Accounting 2 Final Exam

E2) #12 Providing the power required to run production equipment is an example of a: A)Organization-sustaining activity. B)Product-level activity. C)Unit-level activity. D)Batch-level activity.

C)Unit-level activity.

E1) #2 When the level of activity decreases within the relevant range, the fixed cost per unit will: A) decrease. B) remain the same. C) increase. D) The effect cannot be predicted.

C. increase

E1) #25 Lap Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 80,000 units, 100% complete with respect to materials and 25% complete with respect to conversion costs. The total dollar value of this inventory was $226,000. During the month, 150,000 units were transferred out of the department. The costs per equivalent unit for the month were $2.00 for materials and $3.50 for conversion costs. The cost of the units completed and transferred out of the department was: A) $825,000 B)$821,000 C)$681,000 D)$765,000

A) $825,000

E2) #18 Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 6,600 units, but its actual level of activity was 6,550 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting: Fixed element per month Variable element per unit Revenue - $34.10 Direct labor $0 $6.10 Direct materials 0 13.70 Manufacturing overhead 36,000 1.60 Selling and administrative expenses 25,400 0.80 Total expenses $61,400 $22.20 Actual results for May: Revenue $224,900 Direct labor $39,870 Direct materials $91,500 Manufacturing overhead $43,000 Selling and administrative expenses $30,460 The revenue variance for May would be closest to: A)$1,545 F B)$160 F C)$1,545 U D)$160 U

A)$1,545 F

E2) #9 Meester Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs: Equipment depreciation $81,200 Supervisory expense $7,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools: Machining Order Filling Other Equipment depreciation 0.50 0.20 0.30 Supervisory expense 0.50 0.10 0.40 Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: Activity: MHs (Machining) Orders (Order Filling) Product M0 1,680 860 Product H2 9,710 2,240 Total 11,390 3,100 How much overhead cost is allocated to the Order Filling activity cost pool under activity-based costing? A)$16,940 B)$37,578 C)$60,340 D)$12,230

A)$16,940

E2) #4 Northern Pacific Fixtures Corporation sells a single product for $28 per unit. If variable expenses are 65% of sales and fixed expenses total $9,800, the break-even point is: (Round your intermediate calculations to 2 decimal places.) A)$28,000 B)$18,200 C)$9,800 D)$15,077

A)$28,000

E1) #8 Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 40,500 machine-hours. The estimated variable manufacturing overhead was $4.10 per machine-hour and the estimated total fixed manufacturing overhead was $1,194,345. The predetermined overhead rate for the recently completed year was closest to: A)$33.59 per machine-hour B)$32.59 per machine-hour C)$4.10 per machine-hour D)$29.49 per machine-hour

A)$33.59 per machine-hour

E1) #13 Session Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total direct labor-hours 70,000 Total fixed manufacturing overhead cost$511,000 Variable manufacturing overhead per direct labor-hour$2.10 Recently, Job K913 was completed with the following characteristics: Total direct labor-hours 150 Direct materials$705 Direct labor cost$4,650 The total job cost for Job K913 is closest to: (Round your intermediate calculations to 2 decimal places.) A)$6,765 B)$6,060 C)$2,115 D)$5,355

A)$6,765

E2) #3 Which of the following is correct? The break-even point occurs on the CVP graph where: A)total contribution margin equals total fixed expenses. B)total profit equals total fixed expenses. C)total variable expenses equal total contribution margin. D)total profit equals total expenses.

A)total contribution margin equals total fixed expenses.

E1) #24 Malcolm Company uses a weighted-average process costing system. All materials at Malcolm are added at the beginning of the production process. The equivalent units for materials at Malcolm would be the sum of: A)units in beginning work in process and the units started. B)units in beginning work in process and the units started and completed. C)units in ending work in process and the units started. D)units in ending work in process and the units started and completed.

A)units in beginning work in process and the units started.

E1) #23 Annenbaum Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 500 units. The costs and percentage completion of these units in beginning inventory were: Cost Percent Complete Materials costs $5,800 65% Conversion costs $6,900 45% A total of 6,700 units were started and 6,000 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: Cost Materials costs $125,600 Conversion costs $207,100 The ending inventory was 50% complete with respect to materials and 35% complete with respect to conversion costs. The cost per equivalent unit for materials for the month in the first processing department is closest to: A)$17.60 B)$19.91 C)$19.02 D)$18.42

B) $19.91

E1) #7 Which of the following is NOT a period cost? A) Cost of a seminar concerning tax law updates that was attended by the company's controller. B) Depreciation of factory maintenance equipment. C) Insurance on a company showroom where customers can view new products. D) Salary of a clerk who handles customer billing.

B) Depreciation of factory maintenance equipment.

E1) #6 Which of the following statements is correct in describing manufacturing overhead? A) Manufacturing overhead when combined with direct labor cost forms prime cost. B) Manufacturing overhead consists of all manufacturing cost except for prime cost. C) Manufacturing overhead is a period cost. D) Manufacturing overhead when combined with direct materials cost forms conversion cost.

B) Manufacturing overhead consists of all manufacturing cost except for prime cost.

E2) #19 Paulis Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During February, the kennel budgeted for 4,500 tenant-days, but its actual level of activity was 4,480 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February: Data used in budgeting: Fixed element per month Variable element per tenant-day Revenue - $31.00 Wages and salaries $3,500 $7.00 Food and supplies 900 11.80 Facility expenses 8,500 4.00 Administrative expenses 8,300 0.40 Total expenses $21,200 $23.20 Actual results for February: Revenue$108,280 Wages and salaries $23,550 Food and supplies $36,795 Facility expenses $19,300 Administrative expenses $9,150 The net operating income in the planning budget for February would be closest to: A)$19,391 B)$13,900 C)$19,485 D)$13,744

B)$13,900

E1) #12 Ahlheim Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Forming Assembly Machine-hours 16,000 15,000 Direct labor-hours 2,000 6,000 Total fixed manufacturing overhead cost $102,400 $55,200 Variable manufacturing overhead per machine-hour $2.30 Variable manufacturing overhead per direct labor-hour $4.50 During the current month the company started and finished Job T924. The following data were recorded for this job: Job T924: Forming Assembly Machine-hours 70 20 Direct labor-hours 30 40 Direct materials $870 $385 Direct labor cost $630 $840 The estimated total manufacturing overhead for the Forming Department is closest to: A)$36,800 B)$139,200 C)$102,400 D)$309,867

B)$139,200

E2) #13 The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable manufacturing overhead is $5.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $75,000 per month, of which $15,000 is factory depreciation. If the budgeted direct labor time for December is 8,000 hours, then average budgeted manufacturing overhead per direct labor-hour is closest to: A)$12.50 per direct labor-hour B)$14.38 per direct labor-hour C)$16.25 per direct labor-hour D)$9.38 per direct labor-hour

B)$14.38 per direct labor-hour

E1) #11 Kostelnik Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $237,000, variable manufacturing overhead of $3.90 per machine-hour, and 30,000 machine-hours. The company has provided the following data concerning Job A496 which was recently completed: Number of units in the job 20 Total machine-hours 80 Direct materials$500 Direct labor cost$2,160 The unit product cost for Job A496 is closest to: (Round your intermediate calculations to 2 decimal places.) A)$45.05 B)$180.20 C)$133.00 D)$72.20

B)$180.20

E1) #9 Brothern Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below: Estimates made at the beginning of the year: Estimated machine-hours 49,400 Estimated variable manufacturing overhead$5.02per machine-hour Estimated total fixed manufacturing overhead$1,445,444 B)$34.28 per machine-hour Actual machine-hours for the year 47,400 The predetermined overhead rate for the recently completed year was closest to: A)$34.08 per machine-hour B)$34.28 per machine-hour C)$29.26 per machine-hour D)$5.02 per machine-hour

B)$34.28 per machine-hour

E2) #14 Sleeter Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: -Budgeted unit sales for April, May, June, and July are 7,500, 11,900, 10,800, and 14,800 units, respectively. All sales are on credit. -The ending finished goods inventory equals 30% of the following month's sales. -The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 6 pounds of raw materials. The raw materials cost $5.00 per pound. If 72,000 pounds of raw materials are required for production in June, then the budgeted cost of raw material purchases for May is closest to: A)$347,100 B)$350,970 C)$559,230 D)$455,100

B)$350,970

E1) #21 Saada Corporation uses the weighted-average method in its process costing system. The Fitting Department is the second department in its production process. The data below summarize the department's operations in March. Units Percent Complete Beginning work in process inventory 6,100 20% Transferred in from the prior department during March 61,400 Ending work in process inventory 9,600 60% The Fitting Department's cost per equivalent unit for conversion cost for March was $6.11. How much conversion cost was assigned to the units transferred out of the Fitting Department during March? A)$328,022 B)$353,769 C)$412,425 D)$375,154

B)$353,769

E2) #20 Neubert Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,300 units, but its actual level of activity was 5,340 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting: Fixed Element per Month Variable element per unit Revenue - $30.00 Direct labor $0 $3.50 Direct materials 0 10.40 Manufacturing overhead 33,300 1.50 Selling and administrative expenses 25,000 0.50 Total expenses $58,300 $15.90 Actual results for December: Revenue $156,340 Direct labor $17,980 Direct materials $56,566 Manufacturing overhead $41,040 Selling and administrative expenses $28,870 The manufacturing overhead in the flexible budget for December would be closest to: A)$41,350 B)$41,310 C)$41,250 D)$40,733

B)$41,310

E2) #16 The Bandeiras Corporation, a merchandising firm, has budgeted its activity for December according to the following information: -Sales at $550,000, all for cash. -Merchandise inventory on November 30 was $300,000. -The cash balance at December 1 was $25,000. -Selling and administrative expenses are budgeted at $60,000 for -December and are paid in cash. -Budgeted depreciation for December is $35,000. -The planned merchandise inventory on December 31 is $270,000. -The cost of goods sold is 75% of the sales price. -All purchases are paid for in cash. -There is no interest expense or income tax expense. The budgeted net income for December is: A)$107,500 B)$42,500 C)$77,500 D)$137,500

B)$42,500

E1) #16 Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 22,040 hours and the total estimated manufacturing overhead was $555,408. At the end of the year, actual direct labor-hours for the year were 21,700 hours and the actual manufacturing overhead for the year was $555,408. Overhead at the end of the year was: A)$8,618 underapplied B)$8,568 underapplied C)$8,618 overapplied D)$8,568 overapplied

B)$8,568 underapplied

E2) #2 Bristo Corporation has sales of 1,600 units at $50 per unit. Variable expenses are 25% of the selling price. If total fixed expenses are $50,000, the degree of operating leverage is: A)8.00 B)6.00 C)2.00 D)2.17

B)6.00

E1) #22 Arona Corporation manufactures canoes in two departments, Fabrication and Waterproofing. In the Fabrication Department, fiberglass panels are attached to a canoe- shaped aluminum frame. The canoes are then transferred to the Waterproofing department to be coated with sealant. Arona uses a weighted-average process cost system to collect costs in both departments. All materials in the Fabrication Department are added at the beginning of the production process. On July 1, the Fabrication Department had 30 canoes in process that were 20% complete with respect to conversion cost. On July 31, Fabrication had 20 canoes in process that were 40% complete with respect to conversion cost. During July, the Fabrication Department completed 81 canoes and transferred them to the Waterproofing Department. What are the Fabrication Department's equivalent units of production related to conversion costs for July? A)111 B)89 C)101 D)73

B)89

E1) #3 The cost of direct materials is classified as a: Conversion cost Prime cost A) No No B) Yes No C)No Yes D)Yes Yes

C)

E1) #5 The fixed portion of the cost of electricity for a manufacturing facility is classified as a: Period cost Product Cost A)Yes Yes B)No No C)No Yes D)Yes No

C)

E1) #19 In a job-order costing system, indirect labor cost is usually recorded as a debit to: A) Finished Goods. B) Work in Process. C) Manufacturing Overhead. D) Cost of Goods Sold.

C) Manufacturing Overhead.

Sagon Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $89,000 and the total of the credits to the account was $63,000. Which of the following statements is true? A) Manufacturing overhead applied to Work in Process for the month was $89,000. B) Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $89,000. C) Manufacturing overhead for the month was underapplied by $26,000. D)Actual manufacturing overhead incurred during the month was $63,000.

C) Manufacturing overhead for the month was underapplied by $26,000.

E2) #1 Schister Systems uses the following data in its Cost-Volume-Profit analyses: Total Sales $355,000 Variable expenses 213,000 Contribution margin 142,000 Fixed expenses 111,000 Net operating income $31,000 What is total contribution margin if sales volume increases by 30%? A)$21,700 B)$142,000 C)$184,600 D)$40,300

C)$184,600

E2) #10 Eccles Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Costs: Wages and salaries $293,000 Depreciation 220,000 Utilities 141,000 Total $654,000 Distribution of resource consumption: Activity Cost Pools: Assembly Setting Up Other Total Wages and salaries 65% 25% 10% 100% Depreciation 45% 25% 30% 100% Utilities 20% 70% 10% 100% How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool? A)$425,100 B)$304,983 C)$317,650 D)$130,800

C)$317,650

E2) #11 Bennette Corporation has provided the following data concerning its overhead costs for the coming year: Wages and salaries $530,000 Depreciation 215,000 Rent 235,000 Total $980,000 The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year: Activity Cost Pool: Total Activity Assembly 35,000labor-hours Order processing 450orders Other Not applicable The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization-sustaining costs. The distribution of resource consumption across activity cost pools is given below: Activity Cost Pools: Assembly Order Processing Other Total Wages and salaries 35% 30% 35% 100% Depreciation 10% 40% 50% 100% Rent 30% 25% 45% 100% The activity rate for the Order Processing activity cost pool is closest to: A) $544 per order B)$665 per order C)$675 per order D)$685 per order

C)$675 per order

E1) #20 Darden Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 19,600 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $20,200. An additional 92,000 units were started into production during the month. There were 25,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $844,880 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to: A)$10.600 B)$9.886 C)$8.310 D)$9.979

C)$8.310

E2) #15 Fredericksen Corporation makes one product and has provided the following information: Budgeted sales, February 8,700units Raw materials requirement per unit of output 6 pounds Raw materials cost $2.00per pound Direct labor requirement per unit of output 2.9direct labor-hours Direct labor wage rate $21.00per direct labor-hour Predetermined overhead rate (all variable) $10.00per direct labor-hour Variable selling and administrative expense $1.10per unit sold Fixed selling and administrative expense $80,000per month The estimated cost of goods sold for February is closest to: A)$252,300 B)$634,230 C)$886,530 D)$721,230

C)$886,530

D.E1) #1 Vignana Corporation manufactures and sells hand-painted clay figurines of popular sports heroes. Shown below are some of the costs incurred by Vignana for last year: Cost of clay used in production$71,000 Wages paid to the workers who paint the figurines$84,000 Wages paid to the sales manager's secretary$36,000 Cost of junk mail advertising$53,000 What is the total of the product costs above? A)$173,000 B)$155,000 C)$89,000 D)$0

C. $89,000

E2) #8 In its first year of operations, Bronfren Corporation produced 800,000 sets and sold 780,000 sets of artificial tan lines. What would have happened to net operating income in this first year under the following costing methods if Bronfren had produced 20,000 fewer sets? (Assume that Bronfren has both variable and fixed production costs.) Variable costing Absorption costing A)No effect Increase B)Decrease Increase C)Decrease Decrease D)No effect Decrease

D)

E1) #4 The following costs were incurred in May: Direct materials$41,000 Direct labor$13,000 Manufacturing overhead$46,000 Selling expenses$18,000 Administrative expenses$15,000 Conversion costs during the month totaled: A)$87,000 B)$133,000 C)$54,000 D)$59,000

D) $59,000

E1) #18 If manufacturing overhead is underapplied, then: A) the predetermined overhead rate is too high. B) the Manufacturing Overhead account will have a credit balance at the end of the year. C) actual manufacturing overhead cost is less than estimated manufacturing overhead cost. D) the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred.

D) the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred.

E2) #7 Davison Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $95 Units in beginning inventory 0 Units produced 5,000 Units sold 4,900 Units in ending inventory 100 Variable costs per unit: Direct materials $26 Direct labor $40 Variable manufacturing overhead $1 Variable selling and administrative expense $4 Fixed costs: Fixed manufacturing overhead $40,000 Fixed selling and administrative expense $73,500 What is the total period cost for the month under variable costing? A)$40,000 B)$113,500 C)$93,100 D)$133,100

D)$133,100

E1) #15 Rediger Inc., a manufacturing Corporation, has provided the following data for the month of June. The balance in the Work in Process inventory account was $25,000 at the beginning of the month and $18,500 at the end of the month. During the month, the Corporation incurred direct materials cost of $55,600 and direct labor cost of $28,900. The actual manufacturing overhead cost incurred was $53,300. The manufacturing overhead cost applied to Work in Process was $51,600. The cost of goods manufactured for June was: A)$136,100. B)$144,300. C)$137,800. D)$142,600.

D)$142,600.

E1) #14 Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours 30,000 Total fixed manufacturing overhead cost$252,000 Variable manufacturing overhead per machine-hour$2.10 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 30 Direct materials$675 Direct labor cost$1,050 If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.) A)$241.50 B)$305.60 C)$81.60 D)$285.60

D)$285.60

E1) #10 Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total direct labor-hours 85,000 Total fixed manufacturing overhead cost$306,000 Variable manufacturing overhead per direct labor-hour$6.00 Recently, Job P951 was completed with the following characteristics: Number of units in the job 25 Total direct labor-hours 100 Direct materials$700 Direct labor cost$8,500 The unit product cost for Job P951 is closest to: (Round your intermediate calculations to 2 decimal places.) A)$306.40 B)$101.60 C)$240.00 D)$406.40

D)$406.40

E2) #6 The following data pertain to last year's operations at Clarkson, Incorporated, a company that produces a single product: Units in beginning inventory 0 Units produced 100,000 Units sold 98,000 Selling price per unit $10.00 Variable costs per unit: Direct materials $1.50 Direct labor $2.50 Variable manufacturing overhead $1.00 Variable selling and administrative expense $2.00 Fixed expenses per year: Fixed manufacturing overhead $200,000 Fixed selling and administrative expense $50,000 What was the absorption costing net operating income last year? A)$44,000 B)$50,000 C)$49,000 D)$48,000

D)$48,000

E2) #17 Speyer Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,200 patient-visits and the actual level of activity was 1,190 patient-visits. The cost formula for administrative expenses is $4.40 per patient-visit plus $24,000 per month. The actual administrative expense was $23,500. In the clinic's flexible budget performance report for last month, the spending variance for administrative expenses was: A)$2,320 F B)$44 F C)$5,780 F D)$5,736 F

D)$5,736 F

E2) #5 Columbia Corporation produces a single product. The company's variable costing income statement for November appears below: Columbia Corporation Income Statement For the Month Sales ($21 per unit) $905,100 Variable expenses: Variable cost of goods sold 560,300 Variable selling expense 129,300 Total variable expenses 689,600 Contribution margin 215,500 Fixed expenses: Manufacturing 1 41,640 Selling and administrative 35,410 Total fixed expenses 177,050 Net operating income$38,450 During November, 35,410 units were manufactured and 8,520 units were in beginning inventory. Variable production costs per unit, total fixed manufacturing expenses, and the number of units produced were the same in prior months. Under absorption costing, for November the company would report a: A)$35,410 profit B)$7,690 loss C)$38,450 profit D)$7,690 profit

D)$7,690 profit