Test 1 & 2

The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had total production costs of $375,000. The entry to record the transfer of costs from work in process to finished goods is

Dr. Finished Goods 540,000 Cr. Work in Process 540,000

A company sells goods for $150,000 that cost $54,000 to manufacture. Which statement is true?

The company will decrease finished goods by $54,000.

A plant manager's salary is

an indirect cost

Direct labor and direct materials are

product costs and expensed when the goods are sold

Which of the following costs incurred by a tool manufacturer would not be included in conversion costs?

raw steel

The relative distribution of sales among various products sold is referred to as the:

sales mix

Period costs are classified as either

selling expenses or administrative expenses

Which of the following is the principle reason for preparing managerial accounting reports?

usefulness to management

Given the following cost data, what type of cost is shown? ​ Total Cost Number of units $20 1 $40 2 $60 3 $80 4 ​

variable cost

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:

variable selling and administrative expenses

Cost-volume-profit analysis cannot be used if which of the following occurs? a. Costs cannot be properly classified into fixed and variable costs. b. The total fixed costs change. c. The per-unit variable costs change. d. Per-unit sales prices change.

Costs cannot be properly classified into fixed and variable costs.

Which of the following factors is not an advantage of preparing operating budgets? Improved employee loyalty Improved planning Improved communications Improved evaluation of financial performance

Improved employee loyalty

For which of the following businesses would the process cost system be appropriate? a. a paper mill b. a catering firm c. a custom cabinet maker d. a landscaper

a paper mill

Which of the following is not included in conversion costs?

direct materials

A product cost is

expensed in the period the product is sold

Indirect labor and indirect materials are classified as

factory overhead and product costs

Which of the following budgets allow for adjustments in activity levels?

flexible budget

Period costs are

not involved in the production process

Which of the following represents the factory overhead applied to a product?

predetermined factory overhead rate times actual activity base

The graph of a variable cost when plotted against its related activity base appears as a

straight line

Which of the following would record the labor costs to an individual job? a payroll register b. in-and-out cards c. time tickets d. clock cards

time tickets

At the end of July, the first month of the current fiscal year, the factory overhead account had a debit balance. Which of the following describes the nature of this balance and how it would be reported on the interim balance sheet?

underapplied, deferred debit

A form prepared periodically for each processing department summarizing the units for which the department is accountable and the units to be assigned costs and the costs charged to the department and the allocation of these costs is termed a

cost of production report

In a job order cost accounting system, the entry to record the flow of direct materials into production is to

debit Work in Process, credit Materials

The cost of a manufactured product generally consists of which of the following costs?

direct labor cost, direct materials cost, and factory overhead cost

Which of the following is an example of a factory overhead cost?

factory heating and lighting cost

Given the following cost data, what type of cost is shown? Total Cost. Number of Units $8,000. 1 $8,500 2 $9,000 3 $9,500 4 ​

mixed cost

In contribution margin analysis, the quantity factor is computed as:

the increase or decrease in the number of units sold multiplied by the planned unit sales price or unit cost

At the end of the fiscal year, the balance in Factory Overhead is small. The balance would be

transferred to Cost of Goods Sold

Under variable costing, which of the following costs would be included in finished goods inventory? a. salary of salesperson b. straight-line depreciation on factory equipment c. salary of vice-president of finance d. wages of carpenters in a furniture factory

wages of carpenters in a furniture factory

The manufacturing cost of Calico Industries for three months of the year are provided below: ​ Total Cost Production (units) April $120,000 280,000 May 74,000. 165,000 June 90,900 230,000 ​ Using the high-low method, the variable cost per unit and the total fixed costs are

$0.40 per unit and $8,000 Difference in total cost = Total cost (highest level)​ - Total cost (lowest level) = $120,000 - $74,000 = $46,000 Variable Cost per Unit = Difference in Total Cost / Difference in Machine Hours = $46,000 / (280,000 - 165,000) = $0.40 Total Fixed Costs (highest level) = Total Costs - (Variable Cost per Unit × Machine Hours) = $120,000 - ($0.40 × 280,000 ) = $8,000 ​ ​

Department S had no work in process at the beginning of the period. It added 12,000 units of direct materials during the period at a cost of $84,000; 9,000 units were completed during the period; and 3,000 units were 30% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $49,500 and factory overhead was $9,900. The total cost of units completed during the period were

$117,000 Number of equivalent units for conversion costs during the period = [9,000 + (3,000 × 30%)] = 9,900 units Direct materials cost = [9,000 × ($84,000 / 12,000)] = $63,000 Direct labor cost = [($49,500 / 9,900) × 9,000] = $45,000 Factory overhead = [($9,900 / 9,900) × 9,000] = $9,000 Total cost of units completed during this period = $63,000 + $45,000 + $9,000 = $117,000

In the manufacture of 8,000 units of a product, direct materials cost incurred was $154,600, direct labor cost incurred was $84,000, and applied factory overhead was $45,500. What is the total conversion cost?

$129,500 Total conversion cost = $84,000 + $45,500 = $129,500

Aspen Technologies has the following budget data: Estimated direct labor hours : 15,000 Estimated direct labor dollars: $90,000 Estimated factory overhead costs: $198,000

$13.20 Predetermined Overhead Rate = Estimated Total Factory Overhead Costs / Estimated Activity Base $198,000 / 15,000 labor hours = $13.20 per labor hour​

As of January 1 of the current year, the Grackle Company had accounts receivables of $50,000. The sales for January, February, and March were as follows: $120,000, $140,000, and $150,000, respectively. Of each month's sales, 20% are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. What is the total cash collected (both from accounts receivable and for cash sales) in the month of February?

$133,600 Credit sales in January = $120,000 × 80% = $96,000​ Credit sales in February = $140,000 × 80% = $112,000 ​Collections from January credit sales $ 38,400 = =($96,000 × 40%) Add: Collections from February credit sales 67,200= = ($112,000 × 60%) Add: Cash sales in February ($140,000 × 20%) = 28,000 Total collections in February. $133,600

Department J had no work in process at the beginning of the period; 18,000 units were completed during the period; and 2,000 units were 30% completed at the end of the period. The following manufacturing costs were debited to the departmental work in process account during the period (Assume the company uses average cost and rounds cost per unit to two decimal places): Direct materials (20,000 at $5): $100,000 Direct labor: 142,300 Factory overhead: 57,200 Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of the 18,000 units completed during the period?

$269,550 Direct material cost = 18,000 units × $5 = $90,000 Conversion cost = (($142,300 + $57,200) / 20,000) × 18,000 units = $179,550 Total cost = $90,000 + $179,550 = $269,550

oy Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 25 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 30 percent in the month after the sale, and the remaining 20 percent two months after the sale. Gross sales for the quarter are projected as follows: January $20,000 February $10,000 March $40,000 Accounts receivable on December 31 were $30,000. Joy's expected cash collections for March would be:

$30,250

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual factory overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year?

$54,800 overapplied - Predetermined Overhead Rate = Estimated Total Factory Overhead Costs / Estimated ​ Activity Base = $360,000 / 30,000 direct labor hours = $12 per direct labor hour - Applied factory overhead costs = Predetermined overhead rate × Actual direct labor hours = $12 × 36,000 direct labor hours = $432,000 - Amount of overapplied overhead = Applied factory overhead costs - Actual factory overhead costs = $432,000 - $377,200 = $54,800

Given the following data: ​ Beginning raw materials inventory : $30,000 Materials purchased: 65,000 Ending raw materials inventory: 40,000 What is the amount of raw materials used?

$55,000 Amount of raw materials used​ = Beginning raw materials inventory + Materials purchased - Ending raw materials inventory = $30,000 + $65,000 - $40,000 = $55,000

Truliant Co. sells a product called Withitall and has predicted the following sales for the first four months of the current year: January February. March. April Sales in units 1,700 1,900 2,100 1,600 ​ Ending inventory for each month should be 20% of next month's sales. How many units should be produced in February?

1,940 Anticipated sales --->. 1,900 (+) Desired ending inventory (20% of 2,100) --> 420 Total --->. 2,320 (-) Estimated beginning inventory (20% of 1,900) --> 380 Budgeted production ---->. 1,940

O'Boyle Co.'s fixed costs are $256,000, the unit selling price is $36, and the unit variable costs are $20, what is the break-even sales (units)?

16,000 units Break-Even Sales (units) = Fixed Costs / Contribution Margin = $256,000 / ($36 - $20)​ = 16,000 units​

Southern Company is preparing a cash budget for April. The company has $12,000 cash at the beginning of April and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during April. Southern Company has an agreement with its bank to maintain a minimum cash balance of $10,000. To maintain the required balance during April, the company must

borrow $2,500 Beginning cash balance for April. $12,000 Add:Cash receipts during the month. 30,000 Less: Cash payments during the month. 34,500 Total. $ 7,500 Less: Minimum cash requirement 10,000 Deficiency of cash. $ (2,500)

If fixed costs increased and variable costs per unit decreased, the break-even point would

cannot be determined from the data provided

Lean manufacturing is a business philosophy that focuses on reducing time and cost and eliminating poor quality. This is accomplished in manufacturing and nonmanufacturing processes by

combining processing functions into work centers and cross-training workers to perform more than one function

If the variable cost of goods sold totaled $80,000 for the year (16,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,250 (15,000 units at $5.75 each), the effect of the quantity factor on the change in contribution margin is:

$5,750 decrease Variable Cost Quantity Factor = (Planned Units of Sales - Actual Units Sold) × Planned Unit Cost Variable Cost Quantity Factor = (15,000 units - 16,000 units) × $5.75 = -$5,750

Jacob Inc. has fixed costs of $240,000, the unit selling price is $32, and the unit variable costs are $20. What are the old and new break-even sales (units) if the unit selling price increases by $4?

20,000 units and 15,000 units Old Break-Even Sales (units) = Fixed Costs / Contribution Margin = $240,000 / ($32 - $20) = 20,000 units New Break-Even Sales (units) = Fixed Costs / Contribution Margin = $240,000 / (($32 + $4) - $20) = 15,000 units

The forecasted sales pertain to Glad Corporation: Month Sales September $200,000 October 160,000 Finished Goods Inventory (August 31): 14,000 Glad Corporation has a selling price of $5 on all units and expects to maintain ending inventories equal to 25 percent of the next month's sales. How many units does Glad expect to produce in September?

34,000

Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May. Estimated inventory (units), May 1. 30,000 Desired inventory (units), May 31 25,000 Expected sales volume (units): South region 20,000 West region 40,000 North region 20,000 Unit sales price $10

75,000 Expected sales (20,000 + 40,000 + 20,000) ---> 80,000 Add: Desired ending inventory. ---->. 25,000 Total. -----> 105,000 Less: Estimated beginning inventory. ---->. 30,000 Total units expected to be manufactured. ----> 75,000

Product costs

appear on both the income statement and balance sheet

The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured:

are less than units sold

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual manufacturing overhead costs incurred were $377,200, and actual direct labor hours were 36,000. The entry to apply the factory overhead costs for the year would include a

credit to Factory Overhead for $432,000 - Predetermined Overhead Rate = Estimated Total Factory Overhead Costs / Estimated Activity Base = $360,000 / 30,000 direct labor hours = $12 per direct labor hour - Applied factory overhead costs = Predetermined overhead rate × Actual direct labor hours = $12 × 36,000 direct labor hours = $432,000 - The journal entry to apply the factory overhead costs for the year would include a credit to Factory Overhead for $432,000.

Department F had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. Of the $12,500, $8,000 was for material and $4,500 was for conversion costs. 14,000 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. If the average cost method is used, the materials cost per unit (to the nearest cent) would be

$2.04 Equivalent units = 15,000 units + 3,000 units = 18,000 units Materials cost per equivalent unit = ($8,000 + $28,700) / 18,000 = $2.04 per equivalent unit​