Final Cost Accounting
The following information is available for the XYZ Company for the month of July: Static Budget Actual Units 7,000 6,650 Sales revenue $60,000 $55,715 Variable manufacturing costs $15,000 $14,250 Fixed manufacturing costs $20,000 $17,000 Variable selling & administrative expense $10,000 $10,500 Fixed selling & administrative expense $15,000 $12,000 The total sales-volume variance for operating income for the month of July would be: $1,750 unfavorable. $1,965 unfavorable. $1,965 favorable. $1,750 favorable.
$1,750 unfavorable.
Sales total $320,000 when variable costs total $200,000 and fixed costs total $60,000. The sales volume is 5,000 units. The breakeven point in sales dollars is ________. *$25,000 *$160,000 *$150,000 *$320,000
$160,000
XYZ Company has the following sales budget for 2018: May $164,000 June $145,000 July $206,000 August $181,000 September 168,000 October 203,000 November 209,000 December 185,000 Sales are immediately due, however the cash collection of sales, historically, has been as follows: 55% of sales collected in the month of sale, 35% of sales collected in the month following the sale, 7% of sales collected in the second month following the sale, and 3% of sales are uncollectible. Cash collections for August are ________. *$181,000 *$188,170 *$170,170 *$181,800
$181,800
XYZ Corporation's master budget plans for 6,000 units monthly. The master budget includes indirect labor cost of $432,000 annually. The company considers indirect labor to be a variable cost. During the month of September, 4,480 units of product were produced, and indirect labor costs of $24,776 were incurred. XYZ will report a flexible-budget variance for indirect labor of: *$2,104 unfavorable. *$11,224 favorable. *$11,224 unfavorable. *$2,104 favorable.
$2,104 favorable
XYZ Company manufactures baseball-style hats. Material is introduced at the beginning of the process in the Cutting Department. Conversion costs are incurred (and allocated) uniformly throughout the process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Data for the Cutting Department for the month of February 2008 follow: Work-in-process, January 31—40,000 units 100% complete for direct materials; 20% complete for conversion costs; actual costs of direct materials, $69,500; actual costs of conversion, $45,500 Units started during February 150,000 Units completed during February 160,000 Work-in-process, February 28 ? units 100% complete for direct materials; 40% complete for conversion costs Direct materials added during February [actual costs] $356,000 Conversion costs added during February [actual costs] $420,500 Assuming XYZ uses the first-in, first-out (FIFO) method to account for inventories, the cost per equivalent unit for February with respect with direct materials is: *$2.37 *$2.07 *$2.84 *$2.20
$2.37
ABC Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $34 Variable costs per unit: Direct material $6 Direct manufacturing labor $2.40 Manufacturing overhead $0.80 Selling costs $3.20 Annual fixed costs $78,000 The company sells 12,000 units at the end of the year. The contribution margin per unit is ________. *$15.10 *$25.60 *$21.60 *$24.80
$21.60
In XYZ Co.'s manufacturing process, all direct materials are added at the start. For September, there was no beginning inventory. Direct materials of $248,000 were used during the month. 10,000 units were started in September, and 8,000 units were complete, and 1,600 units were spoiled as expected. Ending work-in-process units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete. What is the direct material cost per equivalent unit? *$24.80 *$31.00 *$25.83 *$29.52
$24.80
XYZ Corporation manufactures wheelbarrows and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units 34,800 units Budgeted machine-hours 12,180 hours Budgeted variable manufacturing overhead costs $304,500 Actual output units produced 36,500 units Actual machine-hours used 11,600 hours Actual variable manufacturing overhead costs $348,500 The unfavorable flexible-budget variance for variable manufacturing overhead is _________.
$29,125
XYZ Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 14,000 units in its beginning work in process inventory that were 80% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $5,640. An additional 72,000 units were started into production during the month and 80,000 units were completed in the Welding Department and transferred to the next processing department. The ending work in process inventory of the Welding Department was 50% complete with respect to conversion costs. A total of $250,000 in conversion costs were incurred in the department during the month. What is the cost per equivalent unit for conversion costs for the month?
$3.08
ABC Corp. sells software during the recruiting seasons. During the current year, 5,000 software packages were sold resulting in $250,000 of sales revenue, $120,000 of variable costs, and $35,000 of fixed costs. If sales increase by $60,000, operating income will increase by ________. *$32,000 *$22,800 *$51,600 *$31,200
$31,200
Assume the following cost information for XYZ Company: Selling price $150 per unit Variable costs $60 per unit Total fixed costs $80,000 Tax rate 25% What minimum volume of sales dollars is required to earn an after-tax net income of $80,000?
$311,111 80,000 / (1-25%) = $106,666.67; CM Ratio = (150 - 60) / 150 = 60% [$80,000 + 106,666.67] / 0.6 = $311,111
XYZ Manufacturing reported the following: Revenue $582,000 Beginning inventory of direct materials, January 1, 2015 28,800 Purchases of direct materials 146,400 Ending inventory of direct materials, December 31, 2015 18,000 Direct manufacturing labor 25,200 Indirect manufacturing costs 40,800 Beginning inventory of finished goods, January 1, 2015 45,600 Cost of goods manufactured 223,200 Ending inventory of finished goods, December 31, 2015 39,600 Operating costs 151,200 What is XYZ's gross margin (or gross profit)?
$352,800 582,000 - (45,600 + 223,200 - 39,600) = $352,800
The following information pertains to the September operating budget for XYZ Corporation, a retailer: Budgeted sales are $166,400 Collections of sales are 70% in the month of sale and 30% the next month Cost of goods sold averages 78% of sales Merchandise purchases total $123,200 Distribution costs are $4,000 each month The budgeted gross margin for September is ________. *$6,592 *$43,200 *$96,096 *$36,608
$36,608
XYZ Accessories Corporation manufactured 18,000 bags during March. The following fixed overhead data pertain to March: Actual Static Budget Production 18,000 units 22,600 units Machine-hours 10,500 hours 11,300 hours Fixed overhead cost for March $500,800 $474,600 What is the amount of fixed overhead allocated to production?
$378,000
Ruben intends to sell his customers a special round-trip airline ticket package. He can purchase the package from the airline carrier for $170 each. The round-trip tickets will be sold for $200 each and the airline intends to reimburse Ruben for any unsold ticket packages. Fixed costs include $5,140 in advertising costs. For every $27,000 of ticket packages sold, operating income will increase by ________.
$4,050 Option 1: CM = 200 - 170 =$30 per unit CM ratio = 30/200= 15% $27,000 x 15% = CM increased = $4,050 Option 2: $27,000 / 200 = 135 tickets 135 x 30 CM per unit = $4,050
XYZ Manufacturing Inc. uses normal costing during the year to allocate manufacturing overhead to jobs in a job costing system. At year end, it uses the adjusted allocation rate approach to account for under-allocated or over-allocated overhead. During 2018, XYZ's manufacturing overhead was over-allocated by 10%. Job 117 had the following costs: Direct materials $1,280 Direct labor $2,720 Manufacturing overhead allocated $1,600 The after-adjustment cost of Job117 would be ___________.
$5,440
XYZ Corporation makes one product and its budgeted selling price per unit is $97. It has provided the following budgeted unit sales (all on credit): January 5,600 units February 6,000 units March 9,500 units April 11,900 units Credit sales are collected: 40% in the month of the sale 60% in the following month The budgeted accounts receivable balance at the end of March is closest to: *$349,200 *$717,800 *$552,900 *$461,720
$552,900
Information for XYZ Company's direct-labor costs for the month of September 2005 was as follows: Actual direct-labor hours 33,000 hours Total actual direct-labor payroll $207,900 Standard direct-labor hours allowed for actual output 35,000 hours Direct-labor efficiency variance — favorable $13,000 What is its direct-labor price (or rate) variance? *$6,600 favorable *$19,600 favorable *$19,600 unfavorable *$6,600 unfavorable
$6,600 favorable
For 2018, XYZ Company decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis: Cost pool Manufacturing overhead costs Activity level Design changes $128,000 400 design changes Setups 550,000 1,600 setups Inspections 70,000 35,000 inspections Total manufacturing overhead costs $748,000 During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Activity Money Managers Hospital Systems Pages 70,000 86,000 Design changes 13 5 Setups 20 12 Inspections 450 600 Under Activity-based Costing, what is the setup cost allocated to Money Managers? *$4,469 *$4,125 *$6,875 *$17,188
$6,875
For 2018, ABC Co. uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $8.00 per unit. The selling price of the product is $25.00. The estimated manufacturing overhead costs are $320,000 and estimated 50,000 machine hours. The actual manufacturing overhead costs are $360,000 and actual machine hours are 55,000. Using job costing, the 2018 actual indirect-cost rate is ________. *$6.55 per machine-hour *$6.40 per machine-hour *$9.85 per machine-hour *$7.20 per machine-hour
$6.55 per machine-hour
Market-size variance = $27,000 (U), sales-mix variance = $240,000 (F), flexible-budget variance = $180,000 (F), sales-volume variance = $360,000 (U), calculate the sales-quantity variance. *$540,000 (U) *$180,000 (U) *$120,000 (U) *$600,000 (U)
$600,000 (U)
XYZ Manufacturing Corporation manufactures two vacuum cleaners, the Standard and the Super. The following information was gathered about the two products: Standard. Super Budgeted sales in units 2,160 540 Budgeted selling price $500 $1,500 Budgeted contribution margin per unit $80. $250 Actual sales in units 1,820 980 Actual selling price $550 $1,400 The total sales-mix variance in terms of the contribution margin is ________. *$71,400 favorable *$11,400 unfavorable *$11,400 favorable *$71,400 unfavorable
$71,400 favorable
XYZ Corp. applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $65 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of a necklace. Estimates for this order include: Direct materials of $35,000; 250 direct manufacturing labor-hours at $25 per hour; and a 30% markup rate on total manufacturing costs. The bid price for this special order is ________.
$74,750
XYZ Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to activity-based costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows: Activities Cost driver Allocation Rate Material handling Number of parts $4 per part Assembly Labor hours $16 per hour Inspection Time at inspection station $9 per minute The current traditional costing system allocates overhead based on direct manufacturing labor hours using a rate of $20 per labor hour. XYZ is currently producing one batch of 8 remote controls. This batch requires 80 parts, 15 direct manufacturing labor hours, and 6 minutes of inspection time. What is the indirect manufacturing cost per remote control under activity-based costing system?
$76.75
XYZ Corporation manufactures two models of office chairs, a standard and a deluxe model. The overhead costs for setups and components pools are $60,000 and $58,900, respectively. The following activity has been compiled: Number of Number of Number of Setups Components Direct Labor Hours Standard 11 6 295 Deluxe 29 13 205 Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the deluxe model? *$56,800 *$62,100 *$83,800 *$59,450
$83,800
The following information pertains to the ABC Corp: Beginning work-in-process inventory $56,000 Ending work-in-process inventory 78,000 Beginning finished goods inventory 159,000 Ending finished goods inventory 122,000 Cost of goods manufactured 850,000 What is cost of goods sold? *$828,000 *$887,000 *$813,000 *$835,000
$887,000
XYZ Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Inspection occurs when units are completed. Spoiled units generally constitute 3% of the good units. Data for December 2017 are as follows: WIP, beginning inventory 12/1/2017 17,600 units Direct materials (100% complete) Conversion costs (20% complete) Started during December 60,900 units Completed and transferred out 12/31/2017 58,200 units WIP, ending inventory 12/31/2017 18,000 units Direct materials (100% complete) Conversion costs (80% complete) Costs for December: WIP, beginning Inventory: Direct materials $183,600 Conversion costs 92,500 Direct materials added 269,280 Conversion costs added 352,800 Normal spoilage totals ________. *1,746 units *1,827 units *2,300 units *2,355 units
1,746 units
XYZ Corporation uses the FIFO method in its process costing system. Beginning inventory in the mixing department consisted of 5,000 units that were 60% complete with respect to conversion costs. Ending work in process inventory consisted of 4,000 units that were 80% complete with respect to conversion costs. If 12,000 units were transferred to the next processing department during the period, the equivalent units of production for conversion cost would be: *17,200 units *11,000 units *12,200 units *15,200 units
12,200 units
XYZ Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Inspection occurs when units are completed. Spoiled units generally constitute 3% of the good units. Data for December 2017 are as follows: WIP, beginning inventory 12/1/2017 17,600 units Direct materials (100% complete) Conversion costs (20% complete) Started during December 60,900 units Completed and transferred out 12/31/2017 58,200 units WIP, ending inventory 12/31/2017 18,000 units Direct materials (100% complete) Conversion costs (80% complete) Costs for December: WIP, beginning Inventory: Direct materials $183,600 Conversion costs 92,500 Direct materials added 269,280 Conversion costs added 352,800 What is the number of total spoiled units? *2,300 units *2,286 units *1,827 units *1,746 units
2,300 units
XYZ Co. expects to sell 26,000 pools for $15 each. Direct materials cost is $3 per pool, direct labor cost is $5 per pool, and manufacturing overhead cost is $1.62 per pool. The following inventory levels apply to 2019: Beginning inventory Ending inventory Direct materials 20,000 units 22,000 units Work-in-process inventory 0 units 100 units Finished goods inventory. 1,800 units 2,600 units How many pools need to be produced in 2019? *28,800 pools *28,900 pools *26,500 pools *26,800 pools
26,800 pools
XYZ Company sells two products. Product J sells for $35 and has variable costs per unit of $20. Product L's selling price and variable costs are $25 and $15, respectively. Fixed costs are $600,000 (total fixed costs) and XYZ sells twice as many units of Product J as Product L. What is the breakeven point in units for Product J?
30,000 units CM (J) = 15; CM (L) = 10 Bundle includes 2Js + 1 L and Bundle CM = $40 Breakeven point in bundles = 600,000 / 40 = 15,000 bundles Breakeven point in units of J = 15,000 × 2 = 30,000 units
XYZ Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Inspection occurs when units are completed. Spoiled units generally constitute 3% of the good units. Data for December 2017 are as follows: WIP, beginning inventory 12/1/2017 17,600 units Direct materials (100% complete) Conversion costs (20% complete) Started during December 60,900 units Completed and transferred out 12/31/2017 58,200 units WIP, ending inventory 12/31/2017 18,000 units Direct materials (100% complete) Conversion costs (80% complete) Costs for December: WIP, beginning Inventory: Direct materials $183,600 Conversion costs 92,500 Direct materials added 269,280 Conversion costs added 352,800 Abnormal spoilage totals ________. *554 units *528 units *540 units *690 units
554 units
XYZ Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Units in beginning work in process inventory 1,000 Materials costs $9,800 Conversion costs. $9,200 Percent complete with respect to materials. 55% Percent complete with respect to conversion. 30% Units started into production during the month. 12,000 Materials costs added during the month $130,400 Conversion costs added during the month. $220,600 Ending work in process inventory: Units in ending work in process inventory 4,000 Percent complete with respect to materials 65% Percent complete with respect to conversion $. 25% How many units were started and completed during the month in the first processing department? *4,450 *3,750 *9,000 *8,000
8,000
Which of the following types of companies would typically use process costing rather than job-order costing? *A small appliance repair shop. *A specialty equipment manufacturer. *A manufacturer of commercial passenger aircraft. *A breakfast cereal manufacturer.
A breakfast cereal manufacturer.
Which of the following statements is true? *An indirect cost of one cost object is also an indirect cost of another cost object. *All direct costs are variable costs. *A direct cost of one cost object may be an indirect cost of another cost object. *All indirect costs are fixed costs.
A direct cost of one cost object may be an indirect cost of another cost object.
Which of the following statements is true about static budget and flexible budget? *A flexible budget is based on the actual output level in the budget period. *A static budget is developed at the end of a period. *A static budget is a type of flexible budget once actual results are known. *A flexible budget contains actual costs for planned output.
A flexible budget is based on the actual output level in the budget period.
Which of the following statements is true about standard costing? *A standard costing system traces direct costs by multiplying the standard prices or rates by the actual quantities of output produced. *A standard costing system allocates overhead costs based on standard overhead cost rates times the actual quantities of the allocation based used. *A standard costing system allocates overhead costs based on the actual overhead cost rates. *A standard costing system traces direct costs by multiplying the standard prices or rates by the standard quantities of inputs allowed for the actual output produced.
A standard costing system traces direct costs by multiplying the standard prices or rates by the standard quantities of inputs allowed for the actual output produced.
XYZ Corp. sells software during the recruiting seasons. During the current year, 2,500 software packages were sold resulting in $125,000 of sales revenue, $62,500 of variable costs, and $35,000 of fixed costs. If sales increase by $60,000, operating income will increase by ________. A) $30,000 B) $31,500 C) $60,000 D) $25,000
A) $30,000 (1- 62,500/125,000) or (125,000 - 62,500)/125,000 = 50%
For 2018, XYZ Co. uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $8.00 per unit. The selling price of the product is $20.00. The estimated manufacturing overhead costs are $256,000 and estimated 50,000 machine hours. The actual manufacturing overhead costs are $288,000 and actual machine hours are 55,000.Using job costing, the 2018 actual indirect-cost rate is closest to ________. A) $5.24 per machine-hour B) $5.76 per machine-hour C) $5.12 per machine-hour D) $4.65 per machine-hour
A) $5.24 per machine-hour
XYZ Company provides the following activity-based costing information: Activities Total Costs Activity-cost drivers Account inquiry $320,000 16,000 hours Account billing $160,000 3,200,000 lines Account verification costs $138,600 60,000 accounts Correspondence letters $19,200 4,000 letters Total costs $637,800 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,700 hours 1,800 hours Account billing lines 820,000 lines 630,000 lines Account verification 23,000 accounts 24,000 accounts Correspondence letters 1,500 letters 2,000 letters How much of the account inquiry costs will be assigned to Department A? A) $54,000 B) $92,000 C) $55,440 D) $75,000
A) $54,000 Stage 1: activities - activity rate = 320,000 / 16,000 Stage 2: products (cost objects) - activity rate x cost drivers used by each cost object Department A = activity rate x 2,700 hours
XYZ Company manufactures baseball-style hats. Material is introduced at the beginning of the process in the Cutting Department. Conversion costs are incurred (and allocated) uniformly throughout the process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Data for the Cutting Department for the month of February is as follow: Work-in-process, January 31—30,000 units 100% complete for direct materials; 40% complete for conversion costsactual costs of direct materials, $55,600; actual costs of conversion, $36,400 Units started during February 160,000 Units completed during February 180,000 Work-in-process, February 28 ? units (30,000+160,000-180,000 = 10,000) 100% complete for direct materials; 20% complete for conversion costs Direct materials added during February [actual costs] $285,000 Conversion costs added during February [actual costs] $365,000 Assuming XYZ uses FIFO to account for inventories, the cost per equivalent unit for February with respect to direct materials is: A) 1.78 B) 2.13 C) 1.60 D) 2.04
A) 1.78 1. EUs= remaining work on beginning WIP 30,000 x (1-100%) + started & completed (180,000 - 30,000) + ending WIP (30,000+160,000 - 180,000) x 100% 2. Cost per EU = $285,000 / EUs
XYZ uses FIFO in its process costing system. The first processing department, the Forming Department, started the month with 30,000 units in its beginning work in process inventory that were 40% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $48,600. 120,000 units were completed and transferred to the next processing department. There were 35,000 units in the ending work in process inventory of the Forming Department that were 20% complete with respect to conversion costs. A total of $875,000 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) 7.61 B) 8.03 C) 6.89 D) 6.29
A) 7.61 Beginning WIP: 30,000 (40%) Started ? Completed: 120,000 Ending WIP: 35,000 (20%) 1. EU (FIFO) = remaining work to be done 30,000 x 60% + started & completed (120,000 - 30,000) + ending WIP 35,000 x 20% = 18,000 + 90,000+7,000 =115,000 2. Cost per EU = $875,000 / 115,000
XYZ Company manufactures several different products. Unit costs associated with Product Q97 are as follows: Direct materials $27 Direct manufacturing labor 13 Variable manufacturing overhead 6 Fixed manufacturing overhead 15 Sales commissions (2% of sales) 9 Administrative salaries 8 Total $78 The percentage of the total variable costs per unit associated with Product Q97 with respect to total cost is closest to _____. A) 71% B) 74% C) 59% D) 52%
A) 71%
Which of the following statements is NOT true of normal spoilage and abnormal spoilage? A) Normal spoilage occurs due to machine breakdowns and operator errors, and it is controllable. B) Normal spoilage arises even when the process is carried out in an efficient manner. C) Both normal and abnormal spoilage have financial statement impact. D) Both normal and abnormal spoilage units affect the equivalent units of production.
A) Normal spoilage occurs due to machine breakdowns and operator errors, and it is controllable.
Which of the following companies will use a process costing system? A) an oil refining company B) a manufacturer of ships C) a custom kitchen cabinet company D) an advertising business
A) an oil refining company
The budgeted indirect-cost rate is calculated ________. A) at the beginning of the year B) during the year C) at the end of each quarter D) at the end of the year
A) at the beginning of the year
In a normal costing system, the Manufacturing Overhead Control account ________. A) is increased by actual overhead costs B) is credited with amounts transferred to Work-in-Process C) is credited with actual overhead costs D) is decreased when indirect materials are used
A) is increased by actual overhead costs
XYZ Inc. manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $18 per direct labor-hour. The following data are obtained from the accounting records for June 2018: Direct materials $170,000 Direct labor (4,600 hours @ $10/hour) 46,000 Indirect labor 17,000 Plant facility rent 34,000 Depreciation on plant machinery and equipment 24,500 Sales commissions 33,000 Administrative expenses 28,000 For June 2018, manufacturing overhead is ________. A) overallocated by $7,300 B) underallocated by $20,700 C) overallocated by $20,700 D) underallocated by $7,300
A) overallocated by $7,300
Which one of the following statements is true of activity-based costing? *Activity-based costing system can assign all direct costs of the products more accurately compared with traditional costing system. *Activity-based costing focuses on activities that account for a sizable amount of indirect costs. *Activity-based costing ignores the allocation of marketing and distribution costs. *Activity-based costing systems assume all costs are variable costs.
Activity-based costing focuses on activities that account for a sizable amount of indirect costs.
XYZ Corporation manufactures two models of office chairs, a standard and a deluxe model. The overhead costs for setups and components pools are $48,000 and $50,000, respectively. The following activity has been compiled: * information in image * Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model? A) $30,000 B) $36,500 C) $31,500 D) $57,820
B) $36,500 Step 1: activities: setup rate = $48,000 / (11+21); components rate = $50,000 / (8+12) Step 2: standard model: setup rate x 11 + component rate x 8 = overhead costs allocated to standard model
In XYZ Co.'s manufacturing process, all direct materials are added at the start. For September, there was no beginning inventory. Direct materials of $372,000 were used during the month. 8,000 units were started in September, and 6,000 units were complete, and 800 units were spoiled as expected. Ending work-in-process units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete. What is the direct material cost per equivalent unit? A) $62.00 B) $46.50 C) $51.67 D) $71.54
B) $46.50 Total costs 372,000 / EU (materials) 8,000
XYZ Corporation uses the FIFO method in its process costing system. Beginning inventory in the mixing department consisted of 6,000 units that were 70% complete with respect to conversion costs. Ending work in process inventory consisted of 5,000 units that were 80% complete with respect to conversion costs. If 10,000 units were transferred to the next processing department during the period, the equivalent units of production for conversion cost would be: A) 5,800 units B) 9,800 units C) 6,600 units D) 14,000 units
B) 9,800 units FIFO EU = remaining work on beginning WIP 6,000 x (1-70%) + started & completed (10,000 - 6,000) + ending WIP 5,000 x 80% =1,800 + 4,000 + 4,000 =9,800 units
Which of the following is true of CVP analysis? A) Costs may be separated into separate inventoriable and period components with respect to the level of output. B) Total revenues and total costs are linear in relation to output units. C) Unit selling price, unit variable costs, and unit fixed costs are known and remain constant. D) Proportion of different products will vary according to demand and supply when multiple products are sold.
B) Total revenues and total costs are linear in relation to output units.
Work-in-process inventory would normally include ________. A) direct materials in stock and awaiting use in the manufacturing process B) goods partially worked on but not yet fully completed C) goods fully completed but not yet sold D) goods returned after being sold to be re-worked on further improvements and quality
B) goods partially worked on but not yet fully completed
Manufacturing overhead costs in an automobile manufacturing plant most likely include ________. A) labor costs of the painting department B) indirect material costs such as lubricants C) leather seat costs D) tire costs
B) indirect material costs such as lubricants
Which of the following is true of unit costs of normal and abnormal spoilage when they are detected at the same inspection point? A. Unit cost of normal spoilage is less than unit cost of abnormal spoilage. B. Unit cost of normal spoilage is equal to unit cost of good units produced and transferred. C. Unit cost of abnormal spoilage is less than unit cost of normal spoilage. D. Unit cost of abnormal spoilage is more than unit cost of good units produced and transferred.
B. Unit cost of normal spoilage is equal to unit cost of good units produced and transferred.
Which of the following defines spoilage? A. units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good, finished units B. units of production whether fully or partially completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices C. residual material that results from manufacturing a product D. products of a joint production process that have low total sales values relative to the total sales value of the main product
B. units of production whether fully or partially completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices
Given the information below, the cost of goods manufactured for 2018 is _____. Beginning finished goods, 1/1/2018 $4,000 Ending finished goods, 12/31/2018 20,000 Cost of goods sold 256,000 Sales revenue 540,000 Operating expenses 164,000 A) $284,000 B) $256,000 C) $272,000 D) $240,000
C) $272,000
XYZ Co. manufactures printers. For each unit, $2,880 of direct material is used and there is $1,920 of direct manufacturing labor at $16 per hour. Manufacturing overhead is applied at $14 per direct manufacturing labor hour. Calculate the profit earned on 50 units if each unit sells for $7,500. A) $35,000 B) $23,800 C) $51,000 D) $33,600
C) $51,000 50 units Revenue: 7,500 x 50 - DM: 2,880 x 50 - DL: 1,920 x 50 - MOH: (1,920 / 16) x 14 Profit =???
XYZ Company manufactures baseball-style hats. Material is introduced at the beginning of the process in the Cutting Department. Conversion costs are incurred (and allocated) uniformly throughout the process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Data for the Cutting Department for the month of February 2008 follow: Work-in-process, January 31— 40,000 units 100% complete for direct materials; 20% complete for conversion costs actual costs of direct materials, $69,500; actual costs of conversion, $45,500 Units started during February 150,000 Units completed during February 180,000 Work-in-process, February 28 10,000 units 100% complete for direct materials; 80% complete for conversion costs Direct materials added during February [actual costs] $356,000 Conversion costs added during February [actual costs] $420,500 Assuming XYZ uses the weighted-average method to account for inventories, the equivalent units of work for the month of February with respect to conversion costs are: A) 182,000 B) 174,000 C) 188,000 D) 140,000
C) 188,000 Weighted average EU (conversion) = completed 180,000 + ending WIP 10,000 x 80%
If the contribution margin ratio is 0.60, targeted operating income is $95,000, and targeted sales volume in dollars is $530,000, then the degree of operating leverage is ________. A) 0.30 B) 0.67 C) 3.35 D) 2.23
C) 3.35
Which of the following statements is true? A) All costs have cost drivers in the short run. B) Volume of production is a cost driver of distribution costs. C) A direct cost of one cost object may be an indirect cost of another cost object. D) All indirect costs are fixed costs.
C) A direct cost of one cost object may be an indirect cost of another cost object.
Which of the following best describes transferred-in costs? A) They are the cost of transferring products from a vendor. B) They are value-added costs that are only considered in the first-in, first out process costing system. C) Costs incurred in a previous department or process that are carried forward as the product's cost as that product moves to another department or process in the production cycle D) They are the shipping costs related to finished goods that are transported to a customer's location
C) Costs incurred in a previous department or process that are carried forward as the product's cost as that product moves to another department or process in the production cycle
When the overhead cost allocation is based solely on a measure of volume, such as direct labor-hours, ______________________. A) direct labor costs of various products will be misallocated. B) the low-volume products will be systematically over-costed. C) The indirect costs of various products will be misallocated. D) The product costs must be used for external financial reporting.
C) The indirect costs of various products will be misallocated.
Assume that the beginning WIP inventory is 80% completed with respect to conversion costs. Also assume that the ending WIP inventory is zero. Under the weighted-average method, the number of equivalent units of production with respect to conversion costs would: A) be less than the units completed. B) be greater than the units completed. C) be equal to the units completed. D) be equal to the units started during the period.
C) be equal to the units completed.
Indirect manufacturing costs ________. A) are fixed costs incurred in the production process other than material and labor costs B) can be traced to a particular product in an economically feasible way C) can be variable costs D) can be easily traced to the cost object
C) can be variable costs
Which of the following is an example of spoilage? *End cuts from suit-making operations that are discarded *Defective units of laptops detected after the production process but reworked before the units are sold as good products to customers *Carpets sold as seconds in a factory outlet at a deep discount *Edges from plastic moldings that is a low value byproduct
Carpets sold as seconds in a factory outlet at a deep discount
XYZ company sells wooden carvings for $300 each. The direct materials cost per unit is $160 and the direct labor per unit is 2 hours at a rate of $26 per hour. Manufacturing overhead (all fixed costs) is applied based on labor hours at a rate of $36 per hour. XYZ makes and sells 1,000 units per period. How many units must XYZ sell to breakeven?A) 409 units B) 450 units C) 240 units D) 818 units
D) 818 units CM: 300 - 160 - 2 x 26 = $88 FC: 36 x 2 x 1,000
________ is an example of an output unit-level cost in the cost hierarchy. A) Factory rent expense B) Building security costs C) Top management compensation costs D) Machine depreciation
D) Machine depreciation
________ is an example of an output unit-level cost in the cost hierarchy. A) Factory rent expense B) Building security costs. C) Top management compensation costs D) Machine depreciation
D) Machine depreciation
Transferred-in costs are treated as if they are ________. A) conversion costs added at the beginning of the process B) costs of beginning inventory added at the beginning of the process C) direct labor costs added at the beginning of the process D) a separate direct material added at the beginning of the process
D) a separate direct material added at the beginning of the process
A $2.00 increase in a product's variable expense per unit accompanied by a $2.00 increase in its selling price per unit will: A) decrease the degree of operating leverage. B) increase the contribution margin. C) increase the break-even volume. D) decrease the contribution margin ratio.
D) decrease the contribution margin ratio.
Which of the following increases (are debited to) the Work-in-Process Control account? A) actual plant insurance costs B) customer services costs C) marketing expenses D) direct manufacturing labor costs
D) direct manufacturing labor costs
XYZ manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Inspection occurs when units are 60% converted. Spoiled units generally constitute 6% of the good units. Data for December 2017 are as follows: WIP, beginning inventory 12/1/2017 22,500 units Direct materials (100% complete) Conversion costs (75% complete) Started during December 76,700 units Completed and transferred out 12/31/2017 72,300 units WIP, ending inventory 12/31/2017 18,400 units Direct materials (100% complete) Conversion costs (65% complete) Costs for December: WIP, beginning Inventory: Direct materials $159,000 Conversion costs 77,800 Direct materials added 232,400 Conversion costs added 293,000 What is the number of total spoiled units? A. 10,435 units B. 4,338 units C. 4,162 units D. 8,500 units
D. 8,500 units Spoiled units = (22,500 units + 76,700) - (72,300 units + 18,400) = 8500 units
Which of the following statements is true? *Early inspections can prevent any further conversion costs being wasted on units that are already good. *Early inspections can increase conversion costs on units that are already spoiled. *Excluding abnormal spoilage units in the equivalent-unit calculation will not affect cost per good unit. *Excluding spoiled units in the equivalent-unit calculation results in higher cost per good unit.
Excluding spoiled units in the equivalent-unit calculation results in higher cost per good unit
Which of the following is true if the sales volume increases (within a relevant range)? *Total variable cost does not change *Fixed cost per unit decreases *Total fixed cost increases *Variable cost per unit increases
Fixed cost per unit decreases
Which of the following statements is true? *Volume of production is a cost driver of distribution costs. *Fixed costs have cost drivers in the long run. *All costs have cost drivers in the short run. *Fixed costs have cost drivers within relevant range.
Fixed costs have cost drivers in the long run.
XYZ Corporation manufactures automobile parts. During the year, the company sold $5,600 of parts that had a cost of $3,200. At year end, these are the balances for cost of goods sold and its manufacturing overhead accounts: Cost of goods sold: $3,200 Manufacturing overhead allocated: $1,495 Manufacturing overhead control: $1,400 What would be the correct journal entry to close out the overhead accounts assuming that the write-off to cost of goods sold approach is used? *Cost of goods sold $95 Manufacturing overhead control $1,400 Manufacturing overhead allocated $1,495 *Manufacturing overhead allocated $1,495 Manufacturing overhead control $1,400 Cost of goods sold $95 *Cost of goods sold $3,200 Gross profit $2,400 Sales $5,600 *Manufacturing overhead control $1,495 Finished goods $95 Manufacturing overhead allocated $1,400
Manufacturing overhead allocated $1,495 Manufacturing overhead control $1,400 Cost of goods sold $95
________ is an example of a product-level cost in the cost hierarchy. *Machine depreciation *Top management compensation costs *Factory rent expense *Parts administration costs
Parts administration costs
ABC Inc. currently manufactures and sells 90 units per day. Fixed costs are $30,000 and the variable costs for manufacturing 90 units are $45,000. Each unit is sold for $1,300. How would their profit be affected if the daily sales volume drops by 20%? *Profits are reduced by $23,400 *Profits are reduced by $14,400 *Profits are reduced by $9,260 *Profits are reduced by $21,600
Profits are reduced by $14,400
Which one of the following is a sign that an Activity-based Costing system may be useful for an organization? *Significant amounts of indirect costs are allocated using one cost pool *Operations staff has no substantial disagreements with the reported costs of manufacturing and marketing products and services. *There are relatively few indirect cost pools associated with the product and the indirect costs are a small percentage of total product cost *Products make similar demands on resources because of similarities in volume, process steps, batch size, or complexity.
Significant amounts of indirect costs are allocated using one cost pool
Extracts from cost information of XYZ Corp.: Setup cost allocated using direct labor-hours Simple Pack $4,600 Complex Pack $15,400 Total $20,000 Setup cost allocated using setup-hours Simple Pack $9,280 Complex Pack $10,750 Total $20,000 Assuming that setup-hours is considered a more effective cost drive for allocating setup costs than direct labor-hours. Which of the following statements is true of XYZ's setup costs under traditional costing? *Simple Pack is under-costed by $4,680 *Complex Pack is over-costed by $6,120 *Complex Pack is under-costed by $4,650 *Simple Pack is over-costed by $6,150
Simple Pack is under-costed by $4,680
Which one of the following statements is true? *The FIFO method of process costing separates the work done during the current period from the work done before the current period. *The FIFO method of process costing smooths the input price fluctuations over different periods. *The weighted-average method of process costing does not consider the degree of completion of beginning and ending work-in-process inventories. *The cost per equivalent unit is higher under the weighted-average method compared with that under the FIFO method of process costing.
The FIFO method of process costing separates the work done during the current period from the work done before the current period.
XYZ Company uses a standard cost system. In May, $255,000 of variable manufacturing overhead costs were incurred and the flexible-budget amount for the month was $245,000. Which of the following variable manufacturing overhead entries would have been recorded for May? *Work-in-Process Control 245,000 Variable Manufacturing Overhead Allocated 245,000 *Work-in-Process Control 255,000 Accounts Payable Control and other accounts 255,000 *Accounts Payable Control and other accounts 245,000 Work-in-Process Control 245,000 *Accounts Payable Control and other accounts 255,000 Variable Manufacturing Overhead Control 255,000
Work-in-Process Control 245,000 Variable Manufacturing Overhead Allocated 245,000
The amount reported for fixed overhead on the static budget is also reported ________. *as flexible budget costs *as actual fixed costs *as allocated fixed overhead costs *as committed variable costs
as flexible budget costs
Assume both the beginning work in process inventory and the ending work in process inventory are 80% complete with respect to conversion costs. Under the weighted-average method, the number of equivalent units of production with respect to conversion costs would: *be greater than the units completed. *be greater than the units started during the period. *be less than the units started during the period. *be less than the units completed.
be greater than the units completed.
The budgeted indirect-cost rate for each cost pool is computed as ________. *actual annual indirect costs divided by budgeted annual quantity of cost allocation base *budgeted annual indirect costs divided by actual annual quantity of cost allocation base *budgeted annual quantity of cost allocation base divided by budgeted annual indirect costs *budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base
budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base
An unfavorable sales-volume variance could result from ________. *competitors taking market share *an inefficiency of a purchasing manager in bargaining with suppliers *an inappropriate assignment of labor or machines to specific jobs *a decrease in actual selling price compared to anticipated selling price
competitors taking market share
ABC Manufacturing uses a normal costing system and had the following data available for 2018: Direct materials purchased on account $120,000 Direct materials requisitioned 67,000 Direct labor cost incurred 100,000 Factory overhead incurred 117,000 Cost of goods manufactured 230,000 Cost of goods sold 206,000 Beginning direct materials inventory 20,000 Beginning WIP inventory 55,000 Beginning finished goods inventory 41,000 Overhead application rate, as a percent of direct-labor costs 120 percent The journal entry to record factory overhead allocation would include a ________. *credit to Factory Overhead Control for $117,000 *credit to WIP Inventory for $117,000 *debit to WIP Inventory for $120,000 *debit to WIP Inventory for $175,000
debit to WIP Inventory for $120,000
When fixed overhead spending variance is favorable, it can be safely assumed that ________. *flexible budget amount is lower than actual costs incurred *flexible budget amount is higher than actual costs incurred *fixed overhead allocated for actual output is lower than actual costs incurred *fixed overhead allocated for actual output is higher than actual costs incurred
flexible budget amount is higher than actual costs incurred
A $2.00 increase in a product's variable expense per unit accompanied by a $2.00 increase in its selling price per unit will: *have no effect on the break-even volume. *decrease the degree of operating leverage. *have no effect on the contribution margin ratio. *decrease the contribution margin.
have no effect on the break-even volume
Variable costs ________. *are considered a part of conversion costs *increase in total when the sales volume increases *are direct costs *include most labor costs and overhead costs
increase in total when the sales volume increases
An unfavorable production-volume variance ________. *indicates that the company decreased its fixed overhead cost per unit to improve sales *indicates that the company did not achieve its sales target *indicates that the company has some unused production capacity *indicates that the company has overproduced its products than planned
indicates that the company has some unused production capacity
In a normal costing system, the Manufacturing Overhead Control account ________. *is credited with actual overhead costs *is credited with amounts transferred to Work-in-Process *is increased when indirect materials are used *is increased by allocated manufacturing overhead
is increased when indirect materials are used
ABC Manufacturing produces a single product that sells for $105. Variable costs per unit equal $74. The company expects total fixed costs to be $97,000 for the next month at the projected sales level of 3,200 units. To improve performance, management is considering several alternative actions. Each situation is to be evaluated separately. Suppose that management believes that a 10% reduction in the selling price will result in a 10% increase in sales. If this proposed reduction in selling price is implemented, ________. *operating income will decrease by $27,040 *operating income will decrease by $23,680 *operating income will decrease by $33,600 *operating income will increase by $22,640
operating income will decrease by $27,040
The sales-mix variance will be unfavorable when which of the following occurs? *the actual unit sales are less than the budgeted unit sales *the actual contribution margin is less than the static-budget contribution margin *the actual sales mix shifts toward the less profitable units *the contribution margin per composite unit for the actual mix is greater than the budgeted mix
the actual sales mix shifts toward the less profitable units
XYZ Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. Flexible Variances Budget Price Efficiency Material A $40,000 $1,600F $3,200U Material B 68,000 500U 1,900F Direct labor 85,000 200U 2,700F The most likely explanation of the above direct labor variances is that ________. *the average wage rate paid to employees was less than expected *the company may have assigned more experienced employees this month than originally planned *management may have a problem with budget slack and might be using lax standards for both labor-wage rates and expected efficiency *employees did not work as efficiently as expected to accomplish the job
the company may have assigned more experienced employees this month than originally planned
In a company with low operating leverage, ___________. *more risk is assumed than in a highly leveraged firm *fixed costs are less than the contribution margin *contribution margin and operating income are inversely related *there is a lower possibility of net loss than a higher-leveraged firm
there is a lower possibility of net loss than a higher-leveraged firm
A process costing system is employed in those situations where: *a service is performed such as in a law firm or an accounting firm. *many different products, jobs, or batches of production are being produced each period. *full or absorption cost approach is not employed. *where manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis.
where manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis
