Midterms number 1 Answers

The following data pertains to activity and costs for two months: JuneJulyActivity level in units 10,000 11,000 Direct materials$17,000 $? Fixed factory rent 21,000 ? Other production costs 20,000 ? Total cost$58,000 $61,300 Assuming that these activity levels are within the relevant range, the other production costs for July were: (Round intermediate calculations to 2 decimal places.)

$21,600

Jared Beverage Corporation uses a process costing system to collect costs related to the production of its celery flavored cola. The cola is first processed in a Mixing Department and is then transferred out and finished up in the Bottling Department. The finished cases of cola are then transferred to Finished Goods Inventory. The following information relates to the company's two departments for the month of January: Mixing BottlingCases of cola in work in process, January 1 10,000 5,000 Cases of cola completed/transferred out during January 65,000 ? Cases of cola in work in process, January 31 4,000 7,000 How many cases of cola were completed and transferred to Finished Goods Inventory during January?

63,000

Kapanga Manufacturing Corporation uses a job-order costing system and started the month of October with a zero balance in its work in process and finished goods inventory accounts. During October, Kapanga worked on three jobs and incurred the following direct costs on those jobs: Job B18Job B19Job C11Direct materials$12,000 $25,000 $18,000 Direct labor$8,000 $10,000 $5,000 Kapanga applies manufacturing overhead at a rate of 150% of direct labor cost. During October, Kapanga completed Jobs B18 and B19 and sold Job B19. Required: How much is Kapanga's cost of goods manufactured for October?

Cost of goods manufactured for October $82,000

Malcolm Company uses a weighted-average process costing system. All materials at Malcolm are added at the beginning of the production process. The equivalent units for materials at Malcolm would be equal to the sum of:

units in beginning work in process and the units started.

Timchak Corporation reports that at an activity level of 9,900 units, its total variable cost is $919,116 and its total fixed cost is $259,974. What would be the total cost, both fixed and variable, at an activity level of 10,100 units? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

$1,197,658

Fisher Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. The following information about Fisher Corporation's Work in Process inventory account has been provided for the month of May: May 1 balance$26,000Debits During May: Direct Materials$40,000Direct Labor$50,000Manufacturing Overhead$37,500 During the month, Fisher Corporation's Work in Process inventory account was credited for $120,500, which represented the Cost of Goods Manufactured for the month. Only one job remained in process on May 31; this job had been charged with $9,600 of applied overhead cost. The amount of direct materials cost in the unfinished job would be:

$10,600

Branin Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $160,000, variable manufacturing overhead of $3.40 per direct labor- hour, and 80,000 direct labor-hours. The company has provided the following data concerning Job A578 which was recently completed: Total direct labor-hours 250Direct materials$715Direct labor cost$9,000 The total job cost for Job A578 is closest to: (Round your intermediate calculations to 2 decimal places.)

$11,065

Paparo Corporation has provided the following data from its activity-based costing system: Activity Cost PoolTotal CostTotal ActivityAssembly$846,04052,000machine-hoursProcessing orders$64,0561,700ordersInspection$102,4081,360inspection-hours Data concerning the company's product Q79Y appear below: Annual unit production and sales 450 Annual machine-hours 1,080 Annual number of orders 70 Annual inspection hours 20 Direct materials cost$44.00per unitDirect labor cost$41.03per unit According to the activity-based costing system, the average cost of product Q79Y is closest to:

$133.29 per unit

Gunes Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory were: Cost PercentCompleteMaterials costs$10,600 65% Conversion costs$12,800 30% A total of 8,500 units were started and 7,400 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: CostMaterials costs$142,100 Conversion costs$359,500 The ending inventory was 50% complete with respect to materials and 35% complete with respect to conversion costs. The cost per equivalent unit for materials for the month in the first processing department is closest to:

$18.29

Lysiak Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment depreciation and supervisory expense-are allocated to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation$47,000Supervisory expense$6,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools MachiningOrder FillingOtherEquipment depreciation0.600.100.30Supervisory expense0.600.200.20 In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: Activity: MHs (Machining)Orders (Order Filling)Product C96,900200Product U03,100800Total10,0001,000 What is the overhead cost assigned to Product C9 under activity-based costing?

$23,122

The controller of Hendershot Corporation estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below: Wall MirrorsSpecialty WindowsTotal expected units produced6,0003,000Total expected material moves500100Expected direct labor-hours per unit69 The total materials handling cost for the year is expected to be $6,123.60. If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the wall mirrors is closest to: (Do not round your intermediate calculations.)

$3,499

Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 79,000 machine-hours. The estimated variable manufacturing overhead was $7.38 per machine-hour and the estimated total fixed manufacturing overhead was $2,347,090. The predetermined overhead rate for the recently completed year was closest to:

$37.09 per machine-hour

The cost of electricity for running production equipment is classified as: Conversion costPeriod cost A)YesNo B)YesYes C)NoYes D)NoNo

Choice A

An income statement for Sam's Bookstore for the first quarter of the year is presented below: Sam's BookstoreIncome StatementFor Quarter Ended March 31Sales $900,000Cost of goods sold 630,000Gross margin 270,000Selling and administrative expenses Selling$100,000 Administration 104,000 204,000Net operating income $66,000 On average, a book sells for $50. Cost of Goods Sold varies directly with Sales. Variable selling expenses are $5 per book with the remaining selling expenses being fixed. The variable administrative expenses are 4% of sales with the remainder being fixed. Assume 20,000 books are sold during the second quarter and this activity is within the relevant range. Required: Calculate the company's expected contribution margin for the second quarter. (Input a negative contribution margin with a negative sign.)

Contribution Margin $160,000

In May direct labor was 60% of conversion cost. Manufacturing overhead for the month was $54,000 and the direct materials cost was $30,000.

Direct labor = 0.60 × Conversion cost Manufacturing overhead = $54,000 Conversion cost = Direct labor + Manufacturing overhead Conversion cost = Direct labor + $54,000 Conversion cost = (0.60 × Conversion cost) + $54,000 0.40 × Conversion cost = $54,000 Conversion cost = $54,000 ÷ 0.40 Conversion cost = $135,000 Direct labor = 0.60 × Conversion cost = 0.60 × $135,000 = $81,000 Direct Labor Cost for May = $81,000

Mccabe Corporation uses the weighted-average method in its process costing. The following data pertain to its Assembly Department for September. Percent Complete UnitsMaterialsConversionWork in process, September 11,50055%10%Units started into production during September8,900 Units completed during September and transferred tothe next department8,000 Work in process, September 302,40075%25% Required: Compute the equivalent units of production for both materials and conversion costs for the Assembly Department for September using the weighted-average method.

Equivalent units of production Materials:9,800 Conversion: 8,600

In the Schedule of Cost of Goods Sold, Cost of goods available for sale = Ending finished goods inventory + Cost of goods manufactured.

False

Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning BalanceEnding BalanceRaw materials$14,150$22,150Work in process$27,150$9,150Finished Goods$62,150$77,150 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,150 machine-hours and incur $241,995 in manufacturing overhead cost. The following transactions were recorded for the year: Raw materials purchased, $315,150. Raw materials used in production, $307,150 ($280,850 direct and $26,300 indirect). The following employee costs were incurred: direct labor, $377,150; indirect labor, $96,150; and administrative salaries, $172,150. The administrative salaries are for executive and accounting personnel. Selling costs, $147,150. Factory utility costs, $10,150. Depreciation for the year was $136,000 of which $120,300 is related to factory operations and $15,700 is related to selling, general, and administrative activities. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,030 machine-hours. Sales for the year totaled $1,259,000. Required: Was the overhead underapplied or overapplied? By how much?

Overhead underapplied $4,481

Vallin Manufacturing Corporation's beginning work in process inventory consisted of 8,000 units, 100% complete with respect to materials cost and 60% complete with respect to conversion costs. The total cost in the beginning inventory was $36,000. During the month, 40,000 units were transferred out. The equivalent unit cost was computed to be $2.50 for materials and $3.00 for conversion costs under the weighted-average method. Required: Calculate the total cost of units completed and transferred out.

Total cost of units completed and transferred out $220,000

A fixed cost is a cost whose cost per unit varies as the activity level rises and falls.

True

A traditional cost system is generally easier to set up and run than an activity-based costing system.

True

In activity-based costing, a product margin may exclude costs from some of the company's activity cost pools.

True

Job-order costing would be more likely to be used than process costing in situations where many different products or services are produced each period to customer specifications.

True

The costs attached to products that have been completed but not sold are included in ending inventory on the balance sheet.

True

Bosshart Inc. has provided the following data for the month of May. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. Work In ProcessFinished GoodsCost of Goods SoldTotalDirect materials$10,670 $12,000 $81,120 $103,790 Direct labor 11,630 15,000 101,400 128,030 Manufacturing overhead applied 9,680 9,680 68,640 88,000 Total$31,980 $36,680 $251,160 $319,820 Manufacturing overhead for the month was underapplied by $6,000. The Corporation allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the manufacturing overhead applied during the month in those accounts. The journal entry to record the allocation of any underapplied or overapplied manufacturing overhead for May would include the following:

debit to Work in Process of $660

Harnett Corporation has two manufacturing departments--Molding and Assembly. The company used the following data at the beginning of the period to calculate predetermined overhead rates: MoldingAssemblyTotalEstimated total machine-hours (MHs) 2,000 8,000 10,000Estimated total fixed manufacturing overhead cost$8,800$39,200$48,000Estimated variable manufacturing overhead cost per MH$1.50$3.00 During the period, the company started and completed two jobs--Job E and Job M. Data concerning those two jobs follow: Job EJob MDirect materials$13,900$7,800Direct labor cost$21,000$7,800Molding machine-hours 1,250 750Assembly machine-hours 1,250 6,750 Required: a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the total manufacturing cost assigned to Job E. (Do not round intermediate calculations.) b. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Calculate the total manufacturing cost assigned to Job E. (Do not round intermediate calculations.)

a.Total manufacturing cost assigned to Job E using a plantwide predetermined manufacturing overhead rate. $53,650 b.Total manufacturing assigned to job E using departmental predetermined overhead rates $52,150