ACC202 EXAM 1
Smythe Inc., a manufacturing company, has provided the following data for the month of August. the balance in the work in process inventory account was $10,000 at the beginning of the month and $22,000 at the end of the month during the month, the company incurred direct materials cost of $63,000 and direct labor cost of $39,000. the actual manufacturing overhead cost incurred was $40,000. the manufacturing overhead cost applied to work in process was $43,000. the cost of goods manufactured for August was:
$63,000 (direct materials) + $39,000 (direct labor) + $43,000 (mfg overhead applied) + $10,000 (beg. work in process inventory) -$22,000 (end work in process inventory)
Bims Corporation uses the weighed-average method in its process costing system. the assembly department started with 2,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. an additional 61,000 units were transferred in from the prior department during the month to begin processing in the assembly department. there were 18,000 units in the ending work in process inventory of the assembly department that were 60% complete with respect to conversion costs what were the equivalent units for conversion costs in the assembly department for the month?
2,000 (started) + 61,000 (transferred) - 18,000 (ending) =45,000 units transferred to the next department.... 45,000 ending work in process: conversion: (18,000 * 60%).... 10,800 equivalent units of production... =55,800
Saada Corporation uses the weighted-average method in its process costing system. the fitting department is the second department in its production process. the data below summarize the departments operations in March beginning work in process inventory... 3700# 20% transferred in from the prior department. during March... 59,000# ending work in process inventory... 7,200# 60% the fitting departments cost per equivalent unit for conversion cost for March was $5.99 how much conversion cost was assigned to the units transferred out of the fitting department during March?
3,700 (beginning) + 59,000 (started) - 7,200 (ending) =55,500 units completed and transferred out: units transferred to the next department (a)... 55,500 cost per equivalent unit (b)... $5.99 cost of units completed and transferred out (a)*(b)... =$332,445
applied overhead
POHR * actual direct labor hours
fixed cost
a cost that remains constant, in total, regardless of changes in the level of the activity in total: total fixed cost is not affected by changes in the activity level within the relevant range per unit: fixed cost per unit decreases as the activity level rises and increase as the activity level falls
variable cost
a cost that varies, in total, in direct proportion to changes in the level of activity (constant) in total: total variable cost increase and decrease in proportion to changes in the activity level per unit: variable cost per unit remains constant
debit
actual
Lucas Corporation has provided data concerning the Companys manufacturing overhead account for the month of August. prior to the closing the overapplied or and underapplied balance of cost of goods sold, the total of the debits to the manufacturing overhead account was $50,000 and the total of the credits to the account was $72,000. which is true regarding this information?
actual manufacturing overhead for the month was $50,000 -consists of the actual manufacturing overhead for the month
manufacturing overhead applied
actual mfg over +/- overapplied or underapplied mfg overhead / POHR
overapplied/underapplied
actual mfg overhead incurred + mfg overhead applied to work in process
the cost of beginning inventory under the weighted-average method is
added in with current period costs in determining costs per equivalent unit for a given period
manufacturing overhead includes
all manufacturing costs except direct materials and direct labor. these costs cannot be readily traced to finished products
manufacturing overhead consists of
all manufacturing costs, except direct materials and direct labor
credit
applied
over applied manufacturing overhead occurs when
applied overhead exceeds actual overhead
differential costs (incremental costs)
are the difference in cost between any two alternatives
departmental POHR
assembly department predetermined overhead rate: -estimated fixed manufacturing overhead + estimated variable manufacturing overhead ($ per MH * # MHs) -estimated total manufacturing overhead cost (a) * estimated total machine-hours (b) manufacturing overhead applied to job: machining ($ MH * # MHs) + assembly ($MH * # MHs) selling price direct materials + direct labor + manufacturing overhead applied = total manufacturing cost + markup ( total mfg cost * %)
adjusted cost of goods sold
beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory - manufacturing overhead applied
cost of goods sold
beginning merchandise inventory + purchases - ending merchandise inventory
indirect materials=
beginning raw materials (+)add: debits (purchase of raw materials) total materials available for use (-)less:end raw materials materials requisitioned for use in production (-)less: direct materials
direct materials=
beginning raw materials (+)add: purchase of raw materials total raw materials available (-)less: end raw materials raw materials used in production (-)less: indirect materials included in mfg overhead
indirect materials/indirect labor
cannot be easily or conveniently traced to specific units of product
managerial accounting
concerned with providing information to managers with an organization so that they can formulate plans, control operations, and make decisions
financial accounting
concerned with reporting financial information to external parties, such as stockholders, creditors, and regulators
cost per equivalent unit
cost of beg. work in process inventory + cost added during the period / equivalent units of production
weighted average method- cost to be accounted for
cost of beginning work in process inventory + cost added to production during the period
total cost accounted for
cost of ending work in process inventory + cost of units transferred out
sunk cost
cost of old (original)
flow of costs
costs -raw materials purchases (product)--raw materials -direct labor (product)--work in process -manufacturing overhead (product)--work in process -selling and administrative (period)--income statement balance sheet -raw materials inventory -work in process inventory -finished goods inventory (goods sold) income statement -cost of goods sold -selling and administrative expenses
direct labor
costs are those labor costs that can be easily traced to individual units of product ex: wages paid to automobile assembly workers
in February, one of the processing departments at Whisenhunt Corporation had beginning work in process inventory of $35,000 and ending work in process inventory of $11,000. during the month, the cost of units transferred out from the department was $410,000. in the departments cost reconciliation report for February, the total cost to be accounted for would be:
costs to be accounted for as follows: cost of ending work in process inventory (a)... 11,000 cost of units transferred out (b)... 410,000 total cost account for (a)+(b)... =$421,000 **(ending+transferred out)
indirect materials
debit to manufacturing overhead
direct materials
debit to work in process
each of the follow would be a period cost except: a.) the salary of the company presidents secretary b.) the cost of a general accounting office c.) depreciation of a machine used in manufacturing d.) sales commissions
depreciation of a machine used in manufacturing
conversion cost
direct labor + manufacturing overhead
unit product cost
direct materials + direct labor + manufacturing overhead / # units completed
total manufacturing cost
direct materials + direct labor + manufacturing overhead applied
cost of goods manufactured
direct materials + direct labor + manufacturing overhead applied + beginning work in process inventory - ending work in process inventory
prime cost
direct materials and direct labor (+)
united started into production
ending work in process inventory + units completed and transferred out - beginning work in process inventory
ending work in process inventory
equivalent units of production (#units * %) X cost equivalent unit
estimated total mfg overhead
estimated total fixed mfg overhead + (estimated variable mfg overhead * estimated upcoming)
which of the following is the correct formula to compute the predetermined overhead rate?
estimated total manufacturing overhead costs / estimated total units in the allocation base
predetermined overhead rate (POHR)
estimated total mfg overhead cost / estimated total units the allocation base
overapplied overhead
exists when the amount of overhead applied to jobs during the period using predetermined overhead rate is GREATER THAN the total amount of overhead actually incurred during the period
underapplied overhead
exists when the amount of overhead applied to jobs during the period using the predetermined overhead rate is LESS THAN the total amount of overhead actually incurred during the period
fixed cost per unit
fixed cost / #unit
direct labor-hours
fixed mfg overhead cost + (variable overhead cost per direct labor-hour * total direct labor-hours in the department
machine-hours
fixed mfg overhead cost + (variable overhead cost per machine hour * total machine-hours in the department)
sunk costs
have already been incurred and cannot be changed now in the future
period costs
includes all selling costs and administrative costs
product costs
includes all the costs that are involved in acquiring or making a product (direct materials, direct labor, and manufacturing overhead)
plantwide POHR
manufacturing costs: direct materials + direct labor + manufacturing overhead applied selling price total manufacturing cost + markup (totally mfg cost * %)
in a job-order costing system, indirect materials that have been previously purchased and that are used in production are recorded as a debit to
manufacturing overhead
the actual manufacturing overhead incurred at Hogans Corporation during April was $59,000, while the mfg overhead applied to work in process was $74,000. the Companys cost of goods sold was $289,000 prior to closing out its manufacturing overhead account. the company closes out its manufacturing overhead account cost of goods sold. Which is a true statement regarding this information?
manufacturing overhead was over applied by $15,000; cost of goods sold after closing out the manufacturing overhead account was $274,000 =$289,000 (unadjusted COGS) - $15,000 (over applied mfg overhead)
overhead applied to a particular job
predetermined overhead rate * amount of the allocation based incurred by the job
the cost of leasing production equipment is classified as:
prime cost: no product cost: yes
direct materials
raw materials that become an integral part of the product and that can be conveniently traced directly to ex: a radio installed in an automobile
gross margin
sales - cost of goods sold
contribution margin
sales(#units*selling price) - variable expenses (including COGS)
which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?
sheet steel in a file cabinet made by the company
estimated total overhead cost in two departments
step 1 estimated fixed mfg overhead + estimated variable mfg overhead ($per __* #___) step 2 combine the estimated mfg overhead costs step 3 estimated total mfg overhead cost / estimated machine hours/direct labor-hours
opportunity cost
the potential benefit that is given up when one alternative is selected over another
what document is used to determine the actual amount of direct labor to record on a job cost sheet?
time ticket
total product cost
total variable mfg cost + total fixed mfg cost
mark up
totally cost of job * % (decimal)
equivalent units of production
units completed and transferred + equivalent units remaining in work in process (end)
equivalent units for a process costing system using the weighted-average method would be equal to
units completed during the period + equivalent units in the ending work in process inventory
weighted average method- units transferred to next department
units in beginning work in process + united started in production - units in end work in process units transferred to next department + ending work in process = equivalent units of production cost of beginning work in process inventory + cost added during the period = total cost total cost / equivalent units of product
weighted average method- cost of units completed and transferred out
units transferred to the next department * cosy per equivalent unit (materials + conversion)
Diston Company uses the weighted-average method in its process costing system. the first processing department, the Welding department, started the month with 18,000 units in its beginning work in process inventory that was 30% complete with respect to conversion costs. the conversion cost in this beginning work in process inventory was $44,820. an additional 90,000 units were started into production during the month. there were 21,000 units in the ending work in process inventory of the welding department that were 10% complete with respect to conversion costs. a total of $677,970 in conversion cost incurred in the department during the month. what would be the cost per unit for conversion costs for the month?
units transferred to the next department... 87,000 ending work in process: conversion: (21,000 * 10%)... 2,100 equivalent units of production... =89,100 cost of beginning work in process inventory... 44,820 cost added during the period... 677,970 total cost (a)... 722,790 equivalent units of product (b)... 89,100 cost per equivalent unit (a)/(b)... =$8.112
manufacturing overhead
utilities, factory + indirect labor + depreciate for product equipment
total cost
variable cost + fixed cost
variable cost per unit
variable cost / #units
in a job-order costing system, direct labor cost is ordinarily debited to
work in process
on April 1, Hardin Corporation had $30,000 of raw materials on hand. during the month, the company purchased an additional $63,000 of raw materials. during April, $76,000 of raw materials were requisitioned from the storeroom for use in production. these raw materials included both direct and indirect materials. the indirect materials totaled $2,000. the journal entry to requisition from the storeroom would include:
work in process $74,000 (debit) manufacturing overhead $2,000 (debit) raw materials $76,000 (credit) =debit to work in process of $74,000
