ACC 202 Exam 1 SG
Kesterson Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $7.15 Direct labor $4.20 Variable manufacturing overhead $1.55 Fixed manufacturing overhead $18,900 Sales commissions $2.10 Variable administrative expense $0.40 Fixed selling and administrative expense $4,900 The incremental manufacturing cost that the company will incur if it increases production from 7,000 to 7,001 units is closest to: a. $12.90 b. $15.60 c. $18.80 d. $16.00
a. $12.90 Direct materials $7.15 Direct labor 4.20 Variable manufacturing overhead 1.55 Incremental manufacturing cost $12.90
Kogler 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 $5.40 Direct labor $5.80 Variable manufacturing overhead $1.45 Fixed manufacturing overhead $9.00 Fixed selling expense $4.00 Fixed administrative expense $1.90 Sales commissions $0.70 Variable administrative expense $0.65 If the selling price is $28.00 per unit, the contribution margin per unit sold is closest to: a. $14.00 b. ($0.90) c. $6.35 d. $16.80
a. $14.00 Selling price per unit $28.00 Direct materials $5.40 Direct labor 5.80 Variable manufacturing overhead 1.45 Sales commissions 0.70 Variable administrative expense 0.65 Variable cost per unit sold 14.00
The following cost data pertain to the operations of Quinonez Department Stores, Inc., for the month of September. Corporate headquarters building lease $78,000 Cosmetics Department sales commissions--Northridge Store $5,270 Corporate legal office salaries $66,500 Store manager's salary-Northridge Store $12,200 Heating-Northridge Store $20,400 Cosmetics Department cost of sales--Northridge Store $39,100 Central warehouse lease cost $9,800 Store security-Northridge Store $16,200 Cosmetics Department manager's salary--Northridge Store $4,310 The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are NOT direct costs of the Northridge Store? a. $154,300 b. $50,710 c. $48,680 d. $78,000
a. $154,300 Costs that are not direct costs of the Northridge Store = Corporate headquarters building lease + Corporate legal office salaries + Central warehouse lease cost = $78,000 + $66,500 + $9,800 = $154,300
Eisentrout Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing 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: Machining Customizing Machine-hours 26,000 27,000 Direct labor-hours 18,000 2,000 Total fixed manufacturing overhead cost $153,400 $11,600 Variable manufacturing overhead per machine-hour $1.40 Variable manufacturing overhead per direct labor-hour=$3.20 During the current month the company started and finished Job T272. The following data were recorded for this job: Job T272: Machining Customizing Machine-hours 40 10 Direct labor-hours 40 30 The estimated total manufacturing overhead for the Machining Department is closest to: a. $189,800 b. $153,400 c. $36,400 d. $191,200
a. $189,800 Machining Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department) = $153,400 + ($1.40 per machine-hour × 26,000 machine-hours) = $153,400 + $36,400 = $189,800
Chavez Corporation reported the following data for the month of July: Inventories: Beginning Ending Raw materials $36,000 $34,500 Work in process $20,500 $26,000 Finished goods $36,500 $51,500 Additional information: Raw materials purchases =$70,500 Direct labor cost =$95,500 Manufacturing overhead cost incurred = $63,500 Indirect materials included in manufacturing overhead cost incurred =$9,800 Manufacturing overhead cost applied to Work in Process =$62,500 Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. The cost of goods manufactured for July is: a. $214,700 b. $231,200 c. $220,200 d. $232,200
a. $214,700 Direct materials: Raw materials inventory, beginning $36,000 Add: Purchases of raw materials =70,500 Total raw materials available =106,500 Deduct: Raw materials inventory, ending 34,500 Raw materials used in production =72,000 Deduct: Indirect materials included in manufacturing overhead 9,800 =$62,200 Direct labor 95,500 Manufacturing overhead cost applied to work in process =62,500 Total manufacturing costs =220,200 Add: Beginning work in process 20,500 =240,700 Deduct: Ending work in process 26,000 Cost of goods manufactured $214,700
Longobardi Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the labor-hours for the upcoming year at 39,500 labor-hours. The estimated variable manufacturing overhead was $6.58 per labor-hour and the estimated total fixed manufacturing overhead was $972,095. The actual labor-hours for the year turned out to be 37,000 labor-hours. The predetermined overhead rate for the recently completed year was closest to: a. $31.19 per labor-hour b. $24.61 per labor-hour c. $6.58 per labor-hour d. $33.30 per labor-hour
a. $31.19 per labor-hour Estimated total manufacturing overhead = $972,095 + ($6.58 per labor-hour × 39,500 labor-hours) = $1,232,005 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $1,232,005 ÷ 39,500 labor-hours = $31.19 per labor-hour
The following costs were incurred in May: Direct materials $40,500 Direct labor $36,700 Manufacturing overhead $28,800 Selling expenses $21,400 Administrative expenses $38,800 Conversion costs during the month totaled: a. $65,500 b. $69,300 c. $166,200 d. $77,200
a. $65,500 Conversion cost = Direct labor + Manufacturing overhead = $36,700 + $28,800 = $65,500
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 37,300 Estimated variable manufacturing overhead $5.39per machine-hour Estimated total fixed manufacturing overhead $775,840 Actual machine-hours for the year 35,200 The predetermined overhead rate for the recently completed year was closest to: a. $25.89 per machine-hour b. $26.19 per machine-hour c. $5.39 per machine-hour d. $20.80 per machine-hour
b. $26.19 per machine-hour Estimated total manufacturing overhead = $775,840 + ($5.39 per machine-hour × 37,300 machine-hours) = $976,887 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $976,887 ÷ 37,300 machine-hours = $26.19 per machine-hour
Comans Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department's predetermined overhead rate is based on machine-hours and the Customizing 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: Milling Customizing Machine-hours 20,000 24,000 Direct labor-hours 18,000 8,000 Total fixed manufacturing overhead cost $68,000 $36,000 Variable manufacturing overhead per machine-hour $1.90 Variable manufacturing overhead per direct labor-hour $3.80 During the current month the company started and finished Job A319. The following data were recorded for this job: Job A319: Milling Customizing Machine-hours 70 20 Direct labor-hours 20 60 Direct materials $750 $250 Direct labor cost $450 $750 If the company marks up its manufacturing costs by 20% then the selling price for Job A319 would be closest to: a. $4,419 b. $3,683 c. $3,069 d. $614
b. $3,683 Milling Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department) = $68,000 + ($1.90 per machine-hour × 20,000 machine-hours) = $68,000 + $38,000 = $106,000 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $106,000 ÷ 20,000 machine-hours = $5.30 per machine-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $5.30 per machine-hour × 70 machine-hours = $371 Customizing Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department) = $36,000 + ($3.80 per direct labor-hour × 8,000 direct labor-hours) = $36,000 + $30,400 = $66,400 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $66,400 ÷ 8,000 direct labor-hours = $8.30 per direct labor-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $8.30 per direct labor-hour × 60 direct labor-hours = $498 Milling Customizing Total Direct materials $750 $250 $1,000 Direct labor $450 $750 1,200 Manufacturing overhead applied $371 $498 869 Total cost of Job A319=$3,069 Total cost of Job A319=$3,069 Markup ($3,069 × 20%)=614 Selling price $3,683
Bolka Corporation, a merchandising company, reported the following results for October: Sales $500,000 Cost of goods sold (all variable) $170,700 Total variable selling expense $24,600 Total fixed selling expense $21,500 Total variable administrative expense $10,000 Total fixed administrative expense $34,900 The gross margin for October is: a. $294,700 b. $329,300 c. $238,300 d. $443,600
b. $329,300 Sales $500,000 Cost of goods sold 170,700 Gross margin $329,300
Acheson Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. Estimated manufacturing overhead $157,850 Estimated machine-hours =4,660 Actual manufacturing overhead =$157,600 Actual machine-hours 4,900 The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year. The predetermined overhead rate is closest to: a. $32.16 b. $33.87 c. $33.82 d. $43.52
b. $33.87 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $157,850 ÷ 4,660 machine-hours = $33.87 per machine-hour
Chrzan, Inc., manufactures and sells two products: Product E0 and Product N0. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production (EP) Direct Labor-Hours Per Unit (DLH) Total Direct Labor-Hours (TDLH) Product E0 EP=340 DLH=9.4 TDLH=3,196 Product N0 EP=1,200 DLH=8.4 TDLH=10,080 Total direct labor-hours =13,276 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost (AMOC) Product E0 (E0) Product N0 N0) Total (T) Labor-related DLHs AMOC=$298,390 E0=3,196 N0=10,080 T=13,276 Production orders orders AMOC=57,587 E0=500 N0=600 T=1,100 Order size MHs AMOC=581,866 E0=5,200 N0=4,900 T=10,100 Total AMOC=$937,843 The activity rate for the Order Size activity cost pool under activity-based costing is closest to: a. $52.35 per MH b. $57.61 per MH c. $70.64 per MH d. $29.60 per MH
b. $57.61 per MH Activity rate = Estimated overhead cost ÷ Total expected activity= $581,866 ÷ 10,100 MHs = $57.61 per MH
Baka Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $243,300 and 8,300 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $244,400 and actual direct labor-hours were 5,800. The overhead for the year was: a. $73,302 underapplied b. $74,402 underapplied c. $73,302 overapplied d. $74,402 overapplied
b. $74,402 underapplied Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total direct labor-hours = $243,300 ÷ 8,300 direct labor-hours = $29.31 per direct labor-hour Manufacturing overhead applied = Predetermined overhead rate × Actual direct labor-hours = $29.31 per direct labor-hour × 5,800 direct labor-hours = $169,998 Actual manufacturing overhead incurred =$244,400 Manufacturing overhead applied to Work in Process =169,998 Underapplied (overapplied) manufacturing overhead =$74,402
Opunui Corporation has two manufacturing departments--Molding and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Molding Finishing Total Estimated total machine-hours (MHs) 6,500 3,500 10,000 Estimated total fixed manufacturing overhead cost $27,000 $6,500 $33,500 Estimated variable manufacturing overhead cost per MH $1.00 $2.00 During the most recent month, the company started and completed two jobs--Job A and Job M. There were no beginning inventories. Data concerning those two jobs follow: Job A Job M Direct materials $17,600 $11,500 Direct labor cost $24,500 $10,900 Molding machine-hours 2,500 4,000 Finishing machine-hours 2,500 1,000 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 40% on manufacturing cost to establish selling prices. The calculated selling price for Job A is closest to: a. $65,600 b. $91,840 c. $112,600 d. $26,240
b. $91,840 The first step is to calculate the estimated total overhead costs in the two departments. Molding Estimated fixed manufacturing overhead $27,000 Estimated variable manufacturing overhead ($1.00 per MH × 6,500 MHs) 6,500 Estimated total manufacturing overhead cost $33,500 Finishing Estimated fixed manufacturing overhead $6,500 Estimated variable manufacturing overhead ($2.00 per MH × 3,500 MHs) 7,000 Estimated total manufacturing overhead cost $13,500 The second step is to combine the estimated manufacturing overhead costs in the two departments ($33,500 + $13,500 = $47,000) to calculate the plantwide predetermined overhead rate as follow: Estimated total manufacturing overhead cost $47,000 Estimated total machine hours 10,000MHs Predetermined overhead rate $4.70per MH The overhead applied to Job A is calculated as follows: Overhead applied to a particular job = Predetermined overhead rate × Machine-hours incurred by the job = $4.70 per MH × (2,500 MHs + 2,500 MHs) = $4.70 per MH × (5,000 MHs) = $23,500 Job A's manufacturing cost: Direct materials $17,600 Direct labor cost 24,500 Manufacturing overhead applied 23,500 Total manufacturing cost $65,600 The selling price for Job A: Total manufacturing cost $65,600 Markup (40%) 26,240 Selling price $91,840
Olmo, Inc., manufactures and sells two products: Product K0 and Product H9. The annual production and sales of Product of K0 is 600 units and of Product H9 is 600 units. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Cost Pools (ACP) Activity Measures (AM) Estimated Overhead Cost (EOC) Expected Activity (EA) Product K0 (K0) Product H9 (H9) Total (T) Labor-related DLHs (DLHs) EOC=$550,408 K0=6,000 H9=3,000 T= 9,000 Production orders orders EOC=53,419 K0=700 H9=600 T=1,300 Order size MHs EOC=836,016 K0=3,800 H9=3,000 T=6,800 $1,439,843 The overhead applied to each unit of Product H9 under activity-based costing is closest to: a. $305.80 per unit b. $961.59 per unit c. $614.70 per unit d. $479.95 per unit
b. $961.59 per unit Computation of activity rates: Activity Cost Pools (a) Estimated Overhead Cost (EOC) (b)Total Expected Activity (TEA) (a) ÷ (b) Activity Rate (AR) Labor-related EOC=$550,408 TEA=9,000 DLHs AR=$61.16 per DLH Production orders EOC=$53,419 TEA=1,300 orders AR=$41.09 per order Order size EOC=$836,016 TEA=6,800 MHs AR=$122.94 per MH Computation of the overhead cost per unit under activity-based costing. Product H9 Activity Cost Pools and Activity Rates Expected Activity Amount Labor-related, at $61.16 per DLH 3,000 $183,480 Production orders, at $41.09 per order 600 24,654 Order size, $122.94 per MH 3,000 368,820 Total overhead costs assigned (a) =$576,954 Number of units produced (b) =600 Overhead cost per unit (a) ÷ (b) =$961.59
The following accounts are from last year's books of Sharp Manufacturing: Raw Materials Bal=0 (b)157,400 (a)172,500 15,100= Total Work In Process Bal=0 (f)523,600 (b)133,700 (c)171,400 (e)218,500 0= Total Finished Goods Bal=0 (g)477,000 (f)523,600 46,600= Total Manufacturing Overhead (b)23,700 (e)218,500 (c)27,700 (d)159,400 Total 7,700 Cost of Goods Sold (g)477,000 Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the amount of direct materials used for the year? a. $172,500 b. $157,400 c. $133,700 d. $171,400
c. $133,700 The journal entry to record Issue of direct and indirect materials was entry (b) above: Work in Process 133,700 Manufacturing Overhead 23,700 Raw Materials 157,400 Direct materials are debited to Work in Process; indirect materials are debited to Manufacturing Overhead.
Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 22,000 hours and the total estimated manufacturing overhead was $545,600. At the end of the year, actual direct labor-hours for the year were 21,900 hours and the actual manufacturing overhead for the year was $545,600. Overhead at the end of the year was: a. $2,530 overapplied b. $2,530 underapplied c. $2,480 underapplied d. $2,480 overapplied
c. $2,480 underapplied Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $545,600 ÷ 22,000 direct labor-hours = $24.80 per direct labor-hour Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred = $24.80 per direct labor-hour × 21,900 direct labor-hours = $543,120 Overhead over or underapplied Actual manufacturing overhead incurred =$545,600 Manufacturing overhead applied to Work in Process =543,120 Underapplied (overapplied) manufacturing overhead =$2,480
Faz, Inc., manufactures and sells two products: Product X0 and Product W7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production Direct Labor-Hours Per Unit Total Direct Labor-Hours Product X0 1,500 5 7,500 Product W7 430 3 1,290 Total direct labor-hours 8,790 The direct labor rate is $22.60 per DLH. The direct materials cost per unit is $147.50 for Product X0 and $129 for Product W7. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools -Labor-related - Production orders -order size Activity Measures -DLHs -orders -MHs Overhead Cost (OC) Product X0 (X0) Product W7 (W7) Total (T) Labor-related DLHs OC=$275,078 X0=7,500 W7=1,290 T=8,790 Production orders orders OC=19,248 X0=530 W7=730 T=1,260 Order size MHs OC=240,194 X0=4,030 W7=4,130 T=8,160 Final T=$534,520 The overhead applied to each unit of Product X0 under activity-based costing is closest to: a. $79.10 per unit b. $227.74 per unit c. $240.94 per unit d. $304.05 per unit
c. $240.94 per unit Computation of activity rates: Activity Cost Pools (a) Estimated Overhead Cost (EOC) (b) Total Expected Activity (TEA) (a) ÷ (b) Activity Rate Labor-related EOC=$275,078 TEA=8,790DLHs AR=$31.29per DLH Production orders EOC=$19,248 TEA=1,260 orders AR=$15.28 per order Order size EOC=$240,194 TEA=8,160 MHs AR=$29.44per MH Computation of the overhead cost per unit under activity-based costing. Product X0 Activity Cost Pools and Activity Rates Expected Activity (EA) Amount Labor-related, at $31.29 per DLH EA=7,500 =$234,675.00 Production orders, at $15.28 per order EA=530 =8,098.40 Order size, $29.44 per MH EA=4,030 =118,643.20 Total overhead costs assigned (a)=$361,416.60 Number of units produced (b) =1,500 Overhead cost per unit (a) ÷ (b) =$240.94
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 32,000 Total fixed manufacturing overhead cost $352,000 Variable manufacturing overhead per machine-hour $3.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 40 Direct materials $675 Direct labor cost $1,350 If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to: a. $103.40 b. $546.00 c. $361.90 d. $283.50
c. $361.90 Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $352,000 + ($3.00 per machine-hour × 32,000 machine-hours) = $352,000 + $96,000 = $448,000 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $448,000 ÷ 32,000 machine-hours = $14 per machine-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $14 per machine-hour × 40 machine-hours = $560 Direct materials $675 Direct labor 1,350 Manufacturing overhead applied 560 Total cost of Job T687=$2,585 Total cost of Job T687 (a)=$2,585 Number of units (b) 10 Unit product cost (a) ÷ (b) =$258.50 Unit product cost for Job T687= $258.50 Markup (40% × $258.50)=103.40 Selling price= $361.90
Adelberg Company has two products: A and B. The annual production and sales of Product A is 1,950 units and of Product B is 1,350 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.5 direct labor-hours per unit and Product B requires 0.8 direct labor-hours per unit. The total estimated overhead for next period is $101,600. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and Order Size--with estimated overhead costs and expected activity as follows: Estimated Expected Activity Activity Cost Pools Overhead Costs (OC) Product A (A) Product B (B) Total (T) Activity 1 OC=$31,394 A=1,250 B=850 T=2,100 Activity 2 OC=17,882 A=1,950 B=450 T=2,400 Order Size OC=52,324 A=975 B=1,080 T=2,055 Total$101,600 (Note: The Order Size activity cost pool's costs are allocated on the basis of direct labor-hours.) The predetermined overhead rate under the traditional costing system is closest to: a. $7.45 per DLH b. $25.46 per DLH c. $49.44 per DLH d. $14.95 per DLH
c. $49.44 per DLH Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $101,600 ÷ 2,055 DLHs = $49.44 per DLH
Perteet Corporation's relevant range of activity is 7,800 units to 15,000 units. When it produces and sells 11,400 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $7.70 Direct labor $3.90 Variable manufacturing overhead $1.60 Fixed manufacturing overhead $3.20 Fixed selling expense $0.90 Fixed administrative expense $0.60 Sales commissions $0.70 Variable administrative expense $0.75 If 8,600 units are produced, the total amount of manufacturing overhead cost is closest to: a. $41,280 b. $70,020 c. $50,240 d. $35,260
c. $50,240 Total variable manufacturing overhead cost ($1.60 per unit × 8,600 units) $13,760 Total fixed manufacturing overhead cost ($3.20 per unit × 11,400 units*) 36,480 Total manufacturing overhead cost (a) $50,240 *The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 11,400 units.
Angel Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: Activity Cost Pools (and Activity Measures) Estimated Overhead Cost (EOC) Machine related (machine-hours) EOC=$317,520 Batch setup (setups) EOC=$353,460 Order size (direct labor-hours) EOC=$250,560 Expected Activity Activity Cost Pools Product X (X) Product Y (Y) Total (T) Machine related X=5,300 Y=7,300 T=12,600 Batch setup X=10,600 Y=2,300 T=12,900 Order size X=4,300 Y=7,300 T=11,600 Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to: a. $773,880 b. $353,460 c. $516,880 d. $420,420
c. $516,880 Activity Cost Pools (a) Estimated Overhead Cost (EOC) (b) Total Expected Activity (TEA) (a) ÷ (b) Activity Rate (AR) Machine related EOC=$317,520 TEA=12,600MHs AR=$25.20per MH Batch setup EOC=$353,460 TEA=12,900setups AR=$27.40per setup Order size EOC=$250,560 TEA=11,600DLHs AR=$21.60per DLH Activity Cost Pools and Activity Rates Expected Activity (EA) Amount (A) Machine related ($25.20 per MH) EA=5,300 A=$133,560 Batch setup ($27.40 per setup) EA=10,600 A290,440 Order size ($21.60 per DLH) EA=4,300 A=92,880 Total overhead costs assigned =$516,880
Lagle Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $5.30 Direct labor $4.00 Variable manufacturing overhead $1.45 Fixed manufacturing overhead $8,500 Sales commissions $1.90 Variable administrative expense $0.35 Fixed selling and administrative expense $7,200 If 5,000 units are sold, the total variable cost is closest to: a. $53,750 b. $80,700 c. $65,000 d. $65,250
c. $65,000 Direct materials $5.30 Direct labor 4.00 Variable manufacturing overhead 1.45 Sales commissions 1.90 Variable administrative expense 0.35 Variable cost per unit sold $13.00 Variable cost per unit sold (a) $13.00 Number of units sold (b) 5,000 Total variable costs (a) × (b) $65,000
Pedregon Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $6.75 Direct labor $3.90 Variable manufacturing overhead $1.55 Fixed manufacturing overhead $15,300 Sales commissions $0.75 Variable administrative expense $0.80 Fixed selling and administrative expense $7,200 If the selling price is $20.90 per unit, the contribution margin per unit sold is closest to: a. $3.75 b. $5.30 c. $7.15 d. $10.25
c. $7.15 Selling price per unit $20.90 Direct materials $6.75 Direct labor 3.90 Variable manufacturing overhead 1.55 Sales commissions 0.75 Variable administrative expense 0.80 Variable cost per unit sold 13.75 Contribution margin per unit $7.15
Pedregon Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $7.25 Direct labor $4.10 Variable manufacturing overhead $1.50 Fixed manufacturing overhead $20,900 Sales commissions $0.70 Variable administrative expense $0.80 Fixed selling and administrative expense $3,900 If 5,500 units are sold, the total variable cost is closest to: a. $87,725 b. $103,675 c. $78,925 d. $70,675
c. $78,925 Direct materials $7.25 Direct labor 4.10 Variable manufacturing overhead 1.50 Sales commissions 0.70 Variable administrative expense 0.80 Variable cost per unit sold $14.35 Variable cost per unit sold (a) $14.35 Number of units sold (b) 5,500 Total variable costs (a) × (b) $78,925
The following partially completed T-accounts summarize transactions for Faaberg Corporation during the year: Raw Materials Beg Bal 5,400 9,800 5,600 Work in Process Beg Bal 4,500 22,600 6,600 8,900 8,700 Finished Goods Beg Bal 2,600 20,800 22,600 Manufacturing Overhead 3,200 8,700 3,900 3,600 Wages & Salaries Payable 20,800 Beg Bal 2,900 12,800 Cost of Goods Sold Beg Bal 20,800 The manufacturing overhead applied was: a. $3,600 b. $3,900 c. $8,700 d. $15,500
c. $8,700 The manufacturing overhead applied is the credit entry of $8,700 in the Manufacturing Overhead account
The following data have been recorded for recently completed Job 450 on its job cost sheet. Direct materials cost was $2,059. A total of 41 direct labor-hours and 200 machine-hours were worked on the job. The direct labor wage rate is $21 per labor-hour. The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $29 per machine-hour. The total cost for the job on its job cost sheet would be: a. $6,095 b. $10,865 c. $8,720 d. $5,676
c. $8,720 Direct materials$2,059Direct labor (41 direct labor-hours × $21 per direct labor-hour) 861Overhead (200 machine-hours × $29 per machine-hour) 5,800Total manufacturing cost for Job 450$8,720
Mahon Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department's predetermined overhead rate is based on machine-hours and the Customizing 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: Casting Customizing Machine-hours 14,600 12,600 Direct labor-hours 5,200 6,300 Total fixed manufacturing overhead cost $116,800 $49,770 Variable manufacturing overhead per machine-hour $1.60 Variable manufacturing overhead per direct labor-hour= $3.10 During the current month the company started and finished Job T138. The following data were recorded for this job: Job T138: Casting Customizing Machine-hours 70 40 Direct labor-hours 14 80 The amount of overhead applied in the Customizing Department to Job T138 is closest to: a. $564.00 b. $69,300.00 c. $880.00 d. $282.00
c. $880.00 Customizing Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department) = $49,770 + ($3.10 per direct labor-hour × 6,300 direct labor-hours) = $49,770 + $19,530 = $69,300 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $69,300 ÷ 6,300 direct labor-hours = $11.00 per direct labor-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $11.00 per direct labor-hour × 80 direct labor-hours = $880
Arntson, Inc., manufactures and sells two products: Product R3 and Product N0. The annual production and sales of Product of R3 is 900 units and of Product N0 is 600 units. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production (EP) Direct Labor-Hours Per Unit (DLH) Total Direct Labor-Hours (TDLH) Product R3 EP=900 DLH=10.0 TDLH=9,000 Product N0 EP=600 DLH=5.0 TDLH=3,000 Total direct labor-hours =12,000 The direct labor rate is $25.90 per DLH. The direct materials cost per unit is $284.00 for Product R3 and $240.00 for Product N0. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost (AMOC) Product R3 (R3) Product N0 (N0) Total (T) Labor-related DLHs AMOC=$40,136 R3=9,000 N0=3,000 T=12,000 Production orders orders AMOC=57,020 R3=1,000 N0=600 T=1,600 Order size MHs AMOC=432,575 R3=4,000 N0=2,600 T=6,600 Total AMOC=$529,731 The unit product cost of Product R3 under activity-based costing is closest to: a. $648.29 per unit b. $364.29 per unit c. $907.29 per unit d. $1,191.29 per unit
c. $907.29 per unit Computation of activity rates: Activity Cost Pools (a) Estimated Overhead Cost (EOC) (b) Total Expected Activity (TEA) (a) ÷ (b) Activity Rate (AR) Labor-related EOC=$40,136 TEA=12,000DLHs AR=$3.34per DLH Production orders EOC=$57,020 TEA=1,600orders AR=$35.64per order Order size EOC=$432,575 TEA=6,600MHs AR=$65.54per MH Computation of the overhead cost per unit under activity-based costing. Product R3 Activity Cost Pools and Activity Rates Expected Activity (EA) Amount (A) Labor-related, at $3.34 per DLH EA=9,000 A=$30,060.00 Production orders, at $35.64 per order EA=1,000 A=35,640.00 Order size, $65.54 per MH EA=4,000 A=262,160.00 Total overhead costs assigned (a)=$327,860.00 Number of units produced (b)=900 Overhead cost per unit (a) ÷ (b) =$364.29 Computation of unit product costs under activity-based costing. Product R3 Direct materials =$284.00 Direct labor (10.0 DLHs × $25.90 per DLH) =259.00 Overhead =364.29 Unit product cost $907.29
Ravelo Corporation has provided the following data from its activity-based costing system: Activity Cost Pools Estimated Overhead Cost (EOC) Expected Activity (EA) Assembly EOC=$502,520 EA=46,000machine-hours Processing orders EOC=$56,263 EA=1,300orders Inspection EOC=$79,589 EA=1,310 inspection-hours Data concerning the company's product L19B appear below: Annual unit production and sales 470 Annual machine-hours 1,030 Annual number of orders 110 Annual inspection hours 60 Direct materials cost $41.74per unit Direct labor cost $14.45per unit According to the activity-based costing system, the unit product cost of product L19B is closest to: a. $56.19 per unit b. $94.76 per unit c. $98.01 per unit d. $68.65 per unit
c. $98.01 per unit The activity rates for each activity cost pool are computed as follows: Activity Cost Pools (a) Estimated Overhead Cost (b) Total Expected Activity (a) ÷ (b) Activity Rate Assembly $ 502,520 46,000 machine-hours $ 10.92 per machine-hour Processing orders $ 56,263 1,300 orders $ 43.28 per order Inspection $ 79,589 1,310 inspection-hours $ 60.75 per inspection-hour The overhead cost charged to Product L19B is: Activity Cost Pools Activity Rates (AR) Expected Activity (EA) Amount (A) Assembly AR=$10.92 per machine-hour EA=1,030 machine-hours A=$11,247.60 Processing orders AR=$43.28per order EA=110orders A=4,760.80 Inspection AR=$60.75per inspection-hour EA=60 inspection-hours A=3,645.00 Total overhead cost =$19,653.40 Direct materials (470 units × $41.74 per unit) =$19,617.80 Direct labor (470 units × $14.45 per unit) =6,791.50 Overhead =19,653.40 Total cost =$46,062.70 Unit product cost = $46,062.70 ÷ 470 units = $98.01 per
Tyare Corporation had the following inventory balances at the beginning and end of May: May 1 May 30 Raw materials $32,000 $43,000 Finished Goods $81,500 $79,000 Work in Process $20,000 $17,501 During May, $65,000 in raw materials (all direct materials) were drawn from inventory and used in production. The company's predetermined overhead rate was $12 per direct labor-hour, and it paid its direct labor workers $15 per hour. A total of 430 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $7,700 of direct materials cost. The Corporation incurred $43,950 of actual manufacturing overhead cost during the month and applied $43,500 in manufacturing overhead cost. The actual direct labor-hours worked during May totaled: a. 2,930 hours b. 3,663 hours c. 3,625 hours d. 5,160 hours
c. 3,625 hours Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred Amount of the allocation base incurred = Overhead applied ÷ Predetermined overhead rate Amount of the allocation base incurred = $43,500 ÷ $12 per direct labor-hour = 3,625 direct labor-hours
At an activity level of 9,500 machine-hours in a month, Falks Corporation's total variable production engineering cost is $779,950 and its total fixed production engineering cost is $200,970. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 9,900 machine-hours in a month? Assume that this level of activity is within the relevant range. a. $101.51 b. $102.58 c. $102.40 d. $102.05
d. $102.05 -Variable cost per machine-hour = $779,950 ÷ 9,500 machine-hours = $82.10 per machine-hour -Fixed cost per machine-hour at 9,900 machine-hours = $200,970 ÷ 9,900 machine-hours = $20.30 per machine-hour -Total cost = Variable cost + Fixed cost= $82.10 per machine-hour + $20.30 per machine-hour= $102.40 per machine-hour
Forner, Inc., manufactures and sells two products: Product Z1 and Product Z8. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost (AMOC) Product Z1 (Z1) Product Z8 (Z8) Total (T) Labor-related DLHs AMOC=$127,500 Z1=3,600 Z8=1,800 T=5,400 Machine setups setups AMOC=60,110 Z1=700 Z8=400 T=1,100 Order size MHs AMOC=940,160 Z1=4,000 Z8=3,100 T=7,100 Total AMOC=$1,127,770 The activity rate for the Order Size activity cost pool under activity-based costing is closest to: a. $57.82 per MH b. $210.67 per MH c. $140.88 per MH d. $132.42 per MH
d. $132.42 per MH Activity rate = Estimated overhead cost ÷ Total expected activity= $940,160 ÷ 7,100 MHs = $132.42 per MH
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 32,500 Total fixed manufacturing overhead cost $455,000 Variable manufacturing overhead per machine-hour $5.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 40 Direct materials $710 Direct labor cost $1,420 The total job cost for Job T687 is closest to: a. $2,180 b. $2,130 c. $1,470 d. $2,890
d. $2,890 Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $455,000 + ($5.00 per machine-hour × 32,500 machine-hours) = $455,000 + $162,500 = $617,500 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $617,500 ÷ 32,500 machine-hours = $19 per machine-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $19 per machine-hour × 40 machine-hours = $760
Cull 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 $357,500, variable manufacturing overhead of $2.70 per machine-hour, and 55,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed: Number of units in the job 10 Total machine-hours 80 Direct materials $890 Direct labor cost $1,780 If the company marks up its unit product costs by 25% then the selling price for a unit in Job X455 is closest to: a. $450.75 b. $340.60 c. $85.15 d. $425.75
d. $425.75 Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $357,500 + ($2.70 per machine-hour × 55,000 machine-hours) = $357,500 + $148,500 = $506,000 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $506,000 ÷ 55,000 machine-hours = $9.20 per machine-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $9.20 per machine-hour × 80 machine-hours = $736 Direct materials $890 Direct labor 1,780 Manufacturing overhead applied 736 Total cost of Job X455 $3,406 Total cost of Job X455 (a)$3,406 Number of units (b)10 Unit product cost (a) ÷ (b) $340.60 Unit product cost for Job X455 $340.60 Markup (25% × $340.60) 85.15 Selling price $425.75
Spates, Inc., manufactures and sells two products: Product H2 and Product E0. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production (EP) Direct Labor-Hours Per Unit (DLH) Total Direct Labor-Hours (TDLH) Product H2 EP=150 DLH=6.5 TDLH=975 Product E0 EP=150 DLH=5.5 TDLH=825 Total direct labor-hours =1,800 The company's expected total manufacturing overhead is $268,968. If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product H2 would be closest to: a. $170.78 per unit b. $128.08 per unit c. $298.86 per unit d. $971.30 per unit
d. $971.30 per unit Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours= $268,968 ÷ 1,800 DLHs = $149.43 per DLH (rounded)Product H2: 6.5 DLHs × $149.43 per DLH = $971.30
Fleurant, Inc., manufactures and sells two products: Product W2 and Product P8. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production (EP) Direct Labor-Hours Per Unit (DLH) Total Direct Labor-Hours (TDLH) Product W2 EP=300 DLH=6 TDLH=1,800 Product P8 EP=600 DLH=3 TDLH=1,800 Total direct labor-hours =3,600 The direct labor rate is $35.10 per DLH. The direct materials cost per unit is $201.60 for Product W2 and $138.30 for Product P8. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost (AMOC) Product W2 (W2) Product P8 (P8) Total (T) Labor-related DLHs AMOC=$216,576 W2=1,800 P8=1,800 T=3,600 Production orders orders AMOC=18,338 W2=300 P8=360 T=660 Order size MHs AMOC=233,086 W2=3,860 P8=3,660 T=7,520 Total AMOC=$468,000 Which of the following statements concerning the unit product cost of Product W2 is true? a. The unit product cost of Product W2 under traditional costing is less than its unit product cost under activity-based costing by $260.00. b. The unit product cost of Product W2 under traditional costing is greater than its unit product cost under activity-based costing by $7.61. c. The unit product cost of Product W2 under traditional costing is greater than its unit product cost under activity-based costing by $260.00. d. The unit product cost of Product W2 under traditional costing is less than its unit product cost under activity-based costing by $7.61.
d. The unit product cost of Product W2 under traditional costing is less than its unit product cost under activity-based costing by $7.61. Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours = $468,000 ÷ 3,600 DLHs = $130.00 per DLH (rounded) Computation of traditional unit product cost: Product W2 Direct materials $201.60 Direct labor (6 DLHs × $35.10 per DLH) 210.60 Manufacturing overhead (6 DLHs × $130.00 per DLH) 780.00 Unit product cost $1,192.20 Computation of activity rates: Activity Cost Pools (a) Estimated Overhead Cost (EOC) (b) Total Expected Activity (TEA) (a) ÷ (b) Activity Rate (AR) Labor-related EOC=$216,576 TEA=3,600 DLHs AR=$60.16 per DLH Production orders EOC=$18,338 TEA=660orders AR=$27.78 per order Order size EOC=$233,086 TEA=7,520MHs AR=$31.00 per MH Computation of the overhead cost per unit under activity-based costing. Product W2 Activity Cost Pools and Activity Rates Expected Activity (EA) Amount (A) Labor-related, at $60.16 per DLH EA=1,800 A=$108,288.00 Production orders, at $27.78 per order EA=300 A=8,334.00 Order size, $31.00 per MH EA=3,860 A=119,660.00 Total overhead costs assigned (a)=$236,282.00 Number of units produced (b)=300 Overhead cost per unit (a) ÷ (b) =$787.61 Computation of unit product cost under activity-based costing. Product W2 Direct materials $201.60 Direct labor 210.60 Overhead 787.61 Unit product cost $1,199.81 The difference in unit product costs is: Product W2 Traditional unit product cost $1,192.20 ABC unit product cost 1,199.81 Difference $-(7.61) The unit product cost of Product W2 under traditional costing is less than its unit product cost under activity-based costing by $7.61.
During March, Zea Inc. transferred $52,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $58,000. The journal entries to record these transactions would include a: a. credit to Cost of Goods Sold of $58,000. debit to Finished Goods of $58,000. b. credit to Work in Process of $52,000. c. credit to Finished Goods of $52,000. d. credit to Work in Process of $52,000.
d. credit to Work in Process of $52,000. Finished Goods 52,000 Work in Process 52,000 Cost of Goods Sold 58,000 Finished Goods 58,000
During June, Buttrey Corporation incurred $80,000 of direct labor costs and $20,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a: a. debit to Work in Process of $80,000. b. credit to Work in Process of $100,000. c. debit to Work in Process of $100,000. d. credit to Work in Process of $80,000.
d. credit to Work in Process of $80,000. Work in Process 80,000 Manufacturing Overhead 20,000 Salaries and Wages Payable =100,000
During March, Pendergraph Corporation incurred $71,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $73,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a: a. credit to Manufacturing Overhead of $71,000 b. credit to Work in Process of $73,000 c. debit to Work in Process of $73,000 d. debit to Manufacturing Overhead of $71,000
d. debit to Manufacturing Overhead of $71,000 Manufacturing Overhead $71,000 Accounts Payable, Cash, or other Asset accounts $71,000