Final Review

An intentional understatement of expected revenues or overstatement of expected expenses by managers in order to have a favorable performance evaluation is known as​ ________.

Budgetary Slack

Which of the following will be classified as a conversion​ cost?

depreciation on factory equipment

Because Activity−Based Costing considers the resources each product actually​ uses, it

results in product costs being calculated more accurately.

Which of the following is a focus of managerial​ accounting?

to provide information to business managers to assist them in controlling their business

The Refining Department of Crystal Cane​ Sugar, Inc. had 66,000 tons of sugar to account for in December. Of the 66,000 ​tons, 50,000 tons were completed and transferred to the Boiling​ Department, and the remaining 16,000 tons were 60​% complete. The materials required for production are added at the beginning of the process. Conversion costs are added equally throughout the refining process. The weighted−average method is used. Calculate the total equivalent units of production for conversion costs.

tons were completed and transferred + (Renaming tons x %complete) 50000 + (16000 x .6) = 59600

The Assembly Department of​ ByteSize, Inc., manufacturer of​ computers, incurred $260,000 in direct material costs and $80,000 in conversion costs. The equivalent units of production for direct materials and conversion costs are 1,000 and 600​, respectively. The weighted−average method is used. The cost per equivalent unit of production​ (EUP) for conversion costs is​ ________. (Round your answer to the nearest​ cent.)

80000 / 600 = 133.33

Which one of the following companies is most likely to use job order​ costing?

A law firm

Under process​ costing, the​ ________ account is credited to adjust for under allocated overhead costs. The perpetual inventory system is used.

Manufacturing overhead

Enlighten​ Services, Inc., a management consulting​ firm, has been using a single predetermined overhead allocation rate with direct labor hours as the allocation base to allocate overhead costs. The direct labor rate is $50 per hour. Miriam​ Levy, the president of​ Enlighten, decided to develop an ABC system to accurately allocate the indirect costs. She identified two activities related to the total indirect costs—travel and information technology​ (IT) support. The other relevant details are given​ below: Activity, Allocation base, Estimated costs, Estimated quantity of allocation base Travel, Miles driven, $76,000, 3,000 miles IT Support, Direct labor hours, $56,000, 1,050 DLHr Total $132,000 During the current​ month, Enlighten's consultants spent 150 labor hours for​ Malka, Inc. The job required the professionals to travel 450 miles in total. Determine the total cost of the consulting job using the ABC system.​ (Round any intermediate calculations to the nearest cent and your final answer to the nearest​ dollar.)

Cost Per Mile = 76000 / 3000 = $25.33 Cost Per DLHr = 56000 / 1050 = $53.33 Total Travel Cost = 450 x 25.33 = $11,398.50 Total IT support cost = 150 x 53.33 = $7,999.50 Direct Labor Cost = 150 x 50 = $7,500 Total Cost = 11398.5 + 7999.5 + 7500 = $26,898

The Assembly Department of​ Protocol, Inc., manufacturer of​ computers, incurred $270,000 in direct material costs and $90,000 in conversion costs. The equivalent units of production for direct materials and conversion costs are 1,500 and 600​, respectively. The weighted−average method is used. The cost per equivalent unit of production for direct materials is​ ________. (Round your answer to the nearest​ cent.)

Cost per equivalent units = Material cost / Equivalent production units 270000 / 1500 = 180 $180.00

All of the following are the result of producing poor−quality products except

Decreased Costs, as poor quality products will increase costs due to increased wastage.

Accurate Tax Returns budgets two direct labor hours for every tax return that it​ prepares, at a standard cost of $30 an hour. During the most recent​ year, 550 returns were completed with the labor cost totaling $22,000. The actual labor cost was $40.00 per hour during that period. The actual number of labor hours was 1,100. What is the direct labor cost​ variance?

Direct labor cost variance = (Standard Rate * Actual Returns) - (Actual Rate * Actual Returns) Standard Rate = 30 x 2 = 60 Actual Rate = 40 x 2 = 80 (60 x 550) - (80 x 550) = 11,000 U

Devon Company has collected the following data for one of its​ products: Direct materials standard ​(44 pounds​ @ ​$11​/lb.) $4 per unit Direct materials flexible budget variance—unfavorable $14,000 Actual direct materials used 100,000 pounds Actual units produced 19,000 units What is the direct materials efficiency​ variance?

Direct materials efficiency​ variance = ( Standard quantity for actual production - Actual Quantity ) * Standard rate = ( 19000 * 4 - 100000 ) * 1 = $ 24000 ( unfavourable )

Titus​ Manufacturing, Inc. provided the following information for the​ year: Purchases—Direct Materials $90,000 Plant Utilities and Insurance $68,500 Indirect Materials $11,990 Indirect Labor $4,380 Direct Materials Used in Production $97,000 Direct Labor $119,500 Depreciation on Factory Plant​ & Equipment $4,000 The inventory account balances as of January 1 are given below. Direct Materials $43,000 ​Work-in-Progress Inventory $11,000 Finished Goods Inventory $50,000 What is the ending balance in the Direct Materials​ account?

Ending Balance in the Direct Materials = Direct Materials Jan 1 + Purchases--Direct Materials - Direct Materials Used in Production 43000 + 90000 - 97000 = $36,000

Darius​ Manufacturing, Inc. provided the following information for the​ year: Purchases—Direct Materials $91,000 Plant Utilities and Insurance $68,000 Indirect Materials Used $11,970 Indirect Labor $4,590 Direct Materials Used in Production $97,000 Direct Labor $118,500 Depreciation on Factory Plant and Equipment $5,000 Cost of Goods Manufactured $290,000 The inventory account balances as of January 1 are given below. Direct Materials $41,000 ​Work-in-Process Inventory $1,300 Finished Goods Inventory $49,500 What is the ending balance in the​ Work-in-Process Inventory​ account?

Ending balance in the​ Work-in-Process Inventory​ account = Inventory Jan 1 + Direct Materials Used in Production + Direct Labor + Depreciation on Factory P&E + Plant Utilities and Insurance + Indirect Materials Used + Indirect Labor - Cost of Goods Manufactured 1300 + 97000 + 118500 + 5000 + 68000 + 11970 + 4590 - 290000 = $16,360

Zelia, Inc. has prepared the operating budget for the first quarter of the year. The company forecast sales of $50,000 in​ January, $60,000 in​ February, and $70,000 in March. Variable and fixed expenses are as​ follows: Variable​ Expenses: Power cost ​(30​% of​ sales) Miscellaneous​ expenses: ​(10​% of​ sales) Fixed​ Expenses: Salaries​ expense: $6,000 per month Rent​ expense: $4,000 per month Depreciation​ expense: $1,400 per month Power​ cost/fixed portion: $600 per month Miscellaneous​ expenses/fixed portion: $1,000 per month Using the information​ above, calculate the amount of budgeted selling and administrative expenses for the month of February.

Forecast sales in February = 60000 Variable: Power cost (30% of Sales)= 0.30*60000 = $18,000 Miscellaneous expenses: (10% of Sales) = 0.1*60000 = $6,000 Fixed: Salary expense = $6,000 Rent expense = $4,000 Depreciation expense = $1,400 Power cost/fixed portion = $600 Miscellaneous expenses/fixed portion = $1,000 Selling and administrative expenses for the month of February = 18000 + 6000 + 6000 + 4000 + 1400 + 600 + 1000 = $37,000

Tranquility Company manufactures ceiling fans and uses an activity−based costing system. Each ceiling fan has 20 separate parts. The direct materials cost is $95 and each ceiling fan requires 2.5 hours of machine time to manufacture. There is no direct labor. Additional information is as​ follows: Activity, Allocation Base, Predetermined Overhead Allocation Rate Materials handling, Number of parts, ​$0.05 Machining, Machine hours, 8 Assembling, Number of parts, 0.25 Packaging, Number of finished units, 3.8 What is the total manufacturing cost per ceiling​ fan? (Round any intermediate calculations and your final answer to the nearest​ cent.)

Material handling costs = Number of parts × Predetermined overhead allocation rate Machining costs = Machine hours × Predetermined overhead allocation rate Assembling costs = Number of parts × Predetermined overhead allocation rate Total manufacturing costs = Direct material + Material handling + Machining + Assembling + Packaging 20 x .05 = 1 2.5 x 8 = 20 20 x .25 = 5 95 + 1 + 20 + 5 + 3.8 = 124.8 $124.80

Morwenna, Inc. reports the following information for​ August: Sales Revenue $900,000 Variable Cost of Goods Sold $120,000 Fixed Cost of Goods Sold $50,000 Variable Selling and Administrative Costs $150,000 Fixed Selling and Administrative Costs $65,000 Calculate the operating income for August using absorption costing.

Operating Income = Sales Revenue - Variable CoGS - Fixed CoGS - Variable SaAC - Fixed SaAC 900000 - 120000 - 50000 - 150000 - 65000 = 515000 $515,000

​Bethel, Inc. has collected the following data.​ (There are no beginning​ inventories.) Units produced 500 units Sales price $130 per unit Direct materials $17 per unit Direct labor $15 per unit Variable manufacturing overhead $10 per unit Fixed manufacturing overhead $19,500 per year Variable selling and administrative costs $9 per unit Fixed selling and administrative costs $14,600 per year What is the operating income using variable costing if 450 units are​ sold?

Operating income = (Sales Price x Units) - ((direct materials + direct labor + variable MO + [Fixed MO / Units]) x Units) - V S&AC - (FS&AC / units)

Clay Earth Company sells ceramic pottery at a wholesale price of​ $5 per unit. The variable cost of manufacture is​ $2.50 per unit. The fixed costs are​ $6,200 per month. It sold​ 5,700 units during this month. Calculate Clay​ Earth's operating income​ (loss) for this month.

Operating income(loss) = 5700*(5-2.5)-6200= $8050

Castillo​ Corporation, a​ manufacturer, reports costs for the year as​ follows: Direct Materials Used $525,000 Wages to Line Workers $390,000 Office Rent $19,000 Indirect Materials Used $415,000 How much is the total period costs for​ Castillo?

Period costs consists of general and administrative expenses, selling expenses etc. Hence in this case period cost would be the office rent for the year. $19,000

Lakeside, Inc. estimated manufacturing overhead costs for the year at $375,000​, based on 183,000 estimated direct labor hours. Actual direct labor hours for the year totaled 193,000. The manufacturing overhead account contains debit entries totaling $392,000. The Manufacturing Overhead for the year was​ ________. (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

Predetermined OHAR = 375000 / 183000 =2.05 Manufacturing OHC = 193000 x 2.05 = 395650 MOH = 395650 - 392000 = 3,650

A radial tire manufacturer produces products in two departments—Divisions A and B. The company uses separate predetermined overhead allocation rates for each department to allocate its overhead. Divisions A and B have estimated manufacturing overhead costs of $160,000 and $340,000​, respectively. Division A uses machine hours as the allocation​ base, and Division B uses direct labor hours as the allocation base. The total estimated machine hours were 30,000​, and direct labor hours were 22,000 for the year. Calculate the departmental predetermined overhead allocation rates.​ (Round your answer to the nearest​ cent.)

Predetermined overhead allocation rate = Overhead cost​ / Machine Hours A- 160000/30000 = 5.33 B- 340000/22000 = 15.45

Harmony Company sells hand−knit scarves. Each scarf sells for $30. The company pays $70 to rent vending space for one day. The variable costs are $12 per scarf. How many scarves should the company sell each day in order to break​ even? (Round your answer up to the nearest whole​ scarf.)

Scarves Sell Each Day For Break Even =Fixed cost / Contribution per unit Contribution Per Unit = Selling Price Per Unit - Variable Cost per unit = 70 / (30 - 12) = 3.89 4 Scarves

On January​ 1, Feldstein Manufacturing had a beginning balance in Work-in−Process Inventory of $82,800 and a beginning balance in Finished Goods Inventory of $20,000. During the​ year, Feldstein incurred manufacturing costs of $351,300. During the​ year, the following transactions​ occurred: Job A−12 was completed for a total cost of $122,800 and was sold for $126,100. Job A−13 was completed for a total cost of $201,800 and was sold for $210,100. Job A−15 was completed for a total cost $63,000 but was not sold as of year−end. What was the balance in Finished Goods Inventory at the end of the​ year?

Profit on sales: 126100 - 122800 =3300 210100 - 201800 = 8300 3300 + 8300 = 11,600 Cost of goods sold: (126100 + 210100) - 11600 = 414600 414600 = (122800 + 201800 + 6300) + 82800 - Ending Balance $83,000 debit balance

Which of the following will most likely be considered an indirect material cost for a​ bakery?

Spices

Jezebel, Inc. completed Job 12 and several other jobs in the last week. The cost details of Job 12 are shown below. Direct labor cost $750 Direct materials cost $110 Machine hours 6 hours Direct labor hours 22 hours Predetermined overhead allocation rate per machine hour $82 Number of units of finished product 28 units What is the cost per unit of finished product produced under Job​ 12? (Round your answer to the nearest​ cent.)

TC = (machine hours*Predetermined overhead rate) + Direct labor + Direct Materials Cost per unit = total cost / number of units (6 x 82) + 750 + 110 = 1352 1352 / 28 = $48.29

The phone bill for a corporation consists of both fixed and variable costs. Refer to the​ four-month data below and apply the​ high-low method to answer the question. Month, Minutes, Total Bill January 480 $4,500 February 240 $2,690 March 160 $2,630 April 300 $2,845 If the company uses 360 minutes in​ May, how much will the total bill​ be? (Round any intermediate calculations to the nearest cent and your final answer to the nearest​dollar.)

TC of Highest - TC of Lowest: 45000 - 2630 = 1870 THours of H - THoL: 480 - 160: 320 VC = TC / TH = 5.84 FC = 4500 - (480 x 5.84) = 1696.8 Total for May = 1696.8 + (360 x 5.84) = 3799.2 $3,799

​Nourishmix, Inc. manufactures food processors. The target sales price is $420 per unit. The company desires a 30​% net profit margin on its products. What is the​company's target full−product cost per unit using target​ pricing?

Target Sales Price - (Target sales price x Net Profit %) 420 - (420 x .3) $294

The following information was obtained from Moreau​ Manufacturing, Inc.: Advertising Costs $9,100 Indirect Labor 55,000 ​CEO's Salary 510,000 Direct Labor 42,000 Indirect Materials Used 4,500 Direct Materials Used 64,000 Factory Utilities 500 Factory Janitorial Costs 2,100 Manufacturing Equipment Depreciation 2,500 Delivery Vehicle Depreciation 2,600 Administrative Wages and Salaries 20,000 Calculate Moreau​ Manufacturing's total product costs.

Total Product Cost = Direct material + Direct labor + Indirect labor + Indirect material + Factory utilities + Factory janitorial cost + Manufacturing Equipment Depreciation 64000 + 42000 + 55000 + 4500 + 500 + 2100 + 2500 = 170600 $170,600

Iglesias, Inc. completed Job 12 on November 30. The details of Job 12 are given​ below: Direct labor cost $820 Direct materials cost $1,300 Machine hours 8 hours Direct labor hours 23 hours Predetermined overhead allocation rate $90 per machine hour What is the total cost of Job​ 12?

Total cost = materials + Labor + overhead 1300 + 820 + (Predetermined overhead allocation rate X Machine hours) 1300 + 820 + (90 X 8) = 2840 $2,840

Tentacle Television Antenna Company provided the following manufacturing costs for the month of June. Direct labor cost ​$132,000 Direct materials cost $84,000 Equipment depreciation ​(straight−​line) $24,000 Factory insurance $10,000 Factory​ manager's salary $10,200 ​Janitor's salary $4,000 Packaging costs $​18,600 Property taxes $​16,000 From the above​ information, calculate​ Tentacle's total fixed costs.

Total fixed costs = Equipment depreciation + Factory insurance + Factory​ manager's salary + Janitor's salary + Property taxes 24000 + 10000 + 10200 + 4000 + 16000 = 64200 $64,200

The accounts of Melissa Manufacturing showed the following balances at the beginning of​ December: Account Debit Raw Materials Inventory $52,000 Work−in−Process Inventory $77,000 Finished Goods Inventory $39,000 Manufacturing Overhead $20,000 The following transactions took place during the​ month: December​ 2: Issued direct materials $39,000 and indirect materials $7,000 to production. December​ 15: Incurred $7,000 and $3,000 toward​ factory's direct labor cost and indirect labor​ cost, respectively. What should be the balance in the Work−in−Process Inventory following these​ transactions?

Work-in-Process Inventory = Beginning balance + Direct material issued + Direct labour incurred 77000 + 39000 + 7000 = 123000 $123,000

Goods that have been started in the manufacturing process but are not yet complete are included in the​ ________.

Work in process inventory account

Bright Castle Company provides cleaning services to commercial and residential customers. The commercial business segment provided services to 310 customers and the residential business segment provided services to 635 customers. State which segment has the higher average variable cost per customer and provide the amount of the average variable cost per customer for that segment.​ (Round the answer to the nearest​ dollar.)

Variable cost / Number of Customers

Given the following​ information, determine the cost of goods sold. Direct Labor Incurred $60,000 Manufacturing Overhead Incurred $180,000 Direct Materials Used $155,000 Finished Goods​ Inventory, Jan. 1 $198,000 Finished Goods​ Inventory, Dec. 31 $97,500 ​Work-in-Process Inventory, Jan. 1 $220,500 ​Work-in-Process Inventory, Dec. 31 $108,000

WOP Inventory Jan 1 + DMU + DLI + MOI - WIP Invetory Dec 31 = Cost of Goods Manufactured FGI Jan 1 + CoGM - FGI Dec 31 = Cost of Goods Sold 220500 + 155000 + 60000 + 180000 - 108000 = 507500 198000 + 507500 - 97500 = 608000 $608,000