ACG Exam 2

Damon purchased a $140 ticket to a December game of the Jacksonville Jaguars in July. Parking for the game was expected to cost approximately $21, and Damon would probably spend another $11 for food. Is it now December, the Jaguars have had a miserable season, and the weather for the game looks terrible. Damon is thinking of skipping the game and going out to eat with friends. Damon expects the dinner to cost $100. The amount of sunk cost that should influence Damon's decision to hang out with friends is:

$0

ABC Inc., manufactures clear and tinted sport glasses. The manufacturing of clear glasses takes 45,000 direct labor hours and involves 1,700 parts and 115 inspections. The manufacturing of tinted glasses takes 115,000 direct labor hours and involves 1,400 parts and 450 inspections. The traditional method applies $560,000 of overhead on the basis of direct labor hours. What is the amount of overhead per direct labor hour applied to the clear glass products? *The overhead rate = $560,000/(45,000 + 115,000) = $3.50 per direct labor hour. The labor applied to the clear product = $3.50 per direct labor hour × 45,000 direct labor hours.

$157,500

ABC Corp., which has excess capacity, received a special order for 4,669 units at a price of $16 per unit. Currently, production and sales are anticipated to be 12,000 units without considering the special order. The budget information related to the current year is as follows: Sales$252,000 Less: Cost of goods sold 180,000 Gross margin$72,000 The cost of goods sold includes $36,000 of fixed manufacturing costs. If the special order is accepted, the company's income will increase by: Enter your responses without a $ sign or decimal, i.e., 14000. Round to the nearest dollar. *(COGS- Fixed Manufacturing Costs)/ anticipated units = * current unit price - Answer = * Answer x special order units

18676

Direct material costs $4 per unit, direct labor costs $8 per unit, and overhead is applied at the rate of 100% of the direct labor cost. What is the value of the inventory transferred to the next department if beginning inventory was 2,000 units; 9,000 units were started; and 1,000 units were in ending inventory? Enter your response rounded to the nearest whole number. Do not enter a comma or $ sign.

200,000

A company calculated the predetermined overhead based on an estimated overhead of $70,000, and the activity for the cost driver was estimated as 2,500 hours. If product A utilized 1,241 hours and product B utilized 1,039 hours, what was the total amount of overhead assigned to the products? Enter your response rounded to the nearest whole number and without a comma or $ sign.

63840

ABC Co., currently makes 10,000 units of a product that has created a number of manufacturing problems. ABC's costs are as follows: Manufacturing Costs: Variable$540,000 Fixed 180,000Allocated corporate administrative costs 60,000 If ABC were to discontinue production, fixed manufacturing costs would be reduced by 84%. The relevant cost of deciding whether the division should purchase the product from an outside supplier is: Enter your responses without a $ sign or decimal, i.e., 14000. Round to the nearest dollar. * relevant cost = variable costs + reduced fixed manufacturing costs

691200

The initial processing department had a beginning inventory of 769 units and an ending inventory of 1,362 units, and it started 9,500 units into production. How many were transferred out to the next department? Enter your response rounded to the nearest whole number and without a comma or $ sign.

8,907

Consider the following statements regarding traditional costing systems. Which of the statements is the most accurate?

Overhead costs are applied to products on the basis of volume-related measures and traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements

Activity-based costing systems:

frequently increase the overhead allocation to at least one product while decreasing the overhead allocation to at least one other product

Activity-based costing systems:

often reveal products that were under- or over-costed by traditional costing systems

Predetermined MOH rate formula

total budgeted MOH cost/ total amount of budgeted cost drive

Which statement is correct?

Activity-based cost systems are more accurate than traditional cost systems.

What do we compared when we are seeing if overhead was under or over applied

Applied overhead vs actual overhead

ABC Company is trying to decide whether to replace an old machine with a new one. The following data were analyzed. Cost savings per year on new machine $100,000 New machine cost $150,000 Revenue from sale of old machine $10,000 Book value of old machine $25,000 The purchase of a new machine would have what effect on net income?

Net decrease of $40,000

Which of the following would activity-based costing most likely lead to?

Raising the sale price of low-colume products

The Shoe Department at the Knights Department Store is being considered for closure. The following information related to shoe department activity: Sales revenue $350,000 Variable costs: Cost of goods sold 280,000 Sales commissions 30,000 Fixed operating costs 90,000 If 70% of the fixed operating costs are avoidable, should the shoe department be closed?

Yes, Knights would be better off by $23,000

The Shoe Department at the Knights Department Store is being considered for closure. The following information related to shoe department activity: Sales revenue $352,000 Variable costs: Cost of goods sold 282,000 Sales commissions 32,000 Fixed operating costs 92,000 If 80% of the fixed operating costs are avoidable, should the shoe department be closed?

Yes, Knights would be better off by $35,600

A job order costing system is most likely used by which of the following?

an accounting firm specializing in tax returns

In activity-based costing system, direct materials used would typically be classified as a:

unit-level cost

The controller for Knights Co. estimates that the company's fixed overhead is $160,000 per year. They have also determined that the variable overhead is approximately $0.25 per unit. Since the company has s single product, overhead is applied on the basis of output units. What is the predetermined overhead per unit if the estimated output is 80,000 units?

$2.25

ABC Co. makes batches of custom novelty items or other companies to give away at career fairs. Job A11 consists of 2,000 pens that light up inside the pen base when used. In addition, a specialized logo is printed on the pens. Direct materials for these pens amount to $1,400; direct labor is $2,200; and manufacturing overhead is $1,800. Based on this information, what is the cost per pen for Job A11?

$2.70

ABC Co. makes batches of custom novelty items or other companies to give away at career fairs. Job A11 consists of 2,000 pens that light up inside the pen base when used. In addition, a specialized logo is printed on the pens. Direct materials for these pens amount to $1,500; direct labor is $2,800; and manufacturing overhead is $1,600. Based on this information, what is the cost per pen for Job A11?

$2.95

ABC Co. implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping. ABC determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped. The cost driver for this pool is the number of individual items that are inspected. The third cost pool is used for the general operations of the department, and the cost driver is the number of orders. Cost Pool Estimated Total Costs Cost Driver Estimated Annual Activity Inspection $220,000 Number items inspected 100,000 items General Operations $82,400 Number of orders 10,000 orders Packaging & Shipping $63,000 Number of boxes shipped 15,000 boxes During the period, 4,000 items were sold, reflecting 800 orders that were packed and shipped in 2,100 boxes. What amount is allocated to each box for packing and shipping?

$4.20

What is the difference between estimated, applied, and actual overhead

- Estimated is a prediction - Applied is that predicted rate x actual cost driver - Actual overhead is the actual cost of overhead when the bill comes in

ABC Company estimates its overhead to be $250,000. It expects to have 100,000 direct labor hours costing $2,500,000 in labor and utilizing 12,500 machine hours. Calculate the predetermined overhead rate using direct labor dollars. Enter your response with two decimals (i.e., 2.46) and without a $ sign or comma.

0.10

Match the concept to its correct description. 1. job order costing 2. predetermined overhead rate 3. process costing 4. under applied overhead 5. over applied overhead

1. the cost accounting system used by law firms 2. computes the overhead applied to each job 3. the cost accounting system used by pet food manufacturers 4. the result when the actual overhead is more than the amount assigned to each specific job 5. the result when the actual overhead is less than the amount assigned to each specific job

ABC Manufacturing uses activity-based costing. Each product consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information is as follows: Acitivity Allocation Base Cost Allocation Rate Materials handling Number of parts $0.09 Machine operations Number of hours $5.22 Assembling Number of parts $0.35 Packaging Number of completed products $2.00 What is the cost of materials handling per product? Enter your response with two decimals but without a comma or $ sign.

1.8

ABC Enterprises has been approached about providing a new service to its clients. The company will bill clients $193 per hour; the related hourly variable costs are $65, and the related fixed operating costs are $13. If all employees are currently working at full capacity on other client matters, the per-hour opportunity cost of being unable to provide this new service is: Enter your responses without a $ sign or decimal, i.e., 14000. Round to the nearest whole dollar. *per hour revenue - per hour variable cost

128

Direct material costs $2 per unit, direct labor costs $7 per unit, and overhead is applied at the rate of 100% of the direct labor cost. What is the value of the inventory transferred to the next department if beginning inventory was 2,000 units; 9,000 units were started; and 1,000 units were in ending inventory? Enter your response rounded to the nearest whole number. Do not enter a comma or $ sign.

160000

Fill in the missing items for the following inventories: Product A Product B Product C Beginning balance $14,200 $____$17,000 Ending balance $___ $28,000 16,000 Transferred in 44,000 79,500 ___ Transferred out 45,800 85,000 19,000 Enter your responses without a $ sign or decimal, i.e., 14000 *Inv Transferred out = Beg Inv + Inv Transferred in - End Inv

33500, 58200, 18000

Seashore Furniture has selected direct labor hours as its allocation base. The budgeted manufacturing overhead costs are $321,471 for products that are expected to use a total of 5,618 direct labor hours. What is the predetermined overhead rate? When entering your answer, round to the nearest dollar. Do not include commas or a $ sign (i.e., 24)

57

A company estimated 100,000 direct labor hours and $800,000 in overhead. The actual overhead was $805,100, and there were 99,900 direct labor hours. What is the predetermined overhead rate? How much was applied during the year?

8.00, 799200.00

Which of the following cost drivers would best be associated with the activity of a physician time in a medical clinic?

Physician minutes with a patient

Formula for applied overhead

Predetermined MOH rate x actual amount of cost driver

ABC Production manufactures products X and Y and has been applying overhead on the basis of direct labor hours. Product X is a high-volume product and relatively simplistic in nature. Product Y is a low-volume product that requires a variety of complex manufacturing procedures. What would an activity-based costing system likely disclose about products X and Y?

Product X was overcosted and product Y was undercosted

Party Supply is trying to decide whether or not to continue its costume segment. The information shown is available for Party Supply's business segments. Assume that neither the Direct fixed costs nor the Allocated common fixed costs may be eliminated but will be allocated to the two remaining segments. Costumes Party Supplies Floral Decorations Sales$160,000$110,000$210,000 Variable costs$84,000$50,000$120,000 Direct Fixed costs $50,000$20,000$25,000 Allocated Fixed costs $30,000$25,000$30,000 Net income$(4,000)$15,000$35,000 If the costumes segment is dropped, what change will occur to profit?

Profit will decrease by $76,000

A cost not relevant to deciding whether to purchase a new machine is:

The cost of the old machine

Which of the following product situations is better suited to job order costing than to process costing?

The costs are easily traced to a specific product.

Which of the following is a reason a company would implement activity-based costing?

They want to improve the data on which decisions are made.

Manufacturing overhead:

is a pool of indirect production costs that must somehow be attached to each unit manufactured

Which of the following is most likely to be a cost driver for a packaging and shipping activity?

number of orders

ABC Co.,is analyzing whether to expand operations by adding a new product line. Which of the following choices correctly identifies the costs that should be considered in this decision?

opportunity cost only

Factors in a decision problem that cannot be expressed in numerical terms are:

qualitative in nature

Which of the following is not a qualitative decision that should be considered in an outsourcing decision?

relevant costs

The cost of inventory owned by a company is considered a:

sunk cost

Which of the following types of companies would most likely use process costing?

textile manufacturer

Which if the following costs are relevant to a decision making situation?

the cost of special electrical wiring in an equipment acquisition decision