Acct2302 Midterm

A company has an overhead application rate of 120% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $20,000?

$20,000*1.2= $24,000

K Company estimates that overhead costs for the next year will be $4,900,000 for indirect labor and $1,000,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 100,000 direct labor hours are planned for this next year, what is the company's plantwide overhead rate?

($4,900,000+$1,000,000)/100,000=$59 per direct labor hour

West Company estimates that overhead costs for the next year will be $3,800,000 for indirect labor and $970,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 106,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?

(Indirect labor + Factory utilities) / machine hours = overhead rate

Which of the following costing methods charges all manufacturing costs to its products?

Absorption Costing

Quick assets divided by current liabilities is the:

Acid-test ratio

A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. The company's break-even point in dollars is:

Answer: 275,040; Break even point in dollars=Fixed costs/contribution margin ratio; Contribution Margin Ratio =contribution margin per unit/selling price per unit

External users of financial information:

Are not directly involved in operating the company

The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory.

Beg WIP + DL + DM + Overhead applied - Finished goods = End WIP

A manufacturer's total cost of making and finishing products in the period is called:

COGM

A manufacturing company has a beginning finished goods inventory of $28,100, cost of goods manufactured of $58,300, and an ending finished goods inventory of $27,400. The cost of goods sold for this company is:

COGS= Beg. Finished Goods + COGM - End. Finished Goods

Overhead costs:

Cannot be traced to units of product in the same way that direct labor can.

During March, a firm expects its total sales to be $154,000, its total variable costs to be $94,400, and its total fixed costs to be $24,400. The contribution margin for March is:

Contribution Margin = Net sales - Variable Costs

Current assets divided by current liabilities is the:

Current ratio

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $3,650 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $1,670 and direct labor cost of $890. Therefore, the amount of the applied overhead is:

DL + DM + Overhead Applied = WIP

COGM=?

DM + DL + Manufacturing Overhead + Beg. Work in Process Inventory - End. Work in Process Inventory

Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under absorption costing.

DM + Total Variable + Total Fixed Overheads

Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direct material and direct labor costs are detailed below. Next year the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $338,250. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $28 per hour and the company expects to manufacture 22,000 units of CC1 and 91,000 units of CC2 next year.

Direct Labor Hours= DL per unit / DL cost per unit... Total direct labor hours= DL hours * Units of manufacture... Overhead rate= Estimated Overhead / Total direct labor hours

The margin of safety is the excess of:

Expected sales over break-even sales.

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as fixed costs in the company's contribution margin income statement for the year in question?

Fixed cost = (Total revenue × Contribution margin ratio) - (Targeted Pre- tax profit )... Contribution margin ratio = Total C.M / Total revenue = 1,500,000 / 3,200,000 = 0.46875 Now we calculate Fixed cost (F.c): = (3,200,000 × 0.46875) - 400,000 = $1,100,000

Which of the following is not included in the product cost under variable costing?

Fixed manufacturing overhead

Jenny, an employee of Toucan Company, used company assets for her own personal gain. This is an example of:

Fraud

Calculate the gross margin for May under absorption costing.

Gross Margin= Sales-Fixed COGS- Variable COGS

A target income refers to:

Income planned for a future period.

What is the manufacturing margin for Part A?

Manufacturing Costs per unit = Selling price per unit - Variable Manufacturing costs per unit Manufacturing margin = Manufacturing Costs per unit * Units sold

Gladstone Co. has expected sales of $326,000 for the upcoming month and its monthly break even sales are $300,000. What is the margin of safety as a percent of sales, rounded to the nearest whole percent?

Margin of Safety = (Current Sales Level- Break Even Point) / Current Sales Level *100 = (326000 - 300000)/ 326000 * 100

Using the information below, calculate net income for the period:

Net Income= Sales-COGS-Operating Expense Cost of goods sold = Beginning Finished goods inventory + Cost of goods manufactured - Ending finished goods inventory

Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $38,000; direct materials, $58,000; and factory overhead applied $6,800. The overhead application rate was:

Overhead application rate = (Actual overhead applied / Actual direct labor costs) * 100

A method of assigning overhead costs to a product using a single overhead rate is:

Plantwide overhead rate method

The B&T Company's production costs for May are: direct labor, $16,000; indirect labor, $6,000; direct materials, $14,400; property taxes on production facility, $840; factory heat, lights and power, $940; and insurance on plant and equipment, $140. B&T Company's factory overhead incurred for May is:

Prime Costs= DM + DL Factory Overheads= Indirect Labor + taxes + heat + lights + insurance

Use the following information to determine the break-even point in sales dollars:

Sales - Variable Costs = Contribution margin Contribution margin ratio = Contribution margin / sales Break-even point point in sales= Fixed costs / Contribution Margin

Managerial accounting is an activity that helps managers determine costs of products and services, plan future activities, and compare actual to planned results. T or F

True

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

Variable Costs = Total Sales - Variable Costs =$1,700,000

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $7,305 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,700 and direct labor cost of $1,500. Therefore, the company's overhead application rate is:

Work in progress = DM + DL + Overhead

A company reports basic earnings per share of $3.70, cash dividends per share of $1.35, and a market price per share of $64.85. The company's dividend yield equals:

dividend yield= dividend / market price per share