Cost Exam One

Casio Company manufactures stereos. For each unit, $3,500 of direct material is used and there is $2,500 of direct manufacturing labor at $25 per hour. Manufacturing overhead is applied at $40 per direct manufacturing labor hour. Compute the cost of each unit.

$10,000

Answer the question below using the following information: Annual Total Fixed Supervision Costs for Carburetor Assembly Line (1) $2,500,000 $2,500,000 $2,500,000 Number of Carburetors Produced (2) 5,000 10,000 15,000 Fixed Supervision Cost Per Custom Carburetor (3) Required: Compute the fixed supervision cost per custom carburetor for 10,000, and 15,000 carburetors produced.

$250;$166.66

The accountant at Magnificent Magic Company reported $180,000 total direct-material cost and 60,000 total direct-material equivalent units. Compute the direct-material cost per equivalent unit.

$3 per equivalent unit

Ice Manufacturing reported the following information: Beginning work-in-process inventory $60,000 Ending work-in-process inventory. 58,000 Beginning finished goods inventory. 160,000 Ending finished goods inventory. 180,000 Cost of goods manufactured. 1,200,000 Required: Compute the cost of goods sold.

$1,180,000

The manager at Printing Solutions Company reported that a machine used 1,000 machine-hours. The cost allocation rate is $75 per machine-hour. Required: How should the manager allocate this cost?

$75,000

The store has fixed costs of $25,000 and a contribution margin per unit of $90 per unit. Compute the breakeven quantity in units.

277.77 units

The Tree Shoppe reported the following information: Budgeted revenues $10,000 Breakeven revenues 4,000 Budgeted sales (in units) 35 Breakeven sales (in units) 15 Required: Compute the margin of safety percentage at the Tree Shoppe. Correct!

60%

which of the following is correct about indirect costs of a cost object?

cannot be traced to a cost object in an economically feasible way

Cal's Baseball Clothing Corporation sells material to manufacturers to sew the uniforms. To meet their target the store must earn a net income of $1,000, what is the target operating income, based on an income tax rate of 40%?

$1,666

The manager at the Yarn Shoppe needs to determine the price she could sell 50 units of wool yarn and continue to earn an operating income of $1,400. Review the following information. Target operating income $1,400 Fixed costs 1,900 Targeted contribution margin $3,300 Variable cost per unit 25 Required: Compute the target price of 50 units to earn the operating income of $1,400.

$91

When 5,000 units are produced, variable costs are $6 per unit. Therefore, when 20,000 units are produced:

variable costs will total $120,000

Tia's Tea Manufacturing manufactures organic tea and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $8.00 per direct labor hour. The following data was obtained from the accountant's records for December 2012: Direct materials $100,000 Direct labor (2,000 hours @ $8 per hour) $16,000 Indirect $5,000 Plant facility rent $25,000 Depreciation on plant machinery and equipment $8,000 Sales and commissions paid $10,000 Administrative expenses $6,000 Compute the actual amount of manufacturing overhead cost occurred in December 2012.

$38,000

In 2012, Alan's Seafood Supply Manufacturing uses machine-hours as the only overhead cost-allocation base. The accountant reported the following information: Estimated: Manufacturing overhead costs $225,000 Machine-hours 50,000 Actual: Manufacturing overhead costs $250,000 Machine-hours 55,000 Using job costing, compute the 2012 actual indirect cost rate.

$4.54 per machine hour

Virginia Consultants employs 10 full-time management consultants. The budgeted annual compensation per employee is $75,000. The average time charged per client is 250 hours per year. The professional consultant labor costs are included in a single direct-cost category and they are allocated to jobs on a per-hour basis. The other costs associated with the consultant firm are included in a single indirect-cost pool, allocated according to professional labor hours. The budgeted indirect costs for the year are $500,000, and the firm expects to have 50 new clients in the next year. What is the budgeted direct-labor cost rate per hour?

$60 per hour

John's Assembly Service provided the following data for the assembly department for January 2013: Physical Units for January 2013 Work-in-process, beg inv (January 1) 0 units Started during January 600 units Completed & transferred out during Jan 600 units Work in process, end inv (January 31) 0 units Total Costs for January 2013 Direct material costs added during Jan $36,000 Conversion costs added during January 24,000 Tot assembly dptmt costs add during Jan $60,000 Required: Compute the direct material cost per unit; the conversion cost per unit; and, the total department cost per unit.

$60, $40, $100

The Frame Shoppe reported the following information: Contribution margin per unit $90 Contribution margin $3,500 Operating income $1,500 Required: Compute the degree of operating leverage at the Frame Shoppe.

2.33

The manager at Greenies Floral Shoppe estimated that the 50 units in ending inventory were 60% complete for conversion costs. All conversion costs represented in the 60% were used to make fully completed units. Required: Compute the number of units completed at the end of the month.

30 completed units of output

Sammy's Motorcycle Shoppe reported the following information: Target operating income $1,300 Fixed costs 2,200 Variable costs per unit 100 Required: Compute the number of units required to be sold at $200 to earn a target income of $1,200.

35 units

The Studio Furniture Company manufactures leather recliners. In February, the firm's Assembly Division started production of 50,000 leather recliners. During the month, the firm completed 55,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by the accounting manager. The Operations Manager reported that the beginning work in process was 30% complete as to conversion costs, while ending work-in process was 80% completed as to conversion costs. Beginning Inventory Direct materials $24,000 Conversion costs $35,000 Manufacturing costs added during the accounting period Direct materials $168,000 Conversion costs $278,000 Required: Using the FIFO method, determine how many units that were started in February were completed during February?

40,000 units

The accountant at John's Cycle Manufacturing Company uses the weighted-average costing method. The accountant reported that there were 400 equivalent units of work completed to date, and reported the following cost: Summary of Total Costs Beginning work in progress (direct materials, $15,000 + conversion costs $6,000). $21,000 Costs added during March (direct materials, $12,000 + conversion costs $18,000) $30,000 Total costs to account for in March. $51,000 Required: Compute the conversion cost-per-unit using the weighted-average costing method.

60

The manager at Mary's Floral Service reported the sale of 600 units of a single product that resulted in $75,000 of sales revenue, $15,000 in variable costs, and $8,000 of fixed costs. Required: Compute the contribution margin percentage.

80%

Sunny Pastures reported the following information: Fixed costs $3,000 Target Operating Income. 5,000 Contribution margin per unit 90 Required: Compute the quantity of units required to be sold to have an operating income of $5,000.

88.88 units

The managerial accountant at the Williamsburg Outlet Shoppe reported the following stand-alone costs: Stand-alone costs $130,000,000 Stand-alone costs 70,000,000 Required: Use the two stand-alone costs to allocate the common cost of $140,000,000 in millions for the Williamsburg Outlet Shoppe using the stand-alone cost-allocation method.

91 million

The act that required CEOs and CFOs to certify that their financial statements are fairly represent the results of operations is the:

Sarbanes Oxley Act

the managers at Apple are successful because they offer consumers unique and different products. Which strategy do they use to attract and retain customers?

a product differentiation strategy

pricing and product-mix decisions include:

all costs incurred along the value chain

the cost object is

anything for which a measurement of costs is desired

planning

compromises forecasting and estimating the effects of planning decisions, evaluations of performance, and feedback

What is the second step of process costing?

compute output in terms of equivalent units

if each motorcycle requires a fan belt that costs $20 and 2,000 motorcycles are produced in the month, the total cost for the fan belts is:

considered to be a direct variable cost

the term used to describe the concept that included providing financial information for reports to managers and shareholders, and oversight to the overall operations of the accounting system is

controllership

the assignment of indirect costs is

cost allocation

The term that refers to the cost of goods brought to completion, whether they were started before or during the accounting period is:

cost of goods manufactured.

When 40,000 units are produced, fixed costs are $16 per unit. Therefore, when 80,000 units are produced, fixed costs will:

decrease to $8 per unit.

when individual jobs are completed, work-in-process inventory becomes:

finished goods manufactured

The process-costing method that assumes the earliest equivalent units in work in process are completed first is:

first in, first out (FIFO)

Management Accounting

focuses on measuring, analyzing, and reporting financial and non-financial information to help managers estimate future revenue, costs, and other measures to forecast activities and formulate strategies to increase the competitive advantage of the organization

Managerial accountants realize that a distinct feature of the first-in, first-out (FIFO) process-costing method is that:

it keeps separate work completed on beginning inventory before the current period from work completed in the current period.

The two underlying reasons that managers use longer time periods, such as a year, to calculate indirect-cost rates are:

numerator reason; denominator reason

which of the following is not an ethical behavior of the Practitioner's of the Management Accounting and Financial Managers?

permits the executives to accept bribes to award supply contracts to foreign firms

masses of identical or similar units of a product or service are in:

process costing systems

which of the following is not one the six primary business functions that managerial accountants use to create value for their customers?

profit focus versus customer service

which of the following is not a key success factor that managerial accountants use to promote sustainability in their organizations?

relevance

which of the following is not a standard of ethical professional practice as outlined by the Institute of Management Accountants?

reliability

which of the following is not a true statement about a manager that utilizes the cost-benefit approach?

senior managers are unable to compare the expected benefits to the expected costs associated with a project

________ ________ is a "what-if" technique that managers use to examine how an outcome will change if the original predicted data are not achieved or if an underlying assumption changes.

sensitivity analysis

cost accumulation

the collection of cost data in some organized way by means of an accounting system

Which of the following is not a concern to a manager that utilizes the process-costing system?

the cost object is known as a unit or multiple units of a distinct product

Which of the following is not an assumption of cost-volume-profit (CVP) analysis?

the total costs are never separated into components in the analysis

which of the following is not a benefit of the normal-costing system?

there is under or over allocated overhead