Managerial ACG 2071 Ch 1 to 4

Craigmont Company's direct materials costs are $4,100,000, its direct labor costs total $7,990,000, and its factory overhead costs total $5,990,000. Its prime costs total:

$12,090,000 (direct materials + direct labor = total prime costs)

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $3,400 of direct materials and used $4,900 of direct labor. The job was not finished by the end of September, but needed an additional $3,900 of direct materials and additional direct labor of $8,300 to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. What is the balance in the Work in Process account at the end of September relative to job A3B?

$18,100 (DM $3,400 + DL $4,900 + OH ($4,900 x 2.0) = WIP for job A3B

A company's prime costs total $4,700,00 and its conversion costs total $8,700,000. If direct materials are $1,850,000 and factory overhead is $5,850,000, then direct labor is:

$2,850,000 (prime costs total - direct materials = 2,850,000, direct labor)

K Company estimates that overhead costs for the next year will be $3,648,000 for indirect labor and $960.000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 96,000 direct labor hours are planned for this year, how much overhead would be assigned to a product requiring 5 direct labor hours?

$240.00 ((3,648,000 + $960,000)/96,000 direct labor hours)

A manufacturing company has a beginning finished goods inventory of $15,600, raw material purchases of $19,000, cost of goods manufactured of $34,500, and an ending finished goods inventory of $18,800. The cost of goods sold for this company is:

$31,300 (beginning finished goods + cost of goods manufactured - ending finished goods = $15,600 + $34,500 - $18,800 = $31,300)

K Company estimates that overhead costs for the next year will be $3,500,000 for indirect labor and $940,000 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 plant wide overhead rate?

$44.40 per direct labor hour (($3,500,000 + $940,000)/100,000 direct labor hours)

B&T Company's production costs for May are: direct labor $18,000, indirect labor $5,800, direct materials $14,200, property taxes on production facility $860, factory heat, lights and power $920, and insurance on plant and equipment $120. B&T Company's factory OH for May is:

$7,700 (IDL, property taxes, heat, light, power, and insurance)

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, $20,000, direct materials, $40,000, and factory overhead applied $5,000. The predetermined overhead rate was:

25.00% ( OH applied/direct labor costs)

CWN Company uses a job order costing system and last period incurred $76,000 of actual overhead and $100,000 of direct labor. CWN estimates that its overhead next period will be $79,000. It also expects to incur $100,000 of direct labor cost. CWN bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be:

79% (OH rate = $79,000/$100,000 = 79%

Put the following ABC implementation in order: A use the activity overhead rates to assign overhead costs to cost objects B Compute the allocation rates C Trace overhead costs to cost pools D Identify the activities and the overhead costs they cause

DCBA

Wyman Corporation uses a process costing system. The company manufactured certain goods at a cost of $930 and sold them on credit to Percy Corporation for $1,335. The complete journal entry to be made by Wyman at the time of sale is:

Debit AR $1,335, credit sales $1,335, debit cost of goods sold $930, credit Finished Goods Inventory $930

From an ABC perspective, what causes costs to be incurred?

activities

Which of the following costing systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?

activity-based costing

In a process operation, the direct labor of a production department includes:

all labor used exclusively by that department, even if the labor is not applied to the product itself.

Which of the following would not be considered a product cost?

budget accountants salary

An employee is dissatisfied with the resolution of an ethical conflict with his supervisor at his place of employment. According to the institute of Management Accountants, the employee's next step should be to:

contact the next level of management who is not involved in the ethical conflict

The combined costs of direct labor and factory overhead per equivalent unit used by many businesses with process operations is called:

conversion cost per equivalent unit

Which of the following would not be considered a product cost?

cost accountants salary

A system of accounting for production operations that produces timely information about inventories and manufacturing costs per unit of a product is a:

cost accounting system

ABC assumes all costs in a ________ can be grouped together because they all impact the activity.

cost pool

Which of the following products is least likely to be produced in a process operation?

custom cabinets

A job order costing system would best fit the needs of a company that makes:

custom machinery

A company that uses a job order costing system would make the following entry to record the flow of direct materials into production:

debit Work in Process Inventory, credit Raw Materials Inventory

The purchase of raw materials on account in a process costing system is recorded with a:

debit to raw materials inventory and a credit to accounts payable

Clarkson Company uses a process costing system. The company requisitioned $93,000 of materials for Department A and $67,000 of materials for Department D. The entry to record the use of the direct materials by these two departments is:

debit work in process inventory dept A $93,000, debit work in process inventory dept D $67,000, credit raw materials inventory $160,000

Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period?

departmental overhead rate method and activity based costing

Which of the following is not one of the four steps in accounting for production activity and assigning costs during a period under a process cost system?

determine over or under applied overhead

Labor costs in production can be:

direct or indirect

A fixed cost:

does not change with changes in the the volume of activity within the relevant range

Which of the following characteristics does not usually apply to process operations?

each unit of product is separately identifiable

Products that have been completed and are ready to be sold by the manufacturer are called:

finished goods inventory

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

fraud

Managerial accounting information:

involves gathering information about costs for planning and control decisions

Which of the following statements is true with regard to the departmental overhead rate method?

it is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments.

Which of the following statements is correct concerning the days' sales in raw materials inventory ratio:

it measures how long it takes raw materials to be used in production

A document in a job order costing system that is used to record the costs of producing a job is a:

job cost sheet

Omega Construction manufacturers homes to customer specifications. It most likely uses:

job order costing

The two basic types of cost accounting systems are:

job order costing and process costing

An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called:

just-in-time manufacturing

A source document that production managers use to request materials for a production and that is used to assign materials costs to specific jobs or to overhead is a:

materials requisition

What are three advantages of activity-based costing over traditional volume-based allocation methods?

more accurate product costing, more effective cost control, and better focus on the relevant factors for decision making

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

plant wide overhead rate method

A system of accounting in which costs are accumulated and then measured per unit at the end of a period by combining costs per equivalent unit from various departments is a:

process costing system

An example of direct labor cost is:

product assembler wages

Costs that are capitalized as inventory when they are incurred are called:

product costs

A classification of costs that determines whether a cost is expensed to the income statement or capitalized to inventory is:

product versus period

Continuous improvement:

rejects the notion of 'not good enough'

A company that applies process costing is most frequently characterized by:

similar products and high production volume

A job cost sheet shows information about each of the following items except:

the costs incurred by the marketing department in selling the job

A process cost summary is a managerial accounting report that describes all but which of the following:

the gross profit earned on the sale of products

Period costs for a manufacturing company flow directly to:

the income statement as an expense

Which of the following are advantages of using the plant wide overhead rate method?

the necessary information is readily avaialable

For product costs associated with a particular product to be reported on the income statement:

the product must be sold

The cost objects of the activity-based costing method are:

the production activities in the first stage and the unit of product in the second stage

The cost objects of the departmental overhead rate method is:

the production departments in the first stage and the unit of product in the second stage

The balance in the Work in Process Inventory at any point in time equals:

the sum of the manufacturing costs for all jobs in process but not yet completed

The use of departmental overhead rates will generally result in:

the use of a separate cost allocation base for each department in the factory

In a process costing system, when manufacturing overhead costs are applied to the cost of production, they are debited to:

the work in process inventory account

A source document that an employee uses to report how much time was spent working on a job or on overhead activities and that is used to determine the amount of direct labor to charge to the job or to determine the amount of indirect labor to charge to factory overhead is called a:

time ticket

What are the main advantages of volume-based allocation methods compared to activity-based costing?

volume-based methods are easier to use and less costly to implement and maintain

Products that are in the process of being manufactured but are not yet complete are called:

work in process inventory

Direct Labor and indirect labor are recorded, respectively to:

work in process inventory and factory overhead