (16) = 9 Also equal to sales commission.
What is the most likely behavior of total manufacturing costs and unit manufacturing costs given this change? Atlas Manufacturing produces a unique valve, and has the capacity to produce 50,000 valves annually. Currently Atlas produces 40,000 valves and is thinking about increasing production to 45,000 valves next year.
Total manufacturing costs will increase and unit manufacturing costs will also decrease.
Estimated total product costs for this special order equal ________. Crandle Corp. applies manufacturing overhead costs to products at a budgeted indirect cost rate of $65 per direct manufacturing labor hour. A retail outlet has requested a bid on a special order of a necklace. Estimates for this order include: Direct materials of $37,000;450 direct manufacturing labor hours at $20 per hour; and a 30% markup rate on total manufacturing costs.
Total manufacturing overhead cost = Direct materials + direct manuf labor hours (direct manuf labor hours * pay rate) + Manuf overhead cost (budgeted indirect cost rate per hour * direct manufacturing labor-hours) = 37,000 + (450*20) + (450*65) = 75,250
What are the period costs per unit associated with Product DCT121? Campus Apparels is a clothing maker. Unit costs associated with one of its products, Product DCT121, are as follows: Direct materials - $130 Direct manufacturing labor - 30 Variable manufacturing overhead - 65 Fixed manufacturing overhead - 38 Sales commissions (2% of sales) - 9 Administrative salaries - 19 Total - $291
Total period cost permit = Sales commission + administrative Salary = 9 + 19 = 28
When 24,000 units are produced, fixed costs are $21.00 per unit. Therefore, when 20,000 units are produced, fixed costs will ________.
Units Produced * cost per Unit = Total Unit fixed cost 24,000 * $21.00 = $504,000 Fixed cost per unit = Total Unit fixed cost / Hypothesized Units Produced = $504,000 / 20,000 = 25.2
What is the percentage of the total variable costs per unit associated with Product ORD105 with respect to total cost? The East Company manufactures several different products. Unit costs associated with Product ORD105 are as follows: Direct materials - 86 Direct manufacturing labor - 30 Variable manufacturing overhead - 26 Fixed manufacturing overhead - 12 Sales commissions (2% of sales) - 22 Administrative salaries - 24 Total $200
Variable cost per unit = Direct material + Direct manufacturing labor + Variable manufacturing overhead + sales commission = 86 + 30 + 26 + 22 = $164 Total cost per unit = $200 Percentage of variable cost per unit to Total cost per unit = Variable cost per unit/Total cost per unit = .82% = 82%
When 25,000 units are produced, variable costs are $13.00 per unit. Therefore, when 20,000 units are produced ________.
Variable costs remain the same for any number of units produced. - $13.00 per unit
What are the variable manufacturing costs per unit associated with Product AHF 130? Puritan Apparels is a clothing retailer. Unit costs associated with one of its products, Product AHF 130, are as follows: Direct materials - $100 Direct manufacturing labor - 30 Variable manufacturing overhead - 45 Fixed manufacturing overhead - 34 Sales commissions (2% of sales) - 11 Administrative salaries - 16 Total - $236
Variable manufacturing costs per unit associated = ($100) DM + (30) DML + (45) Variable Manuf Overhead = $175
Inventoriable costs are costs of a product that are considered _______
assets in a company's balance sheet when the costs are incurred and that are expensed as cost of goods sold only when the product is sold
When a normal costing system is used, clients using proportionately more full time employees than trainees will ________.
be under billed for actual resources used
For a manufacturing company, indirect manufacturing costs would be included in ________.
both work in process inventory and finished goods inventory
For a manufacturing company, direct material costs may be included in ________.
direct materials inventory, working process inventory, and finished goods inventory accounts
The balance sheet of a manufacturing sector company would report _____.
direct materials inventory, working process inventory, and finished goods inventory accounts
For a company which produces its products in batches, the CEO's salary is a(n) ________ cost.
facility sustaining
Which of the following is a direct manufacturing cost?
fringe benefits paid to machine operators
The difference between actual costing and normal costing is
normal costing uses budgeted indirect-costs
For a manufacturing company, direct labor costs would be included in ________.
only in both work in process inventory and finished goods inventory
