Managerial Accounting Exam 1 Based on Learnsmarts

A department begins the month with 100 units at a cost of $7,500 in work in process. An additional 1,000 units are started during the month and additional costs incurred are $12,500. At the end of the month, there are 200 units still in process which are 50% complete. The ending balance in Work in Process Inventory is $

$2000

A manufacturing department has 50,000 EUP for units completed and transferred out and 4,500 EUP for units in ending inventory. Materials cost is $2.50 per EUP and labor and overhead cost is $3.75 per EUP. The total amount of ending work in process inventory is $

$28,125

Department D had materials costs of $10,000 in beginning work in process inventory and added an additional $50,000 in materials costs this period. If the department had 20,000 EUP for materials, the cost per equivalent unit of production is $

$3

A manufacturing department has 50,000 EUP for units completed and transferred out and 4,500 EUP for units in ending inventory. Materials cost is $2.50 per EUP and labor/overhead cost is $3.75 per EUP. The total amount transferred out is

$312,500

Johnson Company has the following overhead costs: machine setup $25,000; factory services $10,000; design of $15,000; and selling expenses of $5,000. What is the total overhead costs using activity-based costing?

$50,000. Reason: The selling expenses are not part of the overhead for the factory.

The departmental overhead rate method uses a three-step process to allocate costs objects. List these steps in the correct order

1) Assign overhead costs to departmental cost pools 2) Select an allocation base and complete overhead allocation rate for each department 3) Allocate overhead costs to cost objects

Identify the three steps in activity-based costing. Rank these in the correct order.

1) Identify activities and assign budgeted costs to activity cost pools 2) Compute an overhead activity rate for each activity cost pool. 3) Allocate overhead costs to cost objects

List the four steps involving analysis when accounting for a department's activity, with the first step listed on top.

1) Physical Flow 2) Equivalent units 3) Cost per EUP 4) Assignment and reconciliation

Department B had a beginning inventory balance of 150 units. During the accounting period, the department started an additional 950 units and 975 units were completed and transfered out. Department B had an ending balance of ______ units

125

Department X started 550 units during the accounting period, completed and transferred out 500 units and had an ending balance of 200 units. ________ units were in beginning goods in process inventory for the department.

150

Department A completed and transferred out 2,100 units and had ending work in process inventory of 120 units. The ending inventory is 10% complete for materials and 70% complete for labor and overhead. The equivalent units of production for materials is ______ units

2112

Department A completed and transferred out 2,100 units and had ending work in process inventory of 120 units. The ending inventory is 10% complete for materials and 70% complete for labor and overhead. The equivalent units of production for labor and overhead is ______ units.

2184

Department A had a beginning inventory balance of 25 units. During the accounting period, the department started an additional 275 units and had an ending balance of 50 units. ______ units were transferred out.

250

A manufacturing company has 2 processes. All materials are added at the beginning of the first process. Labor and overhead are added evenly throughout the manufacturing process. If 400 units are started, the EUP with respect to materials is ______ after process 2

400

Department 1 completed and transferred out 450 units and had ending work in process inventory of 60 units. The ending inventory is 20% complete for materials and 60% complete for labor and overhead. The equivalent units of production for labor and overhead is _________ units.

486

The Production Department incurs costs of $250,000 while working 12,500 direct labor hours. If Job 421 requires 25 direct labor hours to assemble, the amount of overhead allocated to the job will be $

500. Reason 250000/12500 x 25

Department Y started 675 units during the accounting period. They had a beginning balance in goods in process inventory of 225 units and an ending balance of 150 units. _______ units were completed and transferred out.

750. Reason: 675+225-150= 750

(Identifying, Assigning,Tracing) activities is the first step in applying activity-based costing.

Identifying

Strengths of the departmental overhead rate method and the plantwide overhead method include all of the following:

They are based on readily available information. They comply with GAAP. They are easy to implement.

Process cost information is prepared for the following reasons. (Check all that apply.)

To help department managers control costs To help factory managers evaluate department managers' performances To provide cost information for financial statements

True or false: A production department in a process operation has a manager that works for two departments. Since the manager is in a supervisory position, the labor is considered indirect labor and the cost is charged to Factory Overhead.

True

A company completes 21,000 units this month and has ending work in process inventory of 3,000 units which are estimated to be 40% complete. Total production costs are $666,000. The cost of ending Work in Process Inventory is $______

Units completed = 21,000 Ending work in process = 3,000 units Degree of completion of work in process = 40% Equivalent units of work in process = Ending work in process x Degree of completion of work in process = 3,000 x 40% = 1,200 Total equivalent units of production = Units completed + Equivalent units of work in process = 21,000+1,200 = 22,200 units Total production costs = $666,000 Cost per equivalent unit = Total production costs / Total equivalent units of production = 666,000/22,200 = $30 Cost of ending work in process = Equivalent units of work in process x Cost per equivalent unit = 1,200 x 30 = $36,000

The journal entry to apply Factory Overhead includes:

a credit to Factory Overhead

The journal entry to record the factory overhead applied includes:

a debit to Work in Process Inventory and a credit to Factory Overhead

A cost driver is

a factor that causes activity to go up or down.

In activity-based costing, costs are first traced to ______ , activity rates are computed, and then allocated to ______.

activities; cost objects

In order for a service provider to use activity-based costing, they should classify costs by __________level.

activity

ABC can be used by service providers who usually classify costs by

activity level

The two assumptions regarding the usefulness of the single plantwide overhead rate method includes:

all products use overhead costs in the same proportion overhead costs change with the allocation base

A disadvantage of using activity-based costing is that

collecting and analyzing cost data is expensive.

Process and job order operations are similar in that both:

combine materials, labor, and overhead in producing products. are used to determine the cost per unit of product or service.

After determining the physical flow of units, the next step in process costing is:

compute equivalent units of production

The parts of the process cost report include: (Check all that apply.)

cost assignment and reconciliation. physical flow of units. equivalent units of production.

A report which focuses on providing gross profit margin per customer, is referred to as a

customer profitability report.

The journal entry to record the use of indirect labor in process costing is to:

debit Factory Overhead and credit Factory Wages Payable.

The journal entry to record the insurance on the factory equipment is to:

debit Factory Overhead and credit Prepaid Insurance

The journal entry to record the use of indirect materials in process costing is to:

debit Factory Overhead and credit Raw Materials Inventory.

The journal entry to record the accrual of factory utilities is to:

debit Factory Overhead and credit Utilities Payable

The journal entry to record the transfer of completed work in process to finished goods in process costing is to:

debit Finished Goods Inventory and credit Work in Process Inventory

The journal entry to record the purchase of materials on account in process cost accounting is:

debit Raw Materials Inventory and credit Accounts Payable

The journal entry to record the applied factory overhead is to:

debit Work in Process Inventory and credit Factory Overhead

The journal entry to record the use of direct labor in process costing is to:

debit Work in Process Inventory and credit Factory Wages Payable

The journal entry to record the use of direct materials in process costing is to:

debit Work in Process Inventory and credit Raw Materials Inventory.

The journal entry to record the transfer of partially completed work in process to the next process in process costing is a(n):

decrease in one asset and an increase in another asset

As it relates to the departmental overhead rate method, when products differ in batch size and complexity, they usually consume _____ amounts of overhead costs.

different

The two main assumptions of the departmental overhead rate method include:

different products are similar in volume, complexity and batch size departmental overhead costs are proportional to the departmental allocation base

A process cost report summarizes the following process costing steps: (Check all that apply).

equivalent units of production physical flow of units costs per equivalent unit of production

Managers use the process cost summary for all of the following except:

evaluate company as a whole

Activity cost pools are:

group of costs related to the same activity

Characteristics of process operations include:

identical units low product flexibility. high volume production.

The journal entry to record the purchase of materials on account in process cost accounting is a(n)

increase in assets and an increase in liabilities

The journal entry to record direct labor used in process costing is a(n):

increase in assets and an increase in liabilities.

The journal entry to record the use of direct materials in process costing is a(n)

increase in one asset and a decrease in another asset.

The cost object in a job order system is the ______ and the cost object in a process costing system is the ______.

job; process or department

Understanding the cost of partially completed goods allows the manufacturer to:

measure production activity for the period

A batch level activity will vary with the

number of batches.

An activity which focuses on product lines and are not affected by number of units is a

product level activity.

When using activity-based costing, it is very important that the activities in each cost pool are

similar

Equivalent units of production refers to the number of units that could have been:

started and completed

True or false: Using the weighted-average method, the computation of EUP separates units into direct materials and conversion.

true

Activities causing overhead include all of the following:

unit-level batch-level facility-level