Accounting 203: midterm 1

Crawford Company has the following equivalent units for July: materials 20,000 and conversion costs 18,000. Production cost data are: Beg WIP...................6,400(materials).........3,000(Conversion) Costs Added.........50,400(materials).........42,000(Conversion)

$56,800 ÷ 20,000 = $2.84; $45,000 ÷ 18,000 = $2.50[(Total materials cost ÷ Equivalent units = Unit cost); (Total conversion cost ÷ Equivalent units = Unit cost)] Ans: 2.84(materials)..........2.50(conversion cost)

Manufacturing costs that cannot be classified as either direct materials or direct labor are known as

Manufacturing Overhead

Which one of the following characteristics would likely be associated with a just-in-time inventory method?

Minimal finished goods inventory on hand

Wood Company has beginning work in process inventory of $138,000 and total manufacturing costs of $477,000. If cost of goods manufactured is $480,000, what is the cost of the ending work in process inventory?

$138,000 + $477,000 - X = $480,000; X = $135,000(Beginning work in process inventory + Total manufacturing cost - Ending work in process inventory = Cost of goods manufactured) Ans: $135,000

Given the following data for Harder Company, compute cost of goods manufactured: DM: $120,000 DL: 200,000 Manufacturing OH: 180,000 Operating expenses: 175,000 Beg WIP: $20,000 End WIP: $10,000 Beg Finished Goods: 25,000 End Finished Goods: 15,000

$20,000 + $120,000 + $200,000 + $180,000 - $10,000 = $510,000(Beginning work in process inventory + Direct materials used + Direct labor + Manufacturing overhead - Ending work in process inventory = Cost of goods manufactured) Ans: $510,000

Norman Company manufactures customized desks. The following pertains to Job No. 953: DM: $22,800 DL hours worked: 600 DL per hour: $16 machine hours: 400 Applied manufacturing OH per MH: $30. What is the total manufacturing cost for Job No. 953?

$22,800 + (600 x $16) + (400 x $30) = $44,400[Direct materials + (Direct labor hours worked x Direct labor hour rate) + (Machine hours used x Factory overhead rate) = Total manufacturing cost of job] Ans:$44,400

Barnes Company applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period: estimated annual OH: 3,000,000 actual annual OH: 2,970,000 estimated machine hours: 300,000 Actual machine hours: 295,000

$3,000,000 ÷ 300,000 = $10/machine hour; 295,000 x $10 = $2,950,000; $2,950,000 - $2,970,000 = $25,000 underapplied(Estimated overhead ÷ Estimated machine hours = Predetermined overhead rate; Actual machine hours x Predetermined overhead rate = Overhead applied; Overhead applied - Actual overhead = Under/overapplied overhead) Ans:$2,950,000 applied and $20,000 underapplied

A department had the following information for the month: Total material Cost......................................$300,000 Conversion cost per unit.........................$3 Total manufacturing cost per unit......$5 What are the equivalent units of production for materials?

$5 - $3 = $2; $300,000 ÷ X = $2; X = 150,000(Total manufacturing cost per unit - Conversion cost per unit = Materials cost per unit; Total materials cost ÷ Equivalent units = Materials cost per unit) Ans: 150,000

Materials costs of $600,000 and conversion costs of $642,600 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 100,000 units were started into production in September, and there were 8,000 units in ending work in process that were 40% complete at the end of September. What was the total amount of manufacturing costs assigned to the 8,000 units in the ending work in process?

$600,000 ÷ 100,000 = $6.00; $642,600 ÷ (92,000 + (8,000 x 40%)) = $6.75; ($6 x 8,000) + ($6.75 x (8,000 x 40%)) = $69,600[(Total materials cost ÷ Equivalent units = Unit cost, materials); (Total conversion cost ÷ Equivalent units = Unit cost, conversion); (Unit cost, materials x Ending WIP units) + (Unit cost, conversion x (Ending WIP units x % complete)) = Cost ending WIP] Ans:$69,600

Conversion cost per unit equals $7.00. Total materials costs are $80,000. Equivalent units are 20,000. How much is the total manufacturing cost per unit?

$7.00 + ($80,000 ÷ 20,000) = $11.00[Unit cost, conversion + (Total materials cost ÷ Equivalent units) = Unit cost, total manufacturing cost] Ans: $11.00

Emley Company incurred direct materials costs of $750,000 during the year. Manufacturing overhead applied was $700,000 and is applied based on direct labor costs. The predetermined overhead rate is 70%. How much are Emley Company's total manufacturing costs for the year?

$700,000 ÷ 70% = $1,000,000; $750,000 + $1,000,000 + $700,000 = $2,450,000(Manufacturing overhead ÷ Overhead rate = Direct labor cost; Direct materials + Direct labor + Manufacturing overhead applied = Total manufacturing costs) Ans: $2,450,00

A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 90,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January?

(20,000 units x 100%) + ((90,000 - 20,000) x 100%) = 90,000[(Ending WIP units x % complete) + ((Units started into production - Ending WIP units) x % complete) = Equivalent units] Ans: 90,000 equivalent units.

Materials costs of $1,200,000 and conversion costs of $1,530,000 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 20,000 units were started into production in September, and there were 5,000 units in ending work in process that were 40% complete at the end of September. What was the total amount of manufacturing costs assigned to the 5,000 units in the ending work in process?

0 + 20,000 = 20,000; 5,000 + X = 20,000; X = 15,000; $1,200,000 ÷ (15,000 + 5,000) = $60; ($1,530,000) ÷ (15,000 + (5,000 x 40%)) = $90; (5,000 x 100% x $60) + (5,000 x 40% x $90) = $480,000[Beginning WIP units + Units started = Units accounted for; Ending WIP units + Units completed and transferred = Units accounted for; Total materials cost ÷ (Units completed and transferred + (Ending WIP units x % complete)) = Unit cost, materials; Total conversion cost ÷ (Units completed and transferred + (Ending WIP units x % complete)) = Unit cost, conversion); (Ending WIP units x % complete x Unit cost, material) + (Ending WIP units x % complete x Unit cost, conversion) = Total cost of ending WIP] Ans:$480,000.

Gloria Company had no beginning work in process. During the period, 16,000 units were completed, and there were 1,200 units of ending work in process. How many units were started into production?

0 + X - 1,200 = 16,000; X = 17,200(Beginning WIP units + Units transferred in - Ending WIP units = Units transferred out) Ans: 17,200

Hanker Company had the following department data on physical units: Beg WIP....................................................... 2,500 Competed & Transferred out............ 18,000 End WIP........................................................ 2,000 Materials are added at the beginning of the process. What is the total number of equivalent units for materials if the FIFO method is used?

18,000 + 2,000 - 2,500 = 17,500(Completed and transferred out + Work in process, ending - Work in process, beginning = Total number of equivalent units for materials if the FIFO method is used) Ans: 17,500

A process began the month with 3,000 units in the beginning work in process inventory and ended the month with 2,000 units in the ending work in process. If 22,000 units were completed and transferred out of the process during the month, how many units were started into production during the month?

2,000 + 22,000 = 24,000; 3,000 + X = 24,000; X = 21,000[(Ending WIP units + Units transferred out = Units accounted for); (Beginning WIP units + Units started = Units accounted for)] Ans:21,000

Department 1 of a two department production process shows: Beg WIP.........................................10,000 End WIP.........................................50,000 Total units accounted for......180,000 How many units were transferred out to Department 2?

50,000 + X = 180,000; X = 130,000(Ending WIP units + Units transferred out = Units accounted for Ans: 130,000

Which of the following is not included in factory labor costs?

All of these are included (Gross earnings, Employer payroll taxes, Fringe benefits.)

At the end of the year, any balance in the Manufacturing Overhead account is generally eliminated by adjusting

Cost of Goods Sold.

Which one of the following does not appear on the balance sheet of a manufacturing company?

Cost of goods manufactured

If the total manufacturing costs are greater than the cost of goods manufactured, which of the following is correct?

Work in Process Inventory has increased.

In a job order cost accounting system, the Raw Materials Inventory account is

a control account

The two major steps in the flow of costs are

accumulating and assigning.

For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to

cost of goods manufactured.

The entry to record the acquisition of raw materials on account is

debit: raw materials inventory credit: Accounts payable

If the amount of "Cost of goods manufactured" during a period exceeds the amount of "Total manufacturing costs" for the period, then

ending work in process is less than the amount of the beginning work in process inventory.

Financial statements for external users can be described as

general-purpose.

In calculating a predetermined overhead rate, a recent trend in automated manufacturing operations is to choose an activity base related to

machine hours.

Manufacturing Overhead would not have a subsidiary account for

raw materials inventory.

The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the

total manufacturing costs.