MBA 700 Module 2 Exam Review

In May direct labor was 60% of conversion cost. If the manufacturing overhead for the month was $54,000 and the direct materials cost was $30,000, the direct labor cost was:

$81,000 Solve: DL = 0.60x$54,000/0.40 = $32,400/0.40 = $81,000

Conversation Costs Formula:

= DL + MOH

Which of the following is not an IMA Standard: a. credibility b. confidentiality c. comparability d. competence

C: Comparability

What is the formula for prime costs?

DM + DL

What type of audience does financial accounting use?

External audience such as owners, creditors, tax authorities, & regulators

What are period costs?

non-manufacturing costs

Manufacturing Cost Incurred Formula:

Q= DMU + DL + FOH

Tenneson Corporation's cost of goods manufactured for the just completed month was $151,000 and its inventories were as follows: Work in process inventory: Beg-$63,000 /End-$66,000 Finished goods inventory :Beg- $ 34,000/End-$48,000 How much was the cost of goods available for sale on the Schedule of Cost of Goods Sold?

$185,000 Solution: COG available for Sale = Beginning FGI + COGM = $34,000 + 151,000 = $185,00

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:

$59,000 Solution: Conversion Cost= DL + MOH = $13,000 + $46,000

What is conversion cost formula?

=DL + MOH

Norred Corporation has provided the following information: Cost per Unit /Cost per Period: Direct materials :(CPU)$7.50 Direct labor :(CPU)$3.70 Variable manufacturing overhead:(CPU)$1.60 Fixed manufacturing overhead:(CPP)$121,500 Sales commissions:(CPU)$1.50 Variable administrative expense:(CPU)$0.45 Fixed selling and administrative expense:(CPP)$44,550 If 8,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

$134,300 Solution: MOH = VMOH * Units produced + FMOH = ($1.60 x 8,000) + 121,500 MOH= $12,800 + 121,500 = $134,300

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 $22,000 at the beginning of the month and $17,000 at the end of the month. During the month, the Corporation incurred direct materials cost of $55,000 and direct labor cost of $28,000. The actual manufacturing overhead cost incurred was $53,000. The manufacturing overhead cost applied to Work in Process was $51,000. The cost of goods manufactured for June was:

$139,000 Solution: Q = DMU + DL + MOH = $55,000 + 28,000 + 51,000 = $134,000 COGM = Beg. WIP + Q - End. WIP = $22,000 + $134,000 - $17,000= $139,000

Managerial accounting is not regulated. True or False

True

Nonmanufacturing costs

selling costs and administrative costs

Pedregon Corporation has provided the following information: Direct materials $ 51,000 Direct labor cost $ 54,000 Manufacturing overhead $ 82,000 Selling expense $ 18,000 Administrative expense $ 42,000 The prime cost for November was:

$105,000 Solution: Prime Cost = DM + DL = $51,000 + 54,000 = $105,000

Schonhardt Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows: Average Cost per Unit : Direct materials :$7.15 Direct labor :$3.40 Variable manufacturing overhead:$1.35 Fixed manufacturing overhead:$2.80 Fixed selling expense:$0.70 Fixed administrative expense: $0.40 Sales commissions:$0.50 Variable administrative expense:$0.40 If 5,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:

$11,200 Solution: Fixed MOH for 4,000 units = $2.80 x 4,000 = $11,200 The relevant range is from 2,000 to 6,000 units. Total Fixed Costs do not change within the relevant range. Therefore, Total Fixed Cost for producing 5,000 units is still $11,200.

Dipaola Corporation has provided the following data concerning last month's operations. Purchases of raw materials:$26,000 Indirect materials included in manufacturing overhead :$6,000 Direct labor costs:$58,000 Manufacturing overhead applied to Work in Process:$87,000 Overapplied overhead:$6,000 Raw materials inventory: Beg-$12,000 /End-$18,000 Work in process inventory: Beg-$46,000 /End-$64,000 Finished goods inventory: Beg-$31,000 /End-$46,000 How much is the direct materials cost for the month on the Schedule of Cost of Goods Manufactured?

$14,000 Solution: DMU = Beg. RMI + RMP - End. RMI - Indirect RMI DMU = $12,000 + 26,000 - 18,000 - 6,000 = $14,000

Franklin Corporation has provided the following data concerning last month's operations. Purchases of raw materials:$26,000 Indirect materials included in manufacturing overhead: $6,000 Direct labor: $58,000 Manufacturing overhead applied to Work in Process: $97,000 Raw Material Inventory- Beg: $11,000/End: $17,000 Work in Process Inventory- Beg:$52,000/End: $66,000 How much is the cost of goods manufactured for the month on the Schedule of Cost of Goods Manufactured?

$155,000 Solve: Formula: DMU = Beg. RMI + RMP - End. RMI - Indirect RMI DMU = $11,000 + 26,000 - 17,000 - 6,000 = $14,000 Q = DMU + DL + MOH = $14,000 +58,000 + 97,000 = $169,000 COGM = Beg. WIP + Q - End. WIP = $52,000 + 169,000 - 66,000=

Shane Corporation has provided the following data concerning last month's operations. Direct materials: $23,000 Direct labor :$58,000 Manufacturing overhead applied to Work in Process:$92,000 Beginning/Ending Work in process inventory: Beg-$56,000/End-$69,000 Finished goods inventory: Beg-$33,000/End-$36,000 How much is the unadjusted cost of goods sold on the Schedule of Cost of Goods Sold?

$157,000 Solution: Q = DMU + DL + MOH = $23,000 + 58,000 + 92,000 = $173,000 COGM = Beg. WIP + Q - End. WIP = $56,000 + 173,000 - 69,000 = $160,000 Unadjusted COGS = Beg. FGI + COGM - End. FGI =$33,000 + 160,000 - $36,000 = $157,000

Borchardt Corporation has provided the following data concerning last month's operations. Direct materials $ 29,000 Direct labor $ 58,000 Manufacturing overhead applied to Work in Process $ 82,000 Work in process inventory $ 66,000 $ 57,000 How much is the cost of goods manufactured for the month on the Schedule of Cost of Goods Manufactured?

$178,000 Solution: Q = DMU + DL + MOH = $29,000 + 58,000 + 82,000 = $169,000 COGM = Beg. WIP + Q - End. WIP = $66,000 + 169,000 - 57,000 = $178,000

Borchardt Corporation has provided the following data concerning last month's operations. Direct materials $ 29,000 Direct labor $ 58,000 Manufacturing overhead applied to Work in Process $ 82,000 Work in process inventory -Beg:$66,000/End:$57,000 How much is the cost of goods manufactured for the month on the Schedule of Cost of Goods Manufactured?

$178,000 Solve: Q = DMU + DL + MOH = $29,000 + 58,000 + 82,000 = $169,000 COGM = Beg. WIP + Q - End. WIP = $66,000 + 169,000 - 57,000 = $178,000

Landmann Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: Average Cost per Unit: Direct materials $ 6.35 Direct labor $ 4.10 Variable manufacturing overhead $ 1.35 Fixed manufacturing overhead $ 13.50 Fixed selling expense $ 2.25 Fixed administrative expense $ 1.80 Sales commissions $ 1.00 Variable administrative expense $ 0.45 For financial reporting purposes, the total amount of product costs incurred to make 9,000 units is closest to:

$227,700 Solution: Product Cost = DM + DL + VMOH + FMOH Product Cost = $6.35 + 4.10 + 1.35 + 13.50 = $25.30 Total Product Cost for 9,000 units = $25.30 x 9,000 = $227,700

Bottum Corporation, a manufacturing Corporation, has provided data concerning its operations for May. The beginning balance in the raw materials account was $20,000 and the ending balance was $36,000. Raw materials purchases during the month totaled $63,000. Manufacturing overhead cost incurred during the month was $111,000, of which $2,000 consisted of raw materials classified as indirect materials. The direct materials cost for May was:

$45,000 DMU = Beg. RMI + RMP - End. RMI - Indirect RMI DMU = $20,000 + 63,000 - 36,000 - 2,000 = $45,000

Bottum Corporation, a manufacturing Corporation, has provided data concerning its operations for May. The beginning balance in the raw materials account was $20,000 and the ending balance was $36,000. Raw materials purchases during the month totaled $63,000. Manufacturing overhead cost incurred during the month was $111,000, of which $2,000 consisted of raw materials classified as indirect materials. The direct materials cost for May was:

$45,000 Solve: (Note: DMU for indirect materials) DMU = Beg. RMI + RMP - End. RMI - Indirect RMI DMU = $20,000 + 63,000 - 36,000 - 2,000 = $45,000

Period Cost = Non-Manufacturing Cost = Selling and Administrative Expenses ​

$49,500 Period Cost=Variable S&A + Fixed S&A =Variable S&A/Unit x Units + Fixed S&A Period Cost = ($0.50 + 0.50) x 9,000 + 40,500 = ($1 x 9,000) + 40,500 = $9,000 + 40,500 Period Cost = $49,500

During the month of May direct labor cost totaled $10,000 and direct labor cost was 40% of prime cost. If total manufacturing costs during May were $86,000, the manufacturing overhead was:

$61,000 Solution: DL is 40% of Prime Cost Prime Cost= 10,000/0.40=$25,000 Now Solve for MOH: = 86,000 + 25,000 = 61,000

What are the code of conduct for Mangement Accountants?

1. Principles 2. Standards 3. Resolution of Ethical conflict

What is Managerial Accounting?

Accounting for management that provides useful information to managers for planning controlling, and decision making purposes

Direct Materials Used (DMU) Formula:

Beginning Inventory Direct Materials(BIDM) + Direct Materials Purchased(DMP) - Ending Inventory Direct Materials(EIDM)

Indirect Material Used Formula:

Beginning Inventory Raw Materials(BIRM) + Raw Materials Purchased(RMP) - Indirect Materials(IM) - Ending Inventory Raw Materials(EIRM)

The cost of direct materials are classified as:

Conversion Cost: NO Manufacturing Cost: YES Prime Cost: YES

What are minor types of material often called supplies or indirect are included in manufacturing overhead?

Direct materials

What three categories are the activities of manufacturing cost associated with?

Direct materials, direct labor, and manufacturing overhead

Which type of accounting is regulated ?

Financial Accounting; regulated with GAAP/IFRS

Managerial Accounting reports are:

Future oriented

Principles Code of Conduct include:

Honesty, fairness, objectivity, & responsibility

What type of audience does managerial accounting use?

Internal audience such as planning, controlling, & decision making

The salary paid to the president of a company would be classified on the income statement as a(n): a. Administrative expense b. Direct labor cost c. Manufacturing overhead cost d. Selling expense

a: Administrative expense

Direct Cost are a. DM and MOH b. DL and MOH c. easily traced to a particular cost object d. non-manufacturing cost

c. easily traced to a particular cost object

What are the four key standards of ethical conduct for IMA members?

competence, confidentiality, integrity, and credibility

Period costs are:

costs that are expensed on the income statement in the time period of which they incurred

Is product cost expensed or inventoriable?

inventoriable costs

What is manufacturing cost also referred to as:

product cost