Accy 309 Test 2

Which of the following is true of refinement of a costing system?

It reduces the use of broad averages for assigning the cost of resources to cost objects.

________ is used to record and accumulate all the costs assigned to a specific job.

Job-cost record

Johnson Superior Products Inc. produces hospital equipment and the setup requirements vary from product to product. Johnson produces its products based on customer orders and uses ABC costing. In one of its indirect cost pools, setup costs and distribution costs are pooled together. Costs in this pool are allocated using number of customer orders for the easiness of costing operations. Based on the information provided, which of the following arguments is valid?

Johnson has failed to use the correct cost driver as the cost-allocation base for setup costs

Process costing would most likely be used to assign costs to products produced by which of these companies?

Jones Flour Mill

Extracts from cost information of Hebar Corp.: Simple L3 Pack Complex L7 Pack Total Setup cost allocated using direct labor-hours $19,250 $5,750 $25,000 Setup cost allocated using setup-hours $13,400 $11,600 $25,000 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 Hebar's setup costs under traditional costing?

L3 pack is overcosted by $5,850 Setup cost allocated using direct labor-hours - Setup cost allocated using setup-hours = $19,250 − $13,400 = $5,850

________ is an example of an output unit-level cost in the cost hierarchy.

Machine depreciation

With traditional costing systems, products manufactured in small batches and in small annual volumes may be ________ because batch-related and product-sustaining costs are assigned using unit-related drivers.

undercosted

Direct costs ________.

are costs related to a particular cost object that can be traced to that cost object in an economically feasible manner

Financial planning models:

are mathematical representations of the relationships affecting the budget process

Which of the following steps are part of the first-in, first-out (FIFO) process-costing method?

assignment of costs of the previous period's equivalent units in beginning work-in-process inventory to the first units completed and transferred out of the process

The budgeted indirect-cost rate is calculated ________.

at the beginning of the year

It only makes sense to implement an ABC system when ________.

its benefits exceed its implementation costs

The basic source document for direct manufacturing labor is the ________.

labor-time record

All of the following are encouraged with kaizen budgeting EXCEPT:

large discontinuous improvements

It is important that the product costs reflect as much of the diversity and complexity of the manufacturing process so that ________.

product-pricing errors are minimal

Direct material purchases equal:

production needs plus target ending inventories less beginning inventories

The manager of a hobby store that is part of a chain of stores is most likely responsible for a(n):

profit center

Financial analysts use the projected cash flow statement to do all of the following EXCEPT:

project depreciation expense

If indirect-cost rates are calculated monthly, distortions might occur because of ________.

property tax payments made in July and December

Which of the following cost and cost allocation base have a strong cause and effect relationship?

quality control costs and the number of inspections

For a given job the direct costs associated with the job are ________.

raw materials that can be traced to the job in an economically feasible way

Job costing ________.

records the flow of costs for each product or service

A stretch budget is a budget that:

represents a challenging, but achievable level of performance

The regional sales office manager of a national firm is most likely responsible for a(n):

revenue center

The order to follow when preparing the operating budget is:

revenues budget, production budget, and direct manufacturing labor costs budget

Financial planning software packages assist management with:

sensitivity analysis in their planning and budgeting activities

A good budgeting system forces managers to examine the business as they plan, so they can:

set specific expectations against which actual results can be compared

The following conditions with departmental indirect-cost rates will result in allocation of costs similar to ABC costing except:

several activities cause a sizable portion of the costs of the department

Activity-based-costing analysis makes no distinction between:

short-run variable costs and short-run fixed costs

Which of the following are reasons for using longer periods, such as a year, to calculate indirect cost rates?

shorter the period, the greater is the influence of seasonal patterns on the amount of costs

Managers and accountants collect most of the cost information that goes into their systems through

source documents

Activity-based budgeting does NOT require:

specialized expertise in financial management and control

Line managers who feel that top management does NOT believe in the budget are most likely to:

spend little time on the budgeting process

Facility-sustaining costs are the costs of activities ________.

that managers cannot trace to individual products or services but that support the organization as a whole

When "available time" (i.e., setup-hours) is used to calculate a cost of a resource and to allocate costs to cost objects , the system is called:

time-driven activity based costing

One reason for assigning selling and distribution costs to products for analytical purposes is ________.

to ensure that all costs are considered

When performing a sensitivity analysis, if the selling price per unit is increased, then the:

total costs for sales commissions and other nonmanufacturing variable costs will increase

Management accountants use the cost hierarchy to first calculate the ________.

total costs of each product and then they compute per-unit costs

A cost is considered direct if it can be traced to a particular cost object in a cost effective way which means it can be

traced in an economically feasible way

Process costing ________.

allocates all product costs, including materials, and labor

Xylon Corp. has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $900,000 for an annual production capacity of 10 million pages. For 2018, Xylon 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 $190,000 200 design changes Setups 550,000 5,000 setups Inspections 160,000 16,000 inspections Total manufacturing overhead costs $900,000 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 15 7 Setups 18 8 Inspections 25 63 If manufacturing overhead costs are considered one large cost pool and are assigned based on 10 million pages of production capacity, what is the cost driver rate? (Round the final answer to three decimal places.)

$0.09 per page Cost driver rate = ($900,000 ÷ 10 million pages) = $0.09 per page

Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $1,500,000 for an annual production capacity of 10 million pages. For 2018 Velshi Printers has 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 $100,000 400 design changes Setups 1,300,000 3,000 setups Inspections 100,000 10,000 inspections Total manufacturing overhead costs $1,500,000 During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Activity Money Managers Hospital Systems Pages 90,000 106,000 Design changes 13 0 Setups 18 8 Inspections 30 38 What is the cost driver rate if manufacturing overhead costs are considered one large cost pool and are assigned based on 10 million pages of production capacity?

$0.15 per page $0.15 per page = ($1,500,000 / 10,000,000 pages)

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. Small Department Large Department Square footage 6,850 17,750 Number of employees 1,120 500 Sales $320,000 $1,740,000 If advertising expense of $432,600 is allocated on the basis of sales, the cost per cost driver rate would be ________.

$0.21 per dollar of sales

Stark Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways. Car Rental Truck Rental Number of Vehicles in fleet 880 410 Number of employees 105 50 Sales $760,000 $380,000 If advertising expense of $456,000 is allocated on the basis of sales, the cost per cost driver rate would be ________.

$0.40

Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirectcost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Case High School Job Direct materials $60,000 $2,400 Direct labor $15,000 $600 Manufacturing overhead costs $50,000 Machine-hours 100,000 mh 1,000 mh For Lancelot Manufacturing, what is the annual manufacturing overhead cost-allocation rate?

$0.50 $50,000 / 100,000 mh = $0.50 per mh

For 2018, Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base. The estimated manufacturing overhead costs are $340,000 and estimated machine hours are 40,000. The actual manufacturing overhead costs are $450,000 and actual machine hours are 50,000. What is the difference between the budgeted and the actual manufacturing overhead using job costing? (Round interim and the final answer to the nearest cent.)

$0.50 Budgeted manufacturing overhead rate: $340,000 / 40,000 mh = $8.50 per machine-hour Actual manufacturing overhead is $450,000 / 50,000 = $9.00 per machine hour. Difference is $9.00 - $8.50 = $0.50

Nile Corp. has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Overhead Costs Cost driver Activity level Supervision of direct labor $474,000 Direct labor-hours 790,000 Machine maintenance $147,200 Machine-hours 920,000 Facility rent $243,000 Square feet of area 135,000 Total overhead costs $864,200 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor-hours 240 Machine-hours 1,700 Square feet of area 50 If Nile Corp. uses the three activity cost pools to allocate overhead costs, what are the activity-cost driver rates for supervision of direct labor, machine maintenance, and facility rent, respectively?

$0.60 per dlh; $0.16 per mh; $1.80 per sq ft

Bear Company has the following information: Month Budgeted Purchases January $26,800 February 29,000 March 30,520 April 29,480 May 27,680 Purchases are paid for in the following manner: 10% of the purchase amount in the month of purchase 50% of the purchase amount in the month after purchase 40% of the purchase amount in the month after purchase 12) What is the expected balance in Accounts Payable as of March 31?

$39,068

Milan Manufacturing Company has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Overhead Costs Cost driver Activity level Supervision of direct labor $539,000 Direct labor-hours 920,000 Machine maintenance $120,000 Machine-hours 1,000,000 Facility rent $215,000 Square feet of area 160,000 Total overhead costs $874,000 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor-hours 300 Machine-hours 1,675 Square feet of area 70 If direct labor-hours are considered the only overhead cost driver, what is the single cost driver rate for Milan?

$0.95 per direct labor-hour Cost driver rate = $874,000 ÷ 920,000 = 0.95 per dlh

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weightedaverage costing. Data for the Assembly Department for June 2017 are: Work in process, beginning inventory 370 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 1030 units Work in process, ending inventory: 160 units Direct materials (100% complete) Conversion costs (70% complete) Costs for June 2017: Work in process, beginning inventory: Direct materials $91,500 Conversion costs $138,000 Direct materials costs added during June $602,000 Conversion costs added during June $404,000 What is the total amount debited to the Work-in-Process account during the month of June?

$1,006,000

What is the amount budgeted for direct material purchases in 2012?

$1,040,000

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2017 for the Assembly department. Work in process, beginning inventory 330 units Conversion costs (40% complete) Units started during March 810 units Work in process, ending inventory: 120 units Conversion costs (60% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $346,500 Conversion costs $363,000 Direct materials costs added during March $707,000 Conversion costs added during March $1,124,000 What is the total amount debited to the Work-in-Process account during the month of March?

$1,831,000

What is the amount budgeted for cost of goods manufactured in 2012?

$1,972,000

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: T-SHIRTS SWEATSHIRTS Production and sales volume 180,000 units 24,000 units Selling price $20.00 $29.00 Direct material $1.80 $ 5.00 Direct labor $4.70 $ 7.20 Manufacturing overhead $6.00 $ 3.00 Gross profit $ 7.50 $13.80 Selling and administrative $4.30 $ 7.00 Operating profit $3.20 $ 6.80 Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: Activity Activity cost Activity-cost driver Supervision $97,200 Direct labor hours (DLH) Inspection $164,050 Inspections Activities demanded T-SHIRTS SWEATSHIRTS 0.25 DLH/unit 1.50 DLH/unit 45,000 DLHs 36,000 DLHs 80,000 inspections 16,500 inspections Under the revised ABC system, the activity-cost driver rate for the supervision activity is ________.

$1.2 $97,200 / (45,000 dlh + 36,000 dlh) = $1.2 per dlh

X-Industries manufactures 3-D printers. For each unit, $3,400 of direct material is used and there is $2,600 of direct manufacturing labor at $16 per hour. Manufacturing overhead is applied at $20 per direct manufacturing labor hour. Calculate the profit earned on 46 units if each unit sells for $9,500.

$11,500 ($3,400 + $2,600 + (($2,600 / $16) × $20) = $9,250 Profit earned on 46 units = ($9,500 − $9,250) × 46 units = $11,500)

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: T-SHIRTS SWEATSHIRTS Production and sales volume 64,000 units 40,000 units Selling price $16.00 $29.00 Direct material $2.50 $ 5.00 Direct labor $4.30 $ 7.20 Manufacturing overhead $1.70 $ 3.00 Gross profit $ 7.50 $13.80 Selling and administrative $4.30 $ 7.00 Operating profit $3.20 $ 6.80 Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: Activity Activity cost Activity-cost driver Supervision $107,520 Direct labor hours (DLH) Inspection $70,200 Inspections Activities demanded T-SHIRTS SWEATSHIRTS 0.75 DLH/unit 1.20 DLH/unit 48,000 DLHs 48,000 DLHs 40,000 inspections 18,500 inspections Under the revised ABC system, overhead costs per unit for the Sweatshirts will be ________. (Do not round interim calculations. Round the final answer to the nearest cent)

$1.90 per unit $70,200 / (40,000 inspections + 18,500 inspections) = $1.20 per inspection x 18,500 = $22,200 plus $107,520 / (48,000 dlh + 48,000 dlh) = $1.12 per dlh x 48,000 dlh = $53,760 $22,200 + $53,760 = $75,960 $75,960 / 40,000 sweatshirts = $1.90

Serile Pharma places 800 units in production during the month of January. All 800 units are completed during the month. It had no opening inventory. Direct material costs added during January was $74,000 and conversion costs added during January was $8400. What is the total cost per unit of the product produced during January?

$103

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. Small Department Large Department Square footage 6,850 17,200 Number of employees 1,180 460 Sales $300,000 $1,790,000 If total rent expense of $144,300 is allocated on the basis of square footage, the amount allocated to the Large Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$103,200

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weightedaverage costing. Data for the Assembly Department for June 2017 are: Work in process, beginning inventory 340 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 950 units Work in process, ending inventory: 200 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 2017: Work in process, beginning inventory: Direct materials $94,000 Conversion costs $135,500 Direct materials costs added during June $602,500 Conversion costs added during June $402,000 What amount of direct materials costs is assigned to the ending Work-in-Process account for June? (Round intermediary calculations to the nearest whole dollar.)

$108,000

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2017 for the Assembly department. Work in process, beginning inventory 340 units Conversion costs (25% complete) Units started during March 860 units Work in process, ending inventory: 140 units Conversion costs (60% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $349,000 Conversion costs $360,000 Direct materials costs added during March $703,500 Conversion costs added during March $1,130,000 What amount of conversion costs is assigned to the ending Work-in-Process account for March? (Round intermediary dollar amounts to the nearest cent and unit amounts to the nearest whole unit.)

$109,406

Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $390,000 13,000 hours Account billing $275,000 5,000,000 lines Account verification accounts $130,500 60,000 accounts Correspondence letters $22,000 4,000 letters Total costs $817,500 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,500 hours 4,000 hours Account billing lines 800,000 lines 650,000 lines Account verification accounts 9,000 accounts 7,000 accounts Correspondence letters 2,000 letters 2,400 letters How much of correspondence costs will be assigned to Department A?

$11,000 Correspondence costs - Department A = ($22,000 ÷ 4,000) × 2,000 = $11,000

At the end of January, budgeted accounts receivable is:

$40,000

North Street Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 20 5 720 Deluxe 29 17 460 Overhead costs $17,150 $19,800 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 cost assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$11,500 Setups: 17,150 ÷ (20 + 29) = $350 Components: $19,800 ÷ (5 + 17) = $900 Total amount of overhead cost = ($350 × 20) + ($900 × 5) = $11,500

Weighty Steel processes a single type of steel. For the current period the following information is given: Units Material Costs Conversion Costs Beginning Inventory 3100 $4800 $5800 Started During the Current Period 20,400 32,300 78,700 Ending Inventory 3400 All materials are added at the beginning of the production process. The beginning inventory was 50% complete as to conversion, while the ending inventory was 25% completed for conversion purposes. Weighty uses the weighted-average costing method. What is the total cost assigned to the units completed and transferred this period? (Round intermediary dollar amounts to the nearest cent and total costs to the nearest whole dollar.)

$112,761

Better Products Company manufactures insulation 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 October 2018: Direct materials $370,000 Direct labor (3,300 hours @ $17/hour) 56,100 Indirect labor 22,000 Plant facility rent 53,000 Depreciation on plant machinery and equipment 41,000 Sales commissions 17,000 Administrative expenses 29,000 The actual amount of manufacturing overhead costs incurred in October 2018 totals ________.

$116,000 $22,000 + $53,000 + $41,000 = $116,000

FIFO Aluminum processes a single type of aluminum. During the current period the following information was given: Units Material Costs Conversion Costs Beginning Inventory 4800 $5700 $6600 Started During the Current Period 20,800 49,200 67,000 Ending Inventory 2900 All materials are added at the beginning of the production process. The beginning inventory was 35% complete as to conversion, while the ending inventory was 40% completed for conversion purposes. FIFO Aluminum uses the first-in, first-out system of process costing. What were the costs assigned to the units transferred out this period (Round intermediary calculations to the nearest cent)?

$118,203

Sky High Company has two departments, X and Y. The following estimates are for the coming year: X Y Direct manufacturing labor-hours 20,000 30,000 Machine-hours 30,000 20,000 Manufacturing overhead $300,000 $330,000 A single indirect-cost rate based on direct manufacturing labor-hours for the entire plant is ________.

$12.60 per direct labor-hour $630,000 / 50,000 dlh = $12.60

Dessa Cabinetry, Inc., manufactures standard sized modular cabinet units for kitchens and other applications within the home. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the rough cut department and the finish department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Finishing Department for March 2017 are: Work in process, beginning inventory, 25% converted 850 units Units started during February 1200 units Work in process, ending inventory 680 units Costs for Finishing Department for March 2017 are: Work in process, beginning inventory: Direct materials $204,000 Conversion costs $210,000 Direct materials costs added during February $429,000 Conversion costs added during February $140,000 What is the unit cost per equivalent unit of the beginning inventory in the Finishing Department? (Round the final answer to the nearest whole dollar.)

$1228

Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC 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 $2 per part Assembly Labor hours $10 per hour Inspection Time at inspection station $20 per minute The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $600 per labor hour. What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 100 remote controls are produced? The batch requires 460 parts, 5 direct manufacturing labor hours, and 18 minutes of inspection time.

$13.30 per remote control Cost per batch = ($2 × 460) + ($10 × 5) + ($20 × 18) = $1,330.00 per batch Cost per remote control = $1,330.00 per batch ÷ 100 units per batch = $13.30 per unit

Elite Stationary employs 20 full-time employees and 10 trainees. Direct and indirect costs are applied on a professional labor-hour basis that includes both employee and trainee hours. Following is information for 2018: Budget Actual Indirect costs $300,000 $400,000 Annual salary of each employee $200,000 $210,000 Annual salary of each trainee $35,000 $40,000 Total professional labor-hours 20,000 dlh 40,000 dlh How much should a client be billed in a normal costing system when 1,000 professional labor-hours are used?

$130,000 [($210,000 × 20) + ($40,000 × 10)] / 40,000 × 1,000 = $115,000 $300,000 / 20,000 × 1,000 = 15,000; 115,000 + 15,000= $130,000

Kason, Inc., expects to sell 20,000 pool cues for $24.00 each. Direct materials costs are $4.00, direct manufacturing labor is $8.00, and manufacturing overhead is $1.60 per pool cue. The following inventory levels apply to 2011: Beginning inventory Ending inventory Direct materials 24,000 units 24,000 units Work-in-process inventory 0 units 0 units Finished goods inventory 2,000 units 2,500 units 28) On the 2012 budgeted income statement, what amount will be reported for sales?

$480,000

Stark Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways. Car Rental Truck Rental Number of Vehicles in fleet 900 480 Number of employees 110 75 Sales $720,000 $380,000 If the facility lease expense of $380,000 is allocated on the basis of vehicles in the fleet, the amount allocated to the Truck Rental Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$132,174

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2017 for the Assembly department. Work in process, beginning inventory 350 units Conversion costs (40% complete) Units started during March 850 units Work in process, ending inventory: 160 units Conversion costs (55% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $349,000 Conversion costs $362,000 Direct materials costs added during March $705,500 Conversion costs added during March $1,129,000 What is the conversion cost per equivalent unit in March? (Round to the nearest cent)

$1321.81

North Street Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 17 6 710 Deluxe 27 18 420 Overhead costs $15,400 $22,560 Assume a traditional costing system applies the $37,960 of overhead costs based on direct labor hours. What is the total amount of overhead cost assigned to the deluxe model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$14,109 [$37,960 / (710 + 420)] × 420 = $14,109

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,400 models. During the month, the company completed 11,200 models, and transferred them to the Distribution Department. The company ended the month with 2200 models in ending inventory. There were 3000 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 55% complete as to conversion costs. Beginning inventory: Direct materials costs $20,000 Conversion costs $11,000 Manufacturing costs added during the accounting period: Direct materials costs $70,500 Conversion costs $240,300 What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of October? (Round intermediary calculations to the nearest cent.)

$14,916

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2017 for the Assembly department. Work in process, beginning inventory 320 units Conversion costs (30% complete) Units started during March 840 units Work in process, ending inventory: 160 units Conversion costs (55% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $347,500 Conversion costs $364,000 Direct materials costs added during March $700,500 Conversion costs added during March $1,124,000 What amount of direct materials costs is assigned to the ending Work-in-Process account for March? (Round intermediary calculations to the nearest whole dollar.)

$144,480

Stefan Ceramics is in the business of selling ceramic vases. It has two departments - molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 720 kgs of tungsten carbide at $280 per kg. It started manufacture of 4200 vases and completed and transferred 3200 vases during the month. It has 1000 vases in the process at the end of the month. It incurred direct labor charges of $1900 and other manufacturing costs of $500, which included electricity costs of $900. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 45% complete in respect of conversion costs. What is the cost of tungsten carbide that will be assigned to vases finished and transferred to the finishing department for the month of July?

$153,600

St. Claire Manufacturing expects to produce and sell 6,000 units of Big, its only product, for $20 each. Direct material cost is $2 per unit, direct labor cost is $8 per unit, and variable manufacturing overhead is $3 per unit. Fixed manufacturing overhead is $24,000 in total. Variable selling and administrative expenses are $1 per unit, and fixed selling and administrative costs are $3,000 in total. According to generally accepted accounting principles, inventoriable cost per unit of Big would be:

$17.00 per unit

Columbus Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Labor $384,000 8,000 hours Gas $40,000 4,000 gallons Invoices $40,000 2,500 invoices Total costs $464,000 The above activities used by their three departments are: Lawn Department Bush Department Plowing Department Labor 2,800 hours 1,500 hours 3,700 hours Gas 1,800 gallons 900 gallons 1,300 gallons Invoices 1,400 invoices 300 invoices 800 invoices How much of the total costs will be assigned to the Lawn Department?

$174,800

For January, the amount budgeted for the nonmanufacturing costs budget is:

$18,000

On the 2012 budgeted income statement, what amount will be reported for cost of goods sold?

$180,000

Smith Office Equipment Company's budgeted manufacturing overhead is $5,400,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 30,000. What is the manufacturing overhead rate?

$180.00 ($5,400,000 / 30,000 hours = $180.00)

Cash collections for October are:

$184,800

Morgan Clay Products manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Molding Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for August 2017 are: Work in process, beginning inventory: 3000 units Direct materials (100% complete) Conversion costs (40% complete) Units started during August 695 units Work in process, ending inventory: 500 units Direct materials (100% complete) Conversion costs (65% complete) Costs for August: Standard costs for Assembly: Direct materials $15 per unit Conversion costs $35.50 per unit Work in process, beginning inventory: Direct materials $12,400 Conversion costs $9450. What is the balance in ending work-in-process inventory?

$19,038

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. Small Department Large Department Square footage 6,550 17,300 Number of employees 1,080 470 Sales $330,000 $1,700,000 If total rent expense of $71,550 is allocated on the basis of square footage, the amount allocated to the Small Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$19,650

Monetary Company has the following sales budget for the last six months of 2011: July $200,000 October $ 180,000 August 160,000 November 200,000 September 220,000 December 188,000 Historically, the cash collection of sales has been as follows: 65% of sales collected in the month of sale, 25% of sales collected in the month following the sale, 8% of sales collected in the second month following the sale, and 2% of sales are uncollectible. 9) Cash collections for September are:

$199,000

What is the amount budgeted for cost of goods sold in 2012?

$2,040,000

Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirectcost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Case High School Job Direct materials $40,000 $2,000 Direct labor $10,000 $400 Manufacturing overhead costs $45,000 Machine-hours 100,000 mh 900 mh What are the total manufacturing costs of this job?

$2,805 DM $2,000 + DML $400 + MOH $405 = $2,805

For January, budgeted net income is:

$20,000

Budgeting provides all of the following EXCEPT:

an ethical framework for decision making

Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $1,800,000 for an annual production capacity of 20 million pages. For 2018 Velshi Printers has 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 $200,000 400 design changes Setups 1,550,000 2,000 setups Inspections 50,000 11,000 inspections Total manufacturing overhead costs $1,800,000 During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Activity Money Managers Hospital Systems Pages 80,000 96,000 Design changes 13 0 Setups 18 8 Inspections 29 37 Using the three cost pools to allocate overhead costs, what is the total manufacturing overhead cost estimate for Money Managers during 2018? (Do not round interim calculations. Round the final answer to the nearest cent.)

$20,581.82

Milan Company has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Overhead Costs Cost driver Activity level Supervision of direct labor $624,000 Direct labor-hours 940,000 Machine maintenance $100,000 Machine-hours 840,000 Facility rent $216,000 Square feet of area 140,000 Total overhead costs $940,000 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor-hours 290 Machine-hours 1,681.68 Square feet of area 50 Under activity-based costing, what is the amount of machine maintenance costs allocated to the Mossman Job? (Do not round any intermediary calculations.)

$200.20 Machine maintenance costs = 1,681.68 mh × ($100,000 ÷ 840,000) = $200.20

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. Small Department Large Department Square footage 6,600 17,350 Number of employees 1,030 510 Sales $350,000 $1,750,000 If total payroll processing costs of $64,680 are allocated on the basis of number of employees, the amount allocated to the Large Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$21,420

North Street Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 17 7 720 Deluxe 33 12 410 Overhead costs $16,000 $18,050 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 cost assigned to the deluxe model?

$21,960 Setups: 16,000 ÷ (17 + 33) = $320 Components: $18,050 ÷ (7 + 12) = $950 Total amount of overhead cost = ($320 × 33) + ($950 × 12) = $21,960

Elite Stationary Inc. employs 20 full-time employees and 10 trainees. Direct and indirect costs are applied on a professional labor-hour basis that includes both employee and trainee hours. Following is information for 2018: Budget Actual Indirect costs $300,000 $400,000 Annual salary of each employee $200,000 $210,000 Annual salary of each trainee $35,000 $40,000 Total professional labor-hours 20,000 dlh 40,000 dlh What are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively, per professional labor-hour? (Round the final answers to the nearest cent.)

$217.50; $15.00 [($200,000 × 20) + ($35,000 × 10)] / 20,000 = $217.50 budgeted direct rate $300,000 / 20,000 = $15.00 budgeted indirect rate

Stefan Ceramics is in the business of selling ceramic vases. It has two departments - molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 720 kgs of tungsten carbide at $280 per kg. It started manufacture of 4200 vases and completed and transferred 3800 vases during the month. It has 400 vases in the process at the end of the month. It incurred direct labor charges of $1700 and other manufacturing costs of $600, which included electricity costs of $700. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 40% complete in respect of conversion costs. What is the total conversion costs for the month of July?

$2300

Dartmouth Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 17 6 790 Deluxe 31 15 400 Overhead costs $18,240 $21,000 Assume a traditional costing system applies the $39,240 of overhead costs based on direct labor hours. What is the total amount of overhead cost assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$26,050 [$39,240 / (790 + 400)] × 790 = $26,050

Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $750,000 15,000 hours Account billing $250,000 5,000,000 lines Account verification accounts $173,250 70,000 accounts Correspondence letters $42,000 7,000 letters Total costs $1,215,250 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,000 hours 3,500 hours Account billing lines 900,000 lines 750,000 lines Account verification accounts 9,000 accounts 7,000 accounts Correspondence letters 1,200 letters 1,600 letters How much of the total costs will be assigned to Department B?

$239,425 Account inquiry costs=(750000/15000)x35000=175000 Billing costs= (250000/5000000)x750000=37500 Account verification costs= (173250/70000)x7000=17325 Correspondence costs= (42000/7000)x1600=9600 175000+37500+17325+9600=239425

What are the 2012 budgeted costs for direct materials, direct manufacturing labor, and manufacturing overhead, respectively?

$24,400; $122,000; $36,600

Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $320,000 16,000 hours Account billing $220,000 4,000,000 lines Account verification accounts $182,000 80,000 accounts Correspondence letters $25,000 4,000 letters Total costs $747,000 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,200 hours 3,700 hours Account billing lines 600,000 lines 450,000 lines Account verification accounts 5,000 accounts 3,000 accounts Correspondence letters 1,000 letters 1,400 letters How much of the account billing cost will be assigned to Department B?

$24,750 Billing costs - Department B = ($220,000 ÷ 4,000,000) × 450,000 = $24,750

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. Small Department Large Department Square footage 6,550 17,600 Number of employees 1,040 400 Sales $350,000 $1,740,000 If total payroll processing costs of $34,560 are allocated on the basis of number of employees, the amount allocated to the Small Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$24,960

Elton, Inc., expects to sell 6,000 ceramic vases for $40 each. Direct materials costs are $4, direct manufacturing labor is $20, and manufacturing overhead is $6 per vase. The following inventory levels apply to 2011: Beginning inventory Ending inventory Direct materials 1,000 units 1,000 units Work-in-process inventory 0 units 0 units Finished goods inventory 400 units 500 units 32) On the 2012 budgeted income statement, what amount will be reported for sales?

$240,000

Stark Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways. Car Rental Truck Rental Number of Vehicles in fleet 870 460 Number of employees 125 55 Sales $720,000 $380,000 If the facility lease expense of $381,000 is allocated on the basis of vehicles in the fleet, the amount allocated to the Car Rental Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$249,226

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,700 chairs. During the month, the firm completed 78,500 chairs, and transferred them to the Finishing Department. The firm ended the month with 11,200 chairs in ending inventory. There were 16,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 20% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials $24,800 Conversion costs $35,900 Manufacturing costs added during the accounting period: Direct materials $168,200 Conversion costs $278,400 What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of February? (Round intermediary calculations to the nearest cent.)

$25,536

Grandma's Baskets Company expects to manufacture and sell 50,000 baskets in 2011 for $5 each. There are 4,000 baskets in beginning finished goods inventory with target ending inventory of 4,000 baskets. The company keeps no work-in-process inventory. What amount of sales revenue will be reported on the 2011 budgeted income statement?

$250,000

Brent Enterprises reports the year-end information from 2011 as follows: Sales (35,000 units) $280,000 Cost of goods sold 105,000 Gross margin 175,000 Operating expenses 100,000 Operating income $ 75,000 Brent is developing the 2012 budget. In 2012 the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost. 9) What is budgeted sales for 2012?

$262,080

On the 2012 budgeted income statement, what amount will be reported for cost of goods sold?

$272,000

At the end of January, budgeted ending inventory is:

$28,000

Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $420,000 14,000 hours Account billing $225,000 5,000,000 lines Account verification accounts $95,000 40,000 accounts Correspondence letters $46,000 8,000 letters Total costs $786,000 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,900 hours 4,400 hours Account billing lines 600,000 lines 450,000 lines Account verification accounts 12,000 accounts 10,000 accounts Correspondence letters 1,800 letters 2,200 letters How much of account verification costs will be assigned to Department A?

$28,500 Account verification costs - Department A = ($95,000/ 40,000) × 12,000 = $28,500

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: T-SHIRTS SWEATSHIRTS Production and sales volume 60,000 units 35,000 units Selling price $16.00 $29.00 Direct material $ 2.00 $ 5.00 Direct labor $ 4.50 $ 7.20 Manufacturing overhead $ 2.00 $ 3.00 Gross profit $ 7.50 $13.80 Selling and administrative $ 4.00 $ 7.00 Operating profit $ 3.50 $ 6.80 What is projected operating income if direct materials costs of T-Shirts increase to $4.00 per unit and direct labor costs of Sweatshirts increase to $8.20 per unit.

$293,000

Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $600,000 for an annual production capacity of 12 million pages. For 2018 Velshi Printers has 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 $120,000 500 design changes Setups 380,000 4,000 setups Inspections 100,000 9,000 inspections Total manufacturing overhead costs $600,000 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 12 0 Setups 17 7 Inspections 26 34 Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for Money Managers during 2018?

$3,500 $3,500 = [70,000 pages × ($600,000 / 12,000,000)]

Columbus Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Labor $352,000 8,000 hours Gas $8,000 4,000 gallons Invoices $110,000 5,500 invoices Total costs $470,000 The above activities used by their three departments are: Lawn Department Bush Department Plowing Department Labor 3,200 hours 1,200 hours 3,600 hours Gas 1,900 gallons 900 gallons 1,200 gallons Invoices 1,500 invoices 300 invoices 3,700 invoices How much of the gas cost will be assigned to the Lawn Department?

$3,800 Gas cost = ($8,000 ÷ 4,000 gallons) × 1,900 gallons = $3,800

Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirectcost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Case High School Job Direct materials $40,000 $2,000 Direct labor $10,000 $400 Manufacturing overhead costs $45,000 Machine-hours 100,000 mh 900 mh What is the bid price for the Case High School job if the company uses a 40% markup of total manufacturing costs?

$3,927 (DM $2,000 + DML $400 + MOH $405) × (1 + 40/100) = $3,927

Which of the following statements is true of activity-based costing?

Activity based costing is more suited to companies with high product diversity than companies with single product line.

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: T-SHIRTS SWEATSHIRTS Production and sales volume 204,000 units 34,000 units Selling price $18.00 $29.00 Direct material $1.60 $ 5.00 Direct labor $4.30 $ 7.20 Manufacturing overhead $4.60 $ 3.00 Gross profit $ 7.50 $13.80 Selling and administrative $3.50 $ 7.00 Operating profit $4.00 $ 6.80 Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: Activity Activity cost Activity-cost driver Supervision $130,560 Direct labor hours (DLH) Inspection $69,300 Inspections Activities demanded T-SHIRTS SWEATSHIRTS 0.25 DLH/unit 1.50 DLH/unit 51,000 DLHs 51,000 DLHs 30,000 inspections 19,500 inspections Using an ABC system, next year's estimates show manufacturing overhead costs will total $227,300 for 46,000 T-shirts. If all other T-shirt costs and sales prices remain the same, the profitability that can be expected is ________. (Round the final answer to the nearest whole cent.)

$3.66 per t-shirt [46,000 ($18.00 - $1.60 - $4.30 - $3.50)] - $227,300 = $168,300 / 46,000 = $3.66

Fixed costs remain constant at $450,000 per month. During high-output months variable costs are $300,000, and during low-output months variable costs are $125,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 24,000 for high-output months and 5,000 for low-output months?

$31.25 per hour; $115.00 per hour $450,000 / 24,000 = $18.75 $300,000 / 24,000 = 12.50 High Month = $31.25 $450,000 / 5,000 = $90.00 $125,000 / 5,000 = 25.00 Low Month = $115.00

Columbus Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Labor $490,000 10,000 hours Gas $18,000 3,000 gallons Invoices $56,000 3,500 invoices Total costs $564,000 The above activities used by their three departments are: Lawn Department Bush Department Plowing Department Labor 2,800 hours 1,400 hours 5,800 hours Gas 1,800 gallons 900 gallons 300 gallons Invoices 1,600 invoices 300 invoices 1,600 invoices How much of the total cost will be assigned to the Plowing Department?

$311,600 ($490,000 / 10,000) × 5,800 = $284,200 ($18,000 / 3,000) × 300 = $1,800 ($56,000 / 3,500) × 1,600 = $25,600 $311,600

Stark Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways. Car Rental Truck Rental Number of Vehicles in fleet 900 460 Number of employees 145 55 Sales $700,000 $390,000 If administrative expense of $62,800.00 is allocated on the basis of number of employees, the cost per cost driver rate would be ________.

$314.00

Columbus Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Labor $336,000 8,000 hours Gas $84,000 7,000 gallons Invoices $180,000 7,500 invoices Total costs $600,000 The above activities used by their three departments are: Lawn Department Bush Department Plowing Department Labor 3,100 hours 1,500 hours 3,400 hours Gas 1,900 gallons 900 gallons 4,200 gallons Invoices 1,300 invoices 400 invoices 5,800 invoices If labor hours are used to allocate the non-labor, overhead costs, what is the overhead allocation rate?

$33.00 per hour Overhead allocation rate = ($84,000 + $180,000) ÷ 8,000 = $33.00

What is the expected Accounts Payable balance as of May 31?

$36,704

What is the expected balance in Accounts Payable as of April 30?

$38,740

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weightedaverage costing. Data for the Assembly Department for June 2017 are: Work in process, beginning inventory 390 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 1040 units Work in process, ending inventory: 200 units Direct materials (100% complete) Conversion costs (85% complete) Costs for June 2017: Work in process, beginning inventory: Direct materials $92,500 Conversion costs $138,500 Direct materials costs added during June $603,000 Conversion costs added during June $403,500 What is the conversion cost per equivalent unit in June?

$387.14

Manton Manufacturing applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of the Toy Bear product. Estimates for this order include: Direct materials of $79,000; 680 direct manufacturing labor-hours at $25 per hour; and a 25% markup rate on total manufacturing costs. Manufacturing overhead cost estimates for this special-order total ________.

$40,800 $60 × 680 dlh = $40,800

What is budgeted gross margin for March 2011?

$411,940

Charlie Chairs Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2017 are: Work in process, beginning inventory, 30% converted 200 units Units started during February 1000 units Work in process, ending inventory 240 units Costs for Department A for February 2017 are: Work in process, beginning inventory: Direct materials $150,000 Conversion costs $208,000 Direct materials costs added during February $606,000 Conversion costs added during February $431,000 What is the unit cost per equivalent unit of beginning inventory in Department A? (Round the final answer to the nearest whole dollar.)

$4217

Nile Corp. has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Overhead Costs Cost driver Activity level Supervision of direct labor $304,000 Direct labor-hours 760,000 Machine maintenance $153,600 Machine-hours 960,000 Facility rent $165,000 Square feet of area 110,000 Total overhead costs $622,600 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor-hours 260 Machine-hours 1,500 Square feet of area 70 Using the three cost pools to allocate overhead costs, what is the total amount of overhead costs to be allocated to the Mossman Job?

$449.00

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,600 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,100 chairs in ending inventory. There were 15,700 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 35% complete as to conversion costs, while ending work in process was 85% complete as to conversion costs. Beginning inventory: Direct materials $24,400 Conversion costs $36,000 Manufacturing costs added during the accounting period: Direct materials $168,500 Conversion costs $278,500 What is the cost of the goods transferred out during February? (Round intermediary calculations to the nearest cent.)

$454,987.05

Answer the following questions using the information below: Eagle Eye Company produces two types of lenses-L7 and L9. Single Indirect-Cost Pool System ABC System Total direct costs $77,000 $50,000 Total indirect costs $37,000 (a) Total costs assigned to L7 $68,000 $50,500 Total costs assigned to L9 (b) $32,500 What is the total costs assigned to L9 (b) under single indirect-cost pool system?

$46,000

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,200 models. During the month, the company completed 11,200 models, and transferred them to the Distribution Department. The company ended the month with 2500 models in ending inventory. There were 3500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 55% complete as to conversion costs. Beginning inventory: Direct materials costs $20,200 Conversion costs $11,700 Manufacturing costs added during the accounting period: Direct materials costs $70,600 Conversion costs $240,600 What is the cost assigned to ending inventory during October? (Round intermediary calculations to the nearest cent.)

$46,010

How much cash will be paid to suppliers in March?

$46,400

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weightedaverage costing. Data for the Assembly Department for June 2017 are: Work in process, beginning inventory 310 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 1040 units Work in process, ending inventory: 160 units Direct materials (100% complete) Conversion costs (70% complete) Costs for June 2017: Work in process, beginning inventory: Direct materials $92,000 Conversion costs $139,000 Direct materials costs added during June $601,500 Conversion costs added during June $404,000 What amount of conversion costs is assigned to the ending Work-in-Process account for June? (Round any intermediary calculations to the nearest cent.)

$46,709.60

Canton Corp. manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period: Cost Pool Overhead Costs Activity-cost driver Materials handling $46,000 94,000 orders Machine maintenance $310,000 20,000 maintenance hours Setups $261,000 45,000 setups Inspections $132,370 21,700 inspections Total support costs $749,370 Production Estimates Production units: Regular = 8,000,000 units Jumbo = 16,000,000 units Machine-hours = 500,000 mh Labor-hours = 1,000,000 dlh Expected direct costs amounts to $942,000 for the period. Support cost requirements of both products are substantially different from one another. Canton uses an ABC costing system. The setups activity-cost driver rate is ________.

$5.80 per setup Setups activity-cost driver rate = $261,000 ÷ 45,000 setups = $5.80 per setup

Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirectcost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Case High School Job Direct materials $60,000 $2,400 Direct labor $15,000 $600 Manufacturing overhead costs $50,000 Machine-hours 100,000 mh 1,000 mh What amount of manufacturing overhead costs will be allocated to this job?

$500 1,000 mh × $50,000 / 100,000 mh = $500

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weightedaverage costing. Data for the Assembly Department for June 2017 are: Work in process, beginning inventory 350 units Direct materials (100% complete) Conversion costs (60% complete) Units started during June 1030 units Work in process, ending inventory: 220 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 2017: Work in process, beginning inventory: Direct materials $94,000 Conversion costs $140,000 Direct materials costs added during June $602,500 Conversion costs added during June $402,500 What is the direct materials cost per equivalent unit during June?

$504.71

Stark Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways. Car Rental Truck Rental Number of Vehicles in fleet 880 450 Number of employees 125 60 Sales $700,000 $395,000 If administrative expense of $77,500 is allocated on the basis of number of employees, the amount allocated to the Car Rental Department would be ________.

$52,364.86

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: T-SHIRTS SWEATSHIRTS Production and sales volume 192,000 units 24,000 units Selling price $17.00 $29.00 Direct material $1.70 $ 5.00 Direct labor $4.30 $ 7.20 Manufacturing overhead $3.50 $ 3.00 Gross profit $ 7.50 $13.80 Selling and administrative $4.10 $ 7.00 Operating profit $3.40 $ 6.80 Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: Activity Activity cost Activity-cost driver Supervision $123,480 Direct labor hours (DLH) Inspection $104,800 Inspections Activities demanded T-SHIRTS SWEATSHIRTS 0.25 DLH/unit 1.50 DLH/unit 48,000 DLHs 36,000 DLHs 50,000 inspections 15,500 inspections Under the revised ABC system, supervision costs allocated to Sweatshirts will be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$52,920

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. Small Department Large Department Square footage 6,700 17,750 Number of employees 1,000 410 Sales $370,000 $1,800,000 If total advertising expense of $629,300 is allocated on the basis of sales, the amount allocated to the Large Department would be ________.

$522,000

Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $320,000 16,000 hours Account billing $200,000 4,000,000 lines Account verification accounts $173,250 70,000 accounts Correspondence letters $24,000 4,000 letters Total costs $717,250 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,700 hours 4,200 hours Account billing lines 900,000 lines 750,000 lines Account verification accounts 8,000 accounts 6,000 accounts Correspondence letters 1,400 letters 1,800 letters How much of the account inquiry cost will be assigned to Department A?

$54,000 Account inquiry costs - Department A = ($320,000 ÷ 16,000) × 2,700 = $54,000

Vital Industries manufactured 2400 units of its product Huge in the month of April. It incurred a total cost of $132,000 during the month. Out of this $132,000, $45,700 comprised of direct materials used in the product and the rest was incurred because of the conversion cost involved in the process. Ryan had no opening or closing inventory. What will be the total cost per unit of the product, assuming conversion costs contained $10,000 of indirect labor?

$55

What is budgeted cost of goods sold for 2011?

$576,000

Answer the following questions using the information below: Eagle Eye Company produces two types of lenses-L7 and L9. Single Indirect-Cost Pool System ABC System Total direct costs $78,500 $53,000 Total indirect costs $32,500 (a) Total costs assigned to L7 $68,000 $58,500 Total costs assigned to L9 (b) $55,500 What is the total indirect costs (a) under ABC system?

$58,000

Sherry and John Enterprises are using the kaizen approach to budgeting for 2011. The budgeted income statement for January 2011 is as follows: Sales (168,000 units) $1,000,000 Less: Cost of goods sold 600,000 Gross margin 400,000 Operating expenses (includes $50,000 of fixed costs) 300,000 Operating income $ 100,000 Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. 6) What is budgeted cost of goods sold for March 2011?

$588,060

What is the ending cash balance for March?

$6,600

For 2018, Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base. The estimated manufacturing overhead costs are $300,000 and estimated machine hours are 50,000. The actual manufacturing overhead costs are $420,000 and actual machine hours are 60,000. Using job costing, the 2018 budgeted manufacturing overhead rate is ________. (Round the final answer to the nearest cent.)

$6.00 per machine-hour $300,000 / 50,000 mh = $6.00 per machine-hour

Which of the following companies will use a process costing system?

an oil refining company

Canton's Corp. manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period: Cost Pool Overhead Costs Activity-cost driver Materials handling $42,000 96,000 orders Machine maintenance $360,000 16,000 maintenance hours Setups $236,600 45,500 setups Inspections $135,780 21,900 inspections Total support costs $774,380 Production Estimates Production units: Regular = 11,000,000 units Jumbo = 22,000,000 units Machine-hours = 300,000 mh Labor-hours = 600,000 dlh Expected direct costs amounts to $928,000 for the period. Support cost requirements of both products are substantially different from one another. Canton's uses an ABC costing system. The inspections activity-cost driver rate is ________.

$6.20 Inspections activity-cost driver rate = $135,780 ÷ 21,900 inspections = $6.20 per inspection

Dalrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $68,750. The budgeted number of nozzles to be inserted is 11,000. What is the budgeted indirect cost allocation rate for this activity?

$6.25 $68,750 / 11,000 = $6.25

Sky High Company has two departments, X and Y. The following estimates are for the coming year: X Y Direct manufacturing labor-hours 20,000 30,000 Machine-hours 30,000 20,000 Manufacturing overhead $300,000 $330,000 The budgeted indirect-cost driver rate for Y based on the number of machine-hours is in excess of X by ________. (Round interim and the final answer to the nearest cent.)

$6.50 per machine-hour X = $300,000 / 30,000 mh = $10.00 Y = $330,000 / 20,000 mh = $16.50; Excess = $16.50 − $10.00 = $6.50

For January, budgeted cash payments for purchases are:

$60,000

The following information pertains to the January operating budget for Casey Corporation, a retailer: Budgeted sales are $200,000 for January Collections of sales are 50% in the month of sale and 50% the next month Cost of goods sold averages 70% of sales Merchandise purchases total $150,000 in January Marketing costs are $3,000 each month Distribution costs are $5,000 each month Administrative costs are $10,000 each month 36) For January, budgeted gross margin is:

$60,000

Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 18 9 275 Deluxe 32 14 215 Overhead costs $75,000 $87,400 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?

$61,200 Setups: $75,000 ÷ (18 + 32) = $1,500 Components: $87,400 ÷ (9 + 14) = $3,800 Total amount of overhead costs = ($1,500 × 18) + ($3,800 × 9) = $61,200

Columbus Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Labor $392,000 8,000 hours Gas $30,000 5,000 gallons Invoices $180,000 7,500 invoices Total costs $602,000 The above activities used by their three departments are: Lawn Department Bush Department Plowing Department Labor 2,600 hours 1,300 hours 4,100 hours Gas 1,800 gallons 1,000 gallons 2,200 gallons Invoices 1,600 invoices 100 invoices 5,800 invoices How much of the labor cost will be assigned to the Bush Department?

$63,700 Labor cost assigned = ($392,000 ÷ 8,000) × 1,300 = $63,700

Columbus Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Labor $384,000 8,000 hours Gas $36,000 6,000 gallons Invoices $180,000 7,500 invoices Total costs $600,000 The above activities used by their three departments are: Lawn Department Bush Department Plowing Department Labor 2,500 hours 1,400 hours 4,100 hours Gas 1,800 gallons 1,000 gallons 3,200 gallons Invoices 1,300 invoices 300 invoices 5,900 invoices How much of invoice cost will be assigned to the Bush Department?

$7,200 ($180,000 / 7,500 invoices) × 300 invoices = $7,200

Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC 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 $5 per part Assembly Labor hours $20 per hour Inspection Time at inspection station $10 per minute The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $20 per labor hour. What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 10 remote controls are produced? The batch requires 100 parts, 5 direct manufacturing labor hours, and 3 minutes of inspection time.

$63.00 per remote control ($5 × 100) + ($20 × 5) + ($10 × 3) = $630 per batch / 10 units per batch = $63.00 per unit

Smith and Jones CPA firm employs 12 accountants and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: Budget Actual Indirect costs $290,000 $310,000 Annual salary of each attorney $90,000 $105,000 Annual salary of each paraprofessional $32,000 $33,000 Total professional labor-hours 20,000 dlh 25,000 dlh What are the actual direct-cost rate and the actual indirect-cost rate, respectively, per professional laborhour?

$63.60; $12.40 [($105,000 × 12) + ($33,000 × 10)] / 25,000 = $63.60 actual direct rate $310,000 / 25,000 = $12.40 actual indirect rate

Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 11 5 265 Deluxe 35 15 200 Overhead costs $82,800 $74,000 Assume a traditional costing system applies the overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the deluxe model?

$67,441 The total amount of overhead costs = [($82,800 + $74,000) ÷ (265 + 200)] × 200 = $67,441

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: T-SHIRTS SWEATSHIRTS Production and sales volume 72,000 units 26,250 units Selling price $15.00 $29.00 Direct material $1.50 $ 5.00 Direct labor $4.20 $ 7.20 Manufacturing overhead $1.80 $ 3.00 Gross profit $ 7.50 $13.80 Selling and administrative $3.60 $ 7.00 Operating profit $3.90 $ 6.80 Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: Activity Activity cost Activity-cost driver Supervision $108,480 Direct labor hours (DLH) Inspection $93,000 Inspections Activities demanded T-SHIRTS SWEATSHIRTS 0.75 DLH/unit 1.60 DLH/unit 54,000 DLHs 42,000 DLHs 60,000 inspections 17,500 inspections Under the revised ABC system, total overhead costs allocated to Sweatshirts will be ________.

$68,460 $93,000 / (60,000 inspections + 17,500 inspections) = $1.20 per inspection × 17,500 = $21,000 plus $108,480 / (54,000 dlh + 42,000 dlh) = $1.13 per dlh × 42,000 dlh = $47,460; $21,000 + $47,460 = $68,460

Purchases budgeted for February total:

$69,120

Wallace Company provides the following data for next year: Month Budgeted Sales January $120,000 February 108,000 March 132,000 April 144,000 The gross profit rate is 40% of sales. Inventory at the end of December is $21,600 and target ending inventory levels are 30% of next month's sales, stated at cost. 45) Purchases budgeted for January total:

$69,840

Francis and Hartley Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: Budget Actual Indirect costs $270,000 $300,000 Annual salary of each attorney $100,000 $110,000 Annual salary of each paraprofessional $29,000 $30,000 Total professional labor-hours 50,000 dlh 60,000 dlh How much should the client be billed in an actual costing system if 220 professional labor-hours are used?

$7,040 [($110,000 × 12) + ($30,000 × 10)] / 60,000 × 220 = $5,940 $300,000 / 60,000 × 220 = $1,100 = 5940+1100= 7,040

For 2018, Rest-Well Bedding uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $6.00 per unit. The selling price of the product is $21.00. The estimated manufacturing overhead costs are $275,000 and estimated 40,000 machine hours. The actual manufacturing overhead costs are $350,000 and actual machine hours are 50,000. Using job costing, the 2018 actual indirect-cost rate is ________.

$7.00 per machine-hour $350,000 / 50,000 mh = $7.00

Xylon Corp. has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $940,000 for an annual production capacity of 10 million pages. For 2018, Xylon 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 $160,000 500 design changes Setups 692,000 2,000 setups Inspections 88,000 8,000 inspections Total manufacturing overhead costs $940,000 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 11 3 Setups 19 9 Inspections 26 64 Under ABC costing, what is the inspection cost allocated to Hospital Systems?

$704 Inspection cost = ($88,000 ÷ 8,000 inspections) × 64 = $704

Comfort Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 18 6 265 Deluxe 29 12 200 Overhead costs $61,100 $64,800 Assume a traditional costing system applies the overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$71,749 Total amount of overhead costs = [($61,100 + $64,800) ÷ (265 + 200)] × 265 = $71,749

Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for May 2017 are: Work in process, beginning inventory: 88 units Direct materials (100% complete) Conversion costs (30% complete) Units started during May 40 units Work in process, ending inventory: 26 units Direct materials (100% complete) Conversion costs (55% complete) Costs for May: Standard costs for Assembly: Direct materials $10,000 per unit Conversion costs $36,000 per unit Work in process, beginning inventory: Direct materials $28,300 Conversion costs $520,500. What is the balance in ending work-in-process inventory?

$774,800

Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are: Department A Department B Direct materials $600,000 $100,000 Direct manufacturing labor $100,000 $600,000 Manufacturing overhead $400,000 $300,000 The actual material and labor costs charged to Job #432 were as follows: Total Direct materials: $28,000 Direct labor: Department A $18,000 Department B $12,000 =$30,000 Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year. Manufacturing overhead costs allocated to Job #432 total ________.

$78,000 [($18,000 × $400,000 / $100,000)] + [$12,000 × $300,000 / $600,000] = $78,000

Shamokin Manufacturing produces two products, Big and Bigger. Shamokin expects to sell 10,000 units of product Bigger and to have an inventory of 2,000 units of Bigger on hand at the end of the period. Currently, Shamokin has 800 units of Bigger on hand. Bigger requires two labor operations, molding and polishing. Each unit of Bigger requires one hour of molding and two hours of polishing. The direct labor rate for molding is $20 per molding hour and the direct labor rate for polishing is $25 per polishing hour. The expected cost of direct labor for Bigger is:

$784,000

The following information pertains to the January operating budget for Casey Corporation. ∙ Budgeted sales for January $100,000 and February $200,000. ∙ Collections for sales are 60% in the month of sale and 40% the next month. ∙ Gross margin is 30% of sales. ∙ Administrative costs are $10,000 each month ∙ Beginning accounts receivable is $20,000. ∙ Beginning inventory is $14,000. ∙ Beginning accounts payable is $60,000. (All from inventory purchases.) ∙ Purchases are paid in full the following month. ∙ Desired ending inventory is 20% of next month's cost of goods sold (COGS). 15) For January, budgeted cash collections are:

$80,000

Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $1,760,000 for an annual production capacity of 16 million pages. For 2018 Velshi Printers has 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 $160,000 200 design changes Setups 1,530,000 5,000 setups Inspections 70,000 7,000 inspections Total manufacturing overhead costs $1,760,000 During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Activity Money Managers Hospital Systems Pages 60,000 76,000 Design changes 14 0 Setups 16 6 Inspections 25 33 Assuming activity-cost pools are used, what are the activity-cost driver rates for design changes, setups, and inspections cost pools?

$800.00 per change, $306.00 per setup, $10.00 per inspection

What are the 2012 budgeted costs for direct materials, direct manufacturing labor, and manufacturing overhead, respectively?

$82,000; $164,000; $32,800

Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 11 6 295 Deluxe 29 13 205 Overhead costs $60,000 $58,900 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?

$83,800 Setups: $60,000 ÷ (11 + 29) = $1,500 Components: $58,900 ÷ (6 + 13) = $3,100 Total amount of overhead costs = ($1,500 × 29) + ($3,100 × 13) = $83,800

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2017 for the Assembly department. Work in process, beginning inventory 390 units Conversion costs (30% complete) Units started during March 840 units Work in process, ending inventory: 180 units Conversion costs (65% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $346,000 Conversion costs $368,500 Direct materials costs added during March $707,500 Conversion costs added during March $1,124,000 What is the direct materials cost per equivalent unit during March? (round to the nearest dollar)

$857

The following information pertains to Hepburn Company: Month Sales Purchases January $60,000 $32,000 February $80,000 $40,000 March $100,000 $56,000 ∙ Cash is collected from customers in the following manner: Month of sale 30% Month following the sale70% ∙ 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month. ∙ Labor costs are 20% of sales. Other operating costs are $30,000 per month (including $8,000 of depreciation). Both of these are paid in the month incurred. ∙ The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000. 5) How much cash will be collected from customers in March?

$86,000

How much cash will be disbursed in total in March?

$88,400

A job-cost sheet details the ________.

direct labor costs incurred

Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $280,000 14,000 hours Account billing $350,000 7,000,000 lines Account verification accounts $93,750 50,000 accounts Correspondence letters $29,000 4,000 letters Total costs $752,750 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,100 hours 3,600 hours Account billing lines 500,000 lines 350,000 lines Account verification accounts 7,000 accounts 5,000 accounts Correspondence letters 1,200 letters 1,600 letters How much of the total costs will be assigned to Department A?

$88,825 Account inquiry costs= (280000/14000)x2100=42000 Billing costs= (350000/7000000)x500000=25000 Account verification costs= (93750/50000)x7000=13125 Correspondence costs= (29000/4000)x1200=8700 42000+25000+13125+8700= 88825

Stark Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways. Car Rental Truck Rental Number of Vehicles in fleet 830 460 Number of employees 120 70 Sales $720,000 $370,000 If advertising expense of $140,000 is allocated on the basis of sales, the amount allocated to the Car Rental Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

$92,477.06

What is the ending balance of accounts receivable for September, assuming uncollectible balances are written off during the second month following the sale?

$93,000

Kramer Enterprises reports year-end information from 2010 as follows: Sales (160,000 units) $960,000 Cost of goods sold 640,000 Gross margin 320,000 Operating expenses 260,000 Operating income $ 60,000 Kramer is developing the 2011 budget. In 2011 the company would like to increase selling prices by 8%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost. 6) What is budgeted sales for 2011?

$933,120

What is budgeted cost of goods sold for 2012?

$94,500

Under the weighted-average method, how would you calculate the cost per equivalent units with regards to conversion costs?

(total conversion costs in beginning work in process + conversion cost for work done in the current period)/(units completed and transferred out during the period + equivalent units in ending inventory)

Assembly department of Zahra Technologies had 200 units as work in process at the beginning of the month. These units were 45% complete. It has 300 units which are 35% complete at the end of the month. During the month, it completed and transferred 500 units. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. Calculate the total equivalent units in ending inventory for assignment of conversion costs?

105 units

Shamokin Manufacturing produces two products, Big and Bigger. Shamokin expects to sell 10,000 units of product Bigger and to have an inventory of 2,000 units of Bigger on hand at the end of the period. Currently, Shamokin has 800 units of Bigger on hand. Bigger requires two labor operations, molding and polishing. Each unit of Bigger requires one hour of molding and two hours of polishing. The direct labor rate for molding is $20 per molding hour and the direct labor rate for polishing is $25 per polishing hour. The expected number of hours of direct labor for Bigger is:

11,200 hours of molding; 22,400 hours of polishing

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2012: Month Sales January 10,000 February 14,000 March 13,000 April 16,000 Finished goods inventory at the end of December is 3,000 units. Target ending finished goods inventory is 30% of the next month's sales. 43) How many mattresses need to be produced in January 2012?

11,200 mattresses

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,300 models, and transferred them to the Distribution Department. The company ended the month with 2000 models in ending inventory. There were 3300 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 55% complete as to conversion costs. Beginning inventory: Direct materials costs $19,900 Conversion costs $11,200 Manufacturing costs added during the accounting period: Direct materials costs $71,000 Conversion costs $240,200 What were the equivalent units for conversion costs during October?

11,410

The Swivel Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 145,000 chairs. During the month, the firm completed 183,000 chairs and transferred them to the Finishing Department. The firm ended the month with 24,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weightedaverage costing is used by Swivel. Of the 145,000 units Swivel started during February, how many were finished during the month?

121,000

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2017 for the Assembly department. Work in process, beginning inventory 340 units Conversion costs (40% complete) Units started during March 890 units Work in process, ending inventory: 100 units Conversion costs (50% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $346,000 Conversion costs $366,000 Direct materials costs added during March $703,500 Conversion costs added during March $1,128,500 What are the equivalent units for direct materials and conversion costs, respectively, for March?

1230 units; 1180 units

Audrey Auto Accessories manufactures plastic moldings for car seats. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2017 are: Work in process, beginning inventory, 35% converted 400 units Units started during February 900 units Work in process, ending inventory: 300 units 25% complete as to conversion costs 100% complete as to materials Costs for the Department A for February 2017 are: Work in process, beginning inventory: Direct materials $606,000 Conversion costs $159,000 Direct materials costs added during February $4,009,000 Conversion costs added during February $2,255,000 What were the equivalent units of direct materials and conversion costs, respectively, at the end of February? Assume Audrey uses the weighted-average process costing method.

1300; 1075

Assembly department of Zahra Technologies had 100 units as work in process at the beginning of the month. These units were 45% complete. It has 200 units which are 20% complete at the end of the month. During the month, it completed and transferred 500 units. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. What is the total equivalent units in ending inventory for assignment of direct materials cost?

200 units

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weightedaverage costing. Data for the Assembly Department for June 2017 are: Work in process, beginning inventory 370 units Direct materials (100% complete) Conversion costs (60% complete) Units started during June 970 units Work in process, ending inventory: 250 units Direct materials (100% complete) Conversion costs (80% complete) Costs for June 2017: Work in process, beginning inventory: Direct materials $90,000 Conversion costs $137,000 Direct materials costs added during June $602,500 Conversion costs added during June $401,000 What are the equivalent units for direct materials and conversion costs, respectively, for June? (Round final answers to the nearest unit.)

1340 units; 1290 units

Direct Disk Drive Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were for June 2017: Work in process, beginning inventory 25,400 units Transferred-in costs (100% complete) Direct materials (0% complete) Conversion costs (85% complete) Transferred in during current period 165,100 units Completed and transferred out 185,200 units Work in process, ending inventory 5700 units Transferred-in costs (100% complete) Direct materials (0% complete) Conversion costs (65% complete) How many units must be accounted for during the period?

190,500 units

The Swivel Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 155,000 chairs. During the month, the firm completed 185,000 chairs and transferred them to the Finishing Department. The firm ended the month with 18,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weightedaverage costing is used by Swivel. What were the equivalent units for conversion costs for February if the beginning inventory was 70% complete as to conversion costs and the ending inventory was 45% complete as to conversion costs?

193,100

How many pool cues need to be produced in 2012?

20,500 cues

The Swivel Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 145,000 chairs. During the month, the firm completed 184,000 chairs and transferred them to the Finishing Department. The firm ended the month with 19,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weightedaverage costing is used by Swivel. What were the equivalent units for materials for February?

203,000 chairs

Dessa Cabinetry, Inc., manufactures standard sized modular cabinet units for kitchens and other applications within the home. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the rough cut department and the finish department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Finishing Department for March 2017 are: Work in process, beginning inventory, 20% converted 1000 units Units started during February 1800 units Work in process, ending inventory 500 units Costs for Finishing Department for March 2017 are: Work in process, beginning inventory: Direct materials $200,000 Conversion costs $204,000 Direct materials costs added during February $428,000 Conversion costs added during February $141,000 How many units were completed and transferred out of the Finishing Department during March?

2300 units

For 2018, Winters Manufacturing uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $2.00 per unit. The selling price of the product is $27.00. The estimated manufacturing overhead costs are $220,000 and estimated 20,000 machine hours. The actual manufacturing overhead costs are $225,000 and actual machine hours are 25,000. What is the profit margin earned if each unit requires two machine-hours?

25.93% $225,000/25,000 = $9.00 $27.00 − $2.00 − ($9.00 × 2) = $7; $7 / $20 = 25.93%

Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are: Department A Department B Direct materials $700,000 $100,000 Direct manufacturing labor $200,000 $800,000 Manufacturing overhead $500,000 $400,000 The actual material and labor costs charged to Job #432 were as follows: Total Direct materials: $25,000 Direct labor: Department A $8,000 Department B $12,000 =$20,000 Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year. For Department A, the manufacturing overhead allocation rate is ________.

250.0% $500,000 / $200,000 = 250.0%

For next year, Manzo, Inc., has budgeted sales of 30,000 units, target ending finished goods inventory of 1,500 units, and beginning finished goods inventory of 900 units. All other inventories are zero. How many units should be produced next year?

30,600 units

How many mattresses need to be produced in the first quarter (January, February, March) of 2012?

38,800 mattresses

Direct Disk Drive Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were for August 2017: Work in process, beginning inventory 151,400 units Transferred-in costs (100% complete) Direct materials (0% complete) Conversion costs (80% complete) Transferred in during current period 451,200 units Completed and transferred out 401,000 units Work in process, ending inventory 202,000 units Transferred-in costs (100% complete) Direct materials (0% complete) Conversion costs (55% complete) Calculate equivalent units for conversion costs using the FIFO method.

390,580 units

Wilcox Company has budgeted sales volume of 60,000 units and budgeted production of 54,000 units, while 10,000 units are in beginning finished goods inventory. How many units are targeted for ending finished goods inventory?

4,000 units

Basile Corporation has budgeted sales of 36,000 units, target ending finished goods inventory of 6,000 units, and beginning finished goods inventory of 1,800 units. How many units should be produced next year?

40,200 units

Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are: Department A Department B Direct materials $700,000 $100,000 Direct manufacturing labor $200,000 $800,000 Manufacturing overhead $500,000 $400,000 The actual material and labor costs charged to Job #432 were as follows: Total Direct materials: $25,000 Direct labor: Department A $8,000 Department B $12,000 =$20,000 Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year. For Department B, the manufacturing overhead allocation rate is ________.

50.0% $400,000 / $800,000 = 50.0%

The Swivel Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 147,000 chairs. During the month, the firm completed 180,000 chairs and transferred them to the Finishing Department. The firm ended the month with 21,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weightedaverage costing is used by Swivel. How many chairs were in inventory at the beginning of the month? Conversion costs are incurred uniformly over the production cycle.

54,000 chairs

Beat, Inc., expects to sell 60,000 athletic uniforms for $80 each in 2012. Direct materials costs are $20, direct manufacturing labor is $8, and manufacturing overhead is $6 for each uniform. The following inventory levels apply to 2011: Beginning inventory Ending inventory Direct materials 24,000 units 18,000 units Work-in-process inventory 0 units 0 units Finished goods inventory 12,000 units 10,000 units 39) How many uniforms need to be produced in 2012?

58,000 uniforms

How many ceramic vases need to be produced in 2012?

6,100 vases

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,900 chairs. During the month, the firm completed 78,400 chairs, and transferred them to the Finishing Department. The firm ended the month with 11,200 chairs in ending inventory. There were 15,700 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 70% complete as to conversion costs. Beginning inventory: Direct materials $24,400 Conversion costs $35,900 Manufacturing costs added during the accounting period: Direct materials $169,000 Conversion costs $278,600 How many of the units that were started and completed during February?

62,700

Assembly department of Zahra Technologies had 200 units as work in process at the beginning of the month. These units were 45% complete. It has 300 units which are 25% complete at the end of the month. During the month, it completed and transferred 600 units. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. What is the number of equivalent units of work done during the month with regards to direct materials?

700 units

Charlie Chairs Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2017 are: Work in process, beginning inventory, 30% converted 200 units Units started during February 800 units Work in process, ending inventory 240 units Costs for Department A for February 2017 are: Work in process, beginning inventory: Direct materials $150,000 Conversion costs $210,000 Direct materials costs added during February $603,000 Conversion costs added during February $429,000 How many units were completed and transferred out of Department A during February?

760 units

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,100 chairs. During the month, the firm completed 78,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,800 chairs in ending inventory. There were 15,700 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 75% complete as to conversion costs. Beginning inventory: Direct materials $24,800 Conversion costs $36,000 Manufacturing costs added during the accounting period: Direct materials $168,100 Conversion costs $278,800 What were the equivalent units for conversion costs during February?

81,390

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,300 models. During the month, the company completed 11,900 models, and transferred them to the Distribution Department. The company ended the month with 1100 models in ending inventory. There were 2700 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs. Beginning inventory: Direct materials costs $20,200 Conversion costs $11,400 Manufacturing costs added during the accounting period: Direct materials costs $70,500 Conversion costs $241,000 How many of the units that were started and completed during October?

9200

Which of the following statements is true of a peanut-butter costing system?

A peanut-butter costing system broadly averages or spreads the cost of resources uniformly to cost objects

_______ uses a "what-if" technique that examines how results will change if the originally predicted data changes.

A sensitivity analysis

Which of the following reasons explain why ABC concepts may be of great value to service companies?

A significant portion of the cost structure of a service firm is composed of indirect costs

Which of the following statements is true of ABC systems?

ABC systems provide valuable information to managers beyond accurate product costs.

Which of the following statements about ABC is not true?

ABC should be implemented solely by the accountants as they are the guardians of the accounting information system

Which of the following statements is true of ABC systems?

ABC system employs multiple activity-cost drivers.

Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC 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 $1 per part Assembly Labor hours $20 per hour Inspection Time at inspection station $10 per minute The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $30 per labor hour. Nichols' management is considering to implement ABC system because ________.

ABC system is a highly refined costing system

Which of the following statements is true of ABC systems?

ABC systems are used by managers for strategic decisions rather than for inventory valuation in merchandising companies.

Which of the following statements is true of costing systems?

ABC systems classify some indirect costs as direct costs helping to improve processes

Which of the following statements about actual costing is true?

Actual costing uses actual indirect-cost rates calculated annually.

A budget:

All of the above are correct.

A budget

All of these answers are correct.

A budget can help implement:

All of these answers are correct.

Budgeting is used to help companies:

All of these answers are correct.

Individual budgeted amounts included in the manufacturing overhead costs budget are based on input from:

All of these answers are correct.

It is advantageous to coordinate budgets with:

All of these answers are correct.

Multinational budgeting is more complex than budgeting in a domestic environment due to the possibility of:

All of these answers are correct.

The manufacturing overhead costs budget includes budgeted amounts for:

All of these answers are correct.

The sales forecast is influenced by:

All of these answers are correct.

To gain the benefits of budgeting ________ must understand and support the budget.

All of these answers are correct.

Variances between actual and budgeted amounts can be used to:

All of these answers are correct.

Which of the following is a sign that an ABC system will provide benefits?

All or most indirect costs are treated as output-unit level costs.

Aqua Company produces two products-Alpha and Beta. Alpha has a high market share and is produced in bulk. Production of Beta is based on customer orders and is custom designed. Also, 55% of Beta's cost is shared between design and setup costs, while Alpha's major portions of costs are direct costs. Alpha is using a single cost pool to allocate indirect costs. Which of the following statements is true of Aqua?

Aqua will overcost Alpha's indirect costs as it is using a single cost pool to allocate indirect costs.

Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for May 2017 are: Work in process, beginning inventory: 70 units Direct materials (100% complete) Conversion costs (35% complete) Units started during May 50 units Work in process, ending inventory: 26 units Direct materials (100% complete) Conversion costs (45% complete) Costs for May: Standard costs for Assembly: Direct materials $9000 per unit Conversion costs $36,500 per unit Work in process, beginning inventory: Direct materials $28,400 Conversion costs $521,000 Which of the following journal entries records the Assembly Department's conversion costs at actual costs for the month, assuming conversion costs are 15% higher than expected?

Assembly Department Conversion Cost Control 3,408,370 Various accounts 3,408,370

Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for May 2017 are: Work in process, beginning inventory: 76 units Direct materials (100% complete) Conversion costs (35% complete) Units started during May 60 units Work in process, ending inventory: 10 units Direct materials (100% complete) Conversion costs (55% complete) Costs for May: Standard costs for Assembly: Direct materials $12,500 per unit Conversion costs $34,500 per unit Work in process, beginning inventory: Direct materials $28,450 Conversion costs $521,500 Which of the following journal entries records the total conversion costs variances of the Assembly Department, assuming that conversion costs are 15% higher than expected?

Assembly Department Conversion Costs Allocated 3,619,050 Conversion-Cost Variances 542,858 Assembly Department Conversion Cost Control 4,161,908

________ is considered while choosing a cost allocation base for activity costs in ABC costing.

Availability of reliable data and measures

Advanced Technology Products produces 10 different fastners. Each time a type of fastener is produced, the equipment must be stopped and items such as filters and drill bits must be changed, oil must be added to the equipment and some parts need lubrication. This work must be done before the products can be produced, the costs related to this activity would be part of which cost pool?

Batch-level costs

A responsibility accounting system could:

Both A and C are correct.

Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs: A. Identify indirect costs B. Compute the total cost of the job C. Select cost-allocation bases D. Compute the indirect cost rate

CADB

Put the following ABC implementation steps in order ________. A Compute the allocation rates. B Compute the total cost of the products. C Identify the products that are the cost objects. D Select the cost allocation bases.

CDAB

Chapter 17

Chapter 17

Chapter 4

Chapter 4

Chapter 5

Chapter 5

Chapter 6

Chapter 6

Which of the following statements best describes conversion costs?

Conversion costs are all manufacturing costs other than direct materials costs.

________ is the process of assigning indirect costs to products.

Cost allocation

In which order are the following developed? First to last: A = Production budget B = Direct materials costs budget C = Budgeted income statement D = Revenues budget

DABC

Which of the following entries is used to record direct materials purchased and used in production during a month in the Assembly department, before transferring the goods to Testing department?

Debit: Work in Process—Assembly Credit: Accounts Payable Control

Which of the following entries is correct to record depreciation expense of Assembly Department?

Debit: Work in Process—Assembly Credit: Accumulated Depreciation

When a Bakery transfers goods from the Mixing Department to the Baking Department, the accounting entry would be ________.

Debt: Work in Process — Baking Department Credit: Work in Process — Mixing Department

Which of the following companies is most likely to use process costing?

Dental Bright Inc., a company manufacturing and selling toothpaste on a large scale

Which of the following statements about normal costing is true?

Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate.

A manufacturer utilizes three separate indirect cost pools. Which of the following is true?

Each indirect cost pool utilizes a separate cost-allocation rate

Which of the following statements is true of conversion costs?

Estimating the degree of completion is usually easier for direct material costs than for conversion costs

A major advantage of using the FIFO process-costing method is that:

FIFO provides managers with information about changes in the costs per unit from one period to the next

________ costs support the organization as a whole.

Facility-sustaining

Canton's Corp. manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period: Cost Pool Overhead Costs Activity-cost driver Materials handling $43,000 98,000 orders Machine maintenance $400,000 15,000 maintenance hours Setups $269,630 45,700 setups Inspections $144,840 21,300 inspections Total support costs $857,470 Production Estimates Production units: Regular = 11,000,000 units Jumbo = 22,000,000 units Machine-hours = 600,000 mh Labor-hours = 1,200,000 dlh Expected direct costs amounts to $9,130,000 for the period. Support cost requirements of both products are substantially different from one another. Canton uses an ABC costing system. Which of the following statements is true of implementing an ABC system?

Identifying the cost-allocation bases defines the number of activity pools into which costs must be grouped in an ABC system.

Which of the following statements is true of process costing?

In a period of falling prices, weighted-average process-costing method will result in a higher income tax liability as compared to FIFO process-costing method.

Which of the following statements is true?

In a process-costing system, each unit uses approximately the same amount of resources.

Which of the following is an assumption under FIFO process-costing method?

It assumes that the ending work in process consists of only the lower-cost current-period units.

Which of the following is true of weighted-average process-costing?

It calculates the cost per equivalent unit of all work done to date, regardless of the accounting period in which it was done.

Morgan Clay Products manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Molding Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for August 2017 are: Work in process, beginning inventory: 2600 units Direct materials (100% complete) Conversion costs (35% complete) Units started during August 715 units Work in process, ending inventory: 520 units Direct materials (100% complete) Conversion costs (55% complete) Costs for August: Standard costs for Assembly: Direct materials $18 per unit Conversion costs $35.50 per unit Work in process, beginning inventory: Direct materials $12,600 Conversion costs $8250 Which of the following journal entries records the Molding Department's conversion costs for the month, assuming conversion costs are 20% higher than expected?

Molding Department Conversion Cost Control 92,484.60 Various accounts 92,484.60

Excellent Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages. For 2018 Excellent Printers has 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 $ 120,000 300 design changes Setups 640,000 5,000 setups Inspections 80,000 8,000 inspections Total manufacturing overhead costs $840,000 During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Activity Money Managers Hospital Systems Pages 60,000 76,000 Design changes 10 0 Setups 20 10 Inspections 30 38 When costs are assigned using the single cost driver, number of pages printed, then ________.

Money Managers is grossly under billed for the job, while other jobs will be unfairly over billed

Canton Corp. manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period: Cost Pool Overhead Costs Activity-cost driver Materials handling $46,000 97,000 orders Machine maintenance $360,000 19,000 maintenance hours Setups $258,780 45,400 setups Inspections $149,800 21,400 inspections Total support costs $814,580 Production Estimates Production units: Regular = 12,000,000 units Jumbo = 24,000,000 units Machine-hours = 400,000 mh Labor-hours = 800,000 dlh Expected direct costs amounts to $927,000 for the period. Support cost requirements of both products are substantially different from one another. Zitriks uses an ABC costing system. Which of the following is true of Canton's overhead costing?

Multiple cost pools are appropriate for Canton's because of diverse support costs.

Should Brent increase the selling price in 2012?

No, because gross margin decreases for 2012.

For January, budgeted cost of goods sold is:

None of these answers are correct.

A golf shoe manufacturer makes and sells thousands of golf shoes each year through two channels: wholesale to sporting good stores and direct to consumers through it's custom portal. Customers can specify modifications to 6 basic golf shoe models including spiked or spikeless, traditional or casual, even laced or other closures. From there, customers can specify many details to their preferred model such as size and width (different for each foot), favorite colors for the base, saddle, accents and laces. A customer can choose to embroidered a name or initials or include the logo of their favorite MLB, NFL, NHL or NCAA team. Which of the following costing systems would make the most sense for the custom golf shoe operation and the main product operation (not customized/wholesale)?

Operation-costing and process costing

Which of the following is a sign that an ABC system may be useful for an organization?

Operations staff disagrees with accountants about the costs of manufacturing and marketing products and services.

Which of the following differentiates job costing from process costing?

Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches.

________ are the costs of activities undertaken to support individual products or services regardless of the number of units or batches in which the units are produced.

Product-sustaining costs

Given this change in the cost structure ________.

The costing results for chess pieces under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system.

________ includes a budgeted statement of cash flows and a budgeted balance sheet.

The financial budget

Which of the following is true with activity based cost accounting?

The focus is on activities that account for a sizable fraction of indirect costs .

________ is the usual starting point for budgeting.

The revenues budget

Which of the following is a reason that has accelerated the demand for refinements to the costing system?

The use of product and process technology has led to an increase in indirect costs and a decrease in direct costs.

Which of the following best describes transferred-in costs in process costing?

These costs are incurred in previous departments that are carried forward to subsequent departments.

Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Overhead Costs Cost driver Activity level Supervision of direct labor $320,000 Direct labor-hours 800,000 Machine maintenance $120,000 Machine-hours 960,000 Facility rent $200,000 Square feet of area 100,000 Total overhead costs $640,000 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor-hours 200 Machine-hours 1,600 Square feet of area 50 Which method of allocation probably best estimates actual overhead costs used? Why?

Three activity-cost drivers because they best reflect the relative consumption of resources.

Which of the following entries is used to record the standard costs of direct materials assigned to units worked on and total direct materials variances?

Work in Process (at standard costs) Direct Materials Variances Direct Materials Control

A company's actual performance should be compared against budgeted amounts for the same accounting period so that:

adjustments for future conditions can be included

Job-costing is likely to be used by________.

advertising agencies

The cash flow statement does NOT include:

all sales revenues

Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for May 2017 are: Work in process, beginning inventory: 82 units Direct materials (100% complete) Conversion costs (30% complete) Units started during May 48 units Work in process, ending inventory: 22 units Direct materials (100% complete) Conversion costs (50% complete) Costs for May: Standard costs for Assembly: Direct materials $12,000 per unit Conversion costs $33,000 per unit Work in process, beginning inventory: Direct materials $28,400 Conversion costs $522,000 Which of the following journal entries records the standard costs of direct materials assigned to units worked on and total direct materials variances assuming that the Assembly Department used 15% less materials than expected?

Work in Process — Assembly 576,000 Direct Materials Variance 86,400 Assembly Department Materials Cost Control 489,600

Stefan Ceramics is in the business of selling ceramic vases. It has two departments - molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 500 kgs of tungsten carbide at $60 per kg. It started manufacture of 4000 vases and completed and transferred 3900 vases during the month. It has 100 vases in the process at the end of the month. It incurred direct labor charges of $1400 and other manufacturing costs of $600, which included electricity costs of $500. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 55% complete in respect of conversion costs. Which of the following journal entries would be correct to record direct labor for July?

Work in Process—Molding $1400 Wages Payable Control $1400

Stefan Ceramics is in the business of selling ceramic vases. It has two departments - molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 720 kgs of tungsten carbide at $280 per kg. It started manufacture of 4200 vases and completed and transferred 3800 vases during the month. It has 400 vases in the process at the end of the month. It incurred direct labor charges of $1500 and other manufacturing costs of $1300, which included electricity costs of $300. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 50% complete in respect of conversion costs. Which of the following journal entry would record the tungsten carbide purchased and used in production during July?

Work in Process—Molding $201,600 Accounts Payable Control $201,600

Should Kramer increase the selling price in 2011?

Yes, because operating income is increased for 2011.

Which of the following companies is most likely to use an operation-costing system?

a company that makes suits for which the basic design is same, but depending on specifications, each batch of suits varies somewhat from other batches

In a costing system, ________.

a cost-allocation base can be either financial or nonfinancial

A job-cost record uses information from ________.

a labor-time card to record an employee's wage rate and hours spent on a particular job

Transferred-in costs are treated as if they are ________.

a separate direct material added at the beginning of the process

Using department indirect-cost rates to allocate costs will result in results similar to ABC if:

a single activity accounts for a sizable portion of the costs of the department

The fundamental cost objects of ABC are ________.

activities

Budgets should:

be flexible

A budget should/can do all of the following EXCEPT:

be prepared by managers from different functional areas working independently of each other

Elite Stationary employs 20 full-time employees and 10 trainees. Direct and indirect costs are applied on a professional labor-hour basis that includes both employee and trainee hours. Following is information for 2018: Budget Actual Indirect costs $250,000 $400,000 Annual salary of each employee $200,000 $250,000 Annual salary of each trainee $40,000 $45,000 Total professional labor-hours 40,000 dlh 50,000 dlh When a normal costing system is used, clients using proportionately more full-time employees than trainees will ________.

be under billed for actual resources used

Allocating indirect costs to departments based on the relative revenue earned by those departments is done based on which of the following criterion?

benefits received

The budgeted indirect-cost rate for each cost pool is computed as ________.

budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base

To prepare the cash budget, all of the following budgets are required EXCEPT:

budgeted balance sheet

Financial budgets include the all of the following EXCEPT:

budgeted income statement

Operating budgets include the:

budgeted income statement

The operating budget process generally concludes with the preparation of the:

budgeted income statement

Which budget is NOT necessary to prepare the budgeted balance sheet?

budgeted statement of cash flows

Budgeted production equals:

budgeted unit sales + targeted ending finished goods inventory - beginning finished goods inventory

When using a normal costing system, manufacturing overhead is allocated using the ________ manufacturing overhead rate and the ________ quantity of the allocation base.

budgeted; actual

In a process-costing system average unit costs are calculated ________.

by dividing total costs in a given accounting period by total units produced in that period

A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis ________.

can be used to eliminate nonvalue-added activities

Sensitivity analysis is useful for examining all of the following EXCEPT:

changes in employee satisfaction

Operating budgets and financial budgets:

combined form the master budget

Multinational budgeting is useful for everything EXCEPT:

comparing actual to budget in volatile conditions

Demand for refinements to the costing system has accelerated due to ________.

competition in product markets

Kaizen budgeting involves:

continual small cost reductions

The Japanese use the term kaizen when referring to:

continuous improvement

Which of the following includes both traced direct costs and allocated indirect costs?

cost assignments

A maintenance manager is most likely responsible for a(n):

cost center

A ________ is anything for which a measurement of costs is desired.

cost object

A ________ is a grouping of individual indirect cost items

cost pool

Assigning direct costs to a cost object is called ________.

cost tracing

Which of the following best describes transferred-in costs?

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

Responsibility centers include all of the following EXCEPT:

customers

A budget can do all of the following EXCEPT:

determine actual profitability

Activity-based budgeting makes it easier to:

determine how to reduce costs

Activity-based budgeting includes all the following steps EXCEPT:

determining a separate cost-driver rate for each department

The goal of a properly constructed ABC system is to ________.

develop the best cost system that meets the cost/benefit test

Budgeted manufacturing overhead costs include all types of factory expenses EXCEPT:

direct labor and direct materials

For a manufacturing firm that produces multiple families of products requiring various combinations of different types of parts, what would be the best allocation base for human resource adminstration costs?

direct labor hours

The cost of goods sold budget requires all of the following budgets EXCEPT:

distribution cost budget

The actual indirect-cost rate is calculated by ________.

dividing actual total indirect costs by the actual total quantity of the cost-allocation base

Kaizen budgeting is driven by:

employees

In the computation of the cost per equivalent unit, the weighted-average method of process costing considers all the costs ________.

entering work in process from the units in beginning inventory plus the costs for the work completed during the current accounting period

Activity-based costing (ABC) can eliminate cost distortions because ABC systems ________.

establish a cause-and-effect relationship with the activities performed

Which of the following is true regarding estimates of completion of units in a process costing system?

estimating the degree of completion with regards to direct materials is usually easier and more accurate than estimating the degree of completion with regards to conversion costs

A manager of a profit center is responsible for all of the following EXCEPT:

expanding into new geographic areas

For a company which produce its products in batches, the CEO's salary is a(n) ________ cost.

facility-sustaining

It is usually difficult to find good cost driver (cause-and-effect relationship) between ________ and a cost allocation base.

facility-sustaining costs

Top management compensation cost is an example of ________ in the cost hierarchy

facility-sustaining costs

The number of units in the sales budget and the production budget may differ because of a change in:

finished goods inventory levels

Rolling budgets help management to:

focus on the upcoming budget period

Activity-based budgeting:

focuses on activities necessary to produce and sell products and services

Managers find operation costing useful in cost management because it ________.

focuses on control of physical processes of a given production system

Responsibility accounting:

focuses on whom should be asked about the information

Participation of employees in the budgeting process helps to create:

greater commitment

The time coverage of a budget should be:

guided by the purpose of the budget

An example of a denominator reason for calculating annual indirect-cost rates includes ________.

higher levels of output demanded during the fall months

Which statement about controllability is NOT true:

holds managers responsible for uncontrollable costs

ABC systems create ________.

homogeneous activity-related cost pools

Financing decisions primarily deal with:

how to obtain funds to acquire resources

ABC systems help managers to ________.

identify new designs to reduce costs

Refining a cost system involves which of the following?

identifying the activities involved in a process and understanding how those activities consume resources

Kaizen refers to incorporating cost reductions:

in each successive budgeting period

Problems with costing occur when ________.

incorrect job numbers are recorded on source documents

An increase in direct labor cost per unit ________.

increases the variable cost

Service companies, in particular, find great value from ABC because a vast majority of their cost structure is composed of ________ costs.

indirect

Activity based costing system differs from traditional costing systems in the treatment of ________.

indirect costs

Chess Woods Limited produces two products: wooden chess pieces and wooden inlaid chess boards. Under their traditional cost system using one cost driver (direct manufacturing labor hours), the cost of a set of wooden chess pieces is $325.00. An analysis of the activities and their costs revealed that three cost drivers would be used under a new ABC system. These cost drivers would be equipment usage, storage area for the material, and type of woods used. The new cost of a set of chess pieces was determined to be $298.00 per set. 11) The reduction in cost per unit of wooden chess pieces under ABC system is due to difference in allocation of ________.

indirect costs

For a company with diverse products, undercosting overhead of a product will lead to product-cross - subsidization which means that:

indirect costs of another product are misallocated

A job that shows low profitability may be the result of ________.

inefficient direct manufacturing labor

A controllable cost is any cost that can be ________ by a responsibility center manager for a period of time

influenced

The sales forecast should be primarily based on:

input from sales managers and sales representatives

Which of the following has accelerated need for refined cost systems?

intense competition

A regional manager of a restaurant chain in charge of finding additional locations for expansion is most likely responsible for a(n):

investment center

Responsibility accounting:

is a system that measures the plans, budgets, actions, and actual results of a responsibility center

The cost allocation base ________.

is a systematic way to link an indirect cost or group of indirect costs to cost objects

A master budget:

is an aid to coordinating what needs to be done to implement a plan

Recognizing ABC information is not always perfect because ________.

it balances the need for better information against the costs of creating a complex system

Cannady produces six products. Under their traditional cost system using one cost driver, SR6 costs $168.00 per unit. An analysis of the activities and their costs revealed that three cost drivers would be used under the new ABC system. The new cost of SR6 was determined to be $178.00 per unit. 9) The total amount of indirect costs assigned to product SR6 using the traditional method is ________ the total amount assigned using ABC.

less than

Building in budgetary slack includes:

making budgeted targets more easily achievable

In a job-costing system, a manufacturing firm typically uses an indirect-cost rate to estimate the ________ allocated to a job.

manufacturing overhead costs

Challenging budgets tend to:

motivate improved performance

The difference between actual costing and normal costing is ________.

normal costing uses budgeted indirect-costs

For a business that offers customers a store where product can be purchased and picked up or a delivery service that can ship the product directly to the customer, which of the following would most likely be the best cost allocation base for distribution costs?

number of pounds of product shipped or delivered

A sales forecast is:

often the outcome of elaborate information gathering and discussions among sales managers

Which of the following ordering of the levels best depicts the cost hierarchy within an ABC system?

output unit-level, batch-level, product-sustaining level, and facility-sustaining level

A limitation of comparing a company's performance against actual results of last year is that:

past results can contain inefficiencies of the past year

Actual results should NOT be compared against past performance because:

past results may contain mistakes and substandard performance

If initial budgets prove UNACCEPTABLE, planners achieve the most benefit from:

planning again in light of feedback and current conditions

The cash budget is a schedule of expected cash receipts and disbursements that:

predicts the effect on the cash position at given levels of operations

Activity-based costing information can be used for ________.

pricing decisions

Overcosting a particular product may result in:

pricing the product too high

Which of the following is the costing system used for mass produced like or similar units of products?

process-costing systems

Lavender Company is a logistics company and has recently implemented ABC system. Using activitybased information, it decides to reduce the bulkiness of the packages delivered, thereby reducing costs. This suggests that ABC system helps managers in ________ decisions.

process-improvement

A manager of a revenue center is responsible for all of the following EXCEPT:

the acquisition cost of the product or service sold

Operating budgets include all of the following EXCEPT:

the budgeted balance sheet

Activity-based budgeting would separately estimate:

the cost of a setup activity

Which if the following are not conversion costs?

the cost of tires on an automobile

Given this change in the cost ________.

the costing results for SR6 under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system

Which of the following is not true of the weighted-average process-costing method?

the costs in work in process (beginning work in process) when the period starts are not considered when calculating the weighted-average cost per equivalent unit

Controllability may be difficult to pinpoint because of all the following EXCEPT:

the current use of stretch or challenge targets

The weighted-average process-costing method calculates the equivalent units by ________.

the equivalent units completed during the current period plus the equivalent units in ending inventory

The revenues budget identifies:

the expected level of sales for the company

The use of activity-based budgeting is growing because of:

the increased use of activity-based costing

Which of the following is a disadvantage of the weighted-average method compared to the FIFO process-costing method?

the information it provides about changes in unit prices from one period to the next is less useful than the information provided by FIFO

Which of the following most accurately describes the contrast between process and job costing?

the main difference is the extent of averaging used to compute the unit costs

An example of a numerator reason for calculating annual indirect-cost rates includes ________.

the number of units produced

Production is primarily based on:

the revenues budget

The budgeting process is most strongly influenced by:

the sales forecast

ABC and traditional systems are quite similar in ________.

the treatment of direct costs

An assumption of the FIFO process-costing method is that ________.

the units in beginning inventory are assumed to be completed first

The direct materials usage budget is based on:

the units to be produced during a period

Operating decisions primarily deal with:

the use of scarce resources

Using activity-cost rates rather than department indirect-cost rates to allocate costs results in different product costs when ________.

there are several homogeneous cost pools

A single indirect-cost rate distorts product costs because ________.

there is an assumption that all support activities affect all products in a uniform way

The purpose of the equivalent-unit computation is to ________.

use a common metric to estimate the amount of work done on units in a period

To reduce budgetary slack management may:

use external benchmark performance measures

Process costing is ________.

used by businesses to price identical products

Job costing is ________.

used by businesses to price unique products for different jobs

Actual costing is a costing system that traces direct costs to a cost object by ________.

using the actual direct cost rates times the actual quantities of the direct-cost inputs

Product-cost cross-subsidization means that:

when a company undercosts one of its products, it will overcost at least one of its other products

A primary consideration in assigning a cost to a responsibility center is:

who can best control the change in that cost

Excellent Printing has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages. For 2018, Excellent Printing 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 $ 120,000 200 design changes Setups 640,000 4,000 setups Inspections 80,000 16,000 inspections Total manufacturing overhead costs $840,000 During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Activity Money Managers Hospital Systems Pages 60,000 76,000 Design changes 10 2 Setups 20 10 Inspections 30 38 When costs are assigned using the single cost driver, number of pages printed, then Hospital Systems ________.

will likely seek to do business with competitors

Activity-based costing is most likely to yield benefits for companies ________.

with complex product design processes that vary significantly from product to product

A distinct feature of the FIFO process-costing method is that the ________.

work done on beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units