ch 16 & 17 hw
Clarksen Company uses a process costing system. The company requisitioned $93,000 of materials for Department A and $67,000 of materials for Department D. The entry to record the use of the direct materials by these two departments is:
Debit Work in Process Inventory—Department A $93,000; debit Work in Process Inventory—Department D $67,000; credit Raw Materials Inventory $160,000.
ON EXAM: calculate activity rates for each of the three activities using activity based costing
Extrusion: $418 per batch; Handling: $117.33 per order; Packaging: $0.054 per unit
ON EXAM: Which of the following statements is true with regard to the departmental overhead rate method?
It uses a different overhead rate for each department.
ON EXAM: The Fabricating Department started the current month with a beginning Work in Process inventory of $10,000. During the month, it was assigned the following costs: direct materials, $76,000; direct labor, $24,000; and factory overhead, 50% of direct labor cost. Also, inventory with a cost of $109,000 was transferred out of the department to the next phase in the process. The ending balance of the Work in Process Inventory account for the Fabricating Department is:
$10,000 + $76,000 + $24,000 + $12,000 − $109,000 = $13,000 $13,000
#5 ON EXAM: A manufacturer has the following budgeted data for its two production departments: Assembly finishing overhead costs. 3,600,000 2,400,000 direct labor hours 12,000 DL hr 20,000 DL hr machine hours 4,000 M hr 16,000 M hr Compute the company's single plantwide overhead rate based on direct labor hours.
$187.50 per direct labor hour.
Luker Corporation uses a process costing system. The company had $160,500 of beginning Finished Goods Inventory on October 1. It transferred in $837,000 of units completed during the period. The ending Finished Goods Inventory balance on October 31 was $158,200. The entry to account for the cost of goods sold in October is:
Cost of Goods Sold = Beginning Finished Goods + cost of goods manufactured − Ending Finished Goods160,500 + 837,000 − 158,200 = $839,300 Debit Cost of Goods Sold $839,300; credit Finished Goods Inventory $839,300.
SIMILAR: An ice cream manufacturer makes ice cream in two processes, Mixing and Packaging. During April, its first month of business, the Packaging department transferred 200,000 units and $700,000 of production costs to finished goods. What is the cost to produce one unit of ice cream during April?
Cost per completed unit = Cost transferred to finished goods / Units transferred to finished goods Cost per completed units = $700,000 / 200,000 units = $3.50
Luker Corporation uses a process costing system. The company had $160,500 of beginning Finished Goods Inventory on October 1. It transferred in $837,000 of units completed during the period. The ending Finished Goods Inventory balance on October 31 was $158,200. The entry to account for the cost of goods manufactured during October is:
Debit Finished Goods Inventory $837,000; credit Work in Process Inventory $837,000.
ON EXAM: The journal entry to record overhead applied during June is ... DM Used 87,000? DL used 160,000? Predetermined Overhead cost. 155%? Goods transferred to finished goods 32,000? costs of goods sold. 44,000? credit sales 10,000?
Debit work in process inventory $160,000; credit factory wages $160,000
Williams Company computed its cost per equivalent unit for direct materials to be $2.60 and its cost per equivalent unit for conversion to be $3.75. A total of 250,000 units of product were completed and transferred out as finished goods during the month. The ending Work in Process inventory consists of 36,000 equivalent units of direct materials and 36,000 equivalent units of conversion costs. The amount that should be reported in ending Work in Process Inventory is:
Direct materials 36,000 × $2.60 = $93,600 Conversion 36,000 × $3.75 = $135,000 Total ending Work in Process = $93,600 + $135,000 = $228,600
ON EXAM: Which of the following characteristics does not usually apply to process operations?
Each unit of product is separately identifiable.
ON EXAM: Which of the following companies would be best served by a plantwide overhead rate?
A company that manufactures few products and whose operations are labor intensive.
Direct labor and indirect labor are recorded, respectively, to:
Work in Process Inventory and Factory Overhead.
The combined costs of direct labor and factory overhead per equivalent unit used by many businesses with process operations is called:
Conversion cost per equivalent unit
#11 ON EXAM: Use the data for Wall Nuts, Incorporated to compute the dollar amount of overhead applied to each unit of oak paneling, assuming the company uses departmental overhead rates based on machine hours in Department A and machine hours in Department B.
$8.70
ON EXAM: Clemens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:
A credit to Cost of Goods Sold for $600.
Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment?
All of the work to make a unit 100% complete and ready to move to the next stage of production or to finished goods inventory may not have been completed in a single time period.
ON EXAM: Overhead costs:
Cannot be traced to units of product in the same way that direct labor can.
ON EXAM: Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,000, and actual direct labor costs totaled $170,000. At year-end, Factory Overhead account is:
Overapplied by $10,000. Predetermined overhead rate = $300,000 estimated overhead cost / $150,000 estimated direct labor cost = 200% Applied overhead = $170,000 actual direct labor cost × 200% = $340,000. Overhead incurred, $330,000 − Overhead applied, $340,000
A manufacturer estimates total factory overhead costs of $4,752,000 and total direct labor costs of $2,200,000 for its first year of operations. During January, the company used $100,000 of direct labor cost in its Blending department and $75,000 of direct labor cost in its Bottling department. Compute the predetermined overhead rate as a percentage of direct labor cost.
Predetermined overhead rate = $4,752,000 / 2,200,000 = 216%
A manufacturer estimates total factory overhead costs of $4,752,000 and total direct labor costs of $2,200,000 for its first year of operations. During January, the company used $100,000 of direct labor cost in its Blending department and $75,000 of direct labor cost in its Bottling department. The company computes its predetermined overhead rate as a percentage of direct labor cost. Which of the following is the correct journal entry to apply factory overhead to the Blending and Bottling departments.
Predetermined overhead rate = $4,752,000 / 2,200,000 = 216%Blending: $100,000 DL × 216% = $216,000; Bottling: $75,000 DL × 216% = $162,000 Debit Work in Process Inventory—Blending $216,000; debit Work in Process Inventory—Bottling $162,000; credit Factory Overhead $378,000.
ON EXAM: A company that applies process costing is most frequently characterized by:
Similar products and high production volume.
ON EXAM: Which of the following statements is true with regard to activity-based costing?
The basic principle underlying activity-based costing is that activities are what cause overhead cost to be incurred.
ON EXAM: A production cost report is a managerial accounting report that describes all but which of the following:
The gross profit earned on the sale of products.
Equivalent units of production are equal to:
The number of whole units that could have been started and completed given the costs incurred in the period.
Which of the following statements is true with regard to the plantwide overhead rate method?
The rate is determined using volume-related measures.
ON EXAM: Which of the following is false pertaining to the use of a predetermined overhead rate? - Estimates are used to calculate the rate. - Using this rate provides managers with up-to-date estimates of the costs of their processes during the period. - A single allocation basis may fail to provide useful allocations for all production departments. - The rate is prepared at the beginning of the period. - The rate is used to apply overhead at the end of the accounting period.
The rate is used to apply overhead at the end of the accounting period.
The use of departmental overhead rates will generally result in:
The use of a separate cost allocation base for each department in the factory.
SIMILAR: An ice cream manufacturer makes ice cream in two processes, Mixing and Packaging. During April, its first month of business, the Packaging department transferred 200,000 units and $700,000 of production costs to finished goods. The company completed and sold 192,000 units at a price of $5 per unit in April. What is the total gross profit on ice cream sales for April.
Total Gross Profit = 192,000($5.00 − $3.50) = $288,000
SIMILAR: For the current period, an ice cream producer added raw materials to production that should have produced 50,000 gallons of ice cream. Actual production was 47,000 gallons of (nondefective) ice cream. Compute the yield for this production process. Express the answer in percent.
Yield (47,000 / 50,000) 94%
ON EXAM: Why was activity based costing created?
indirect costs are not caused equally by all products
These are all examples of..... Tennis courts Audit of financial statements Luxury yachts House painting
job order operation
These are all examples of..... Organic juice Ice cream Tennis balls Granola Bars Backpacks
process operation
ON EXAM: The number of equivalent units of production assigned to ending work in process inventory should equal to or less than the # of physical units in ending work in process inventory
true
