ACCT 202 Exam #2
(4) Cabinets Unlimited uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $45 per machine hour, while the Sanding Department uses a departmental overhead rate of $25 per direct labor hour. Job 542 used the following direct labor hours and machine hours in the two departments: Actual results for the Assembly Department and Sanding Department Direct labor hours used 7 (Assembly) 3 (Sanding) Machine hours used 11 (Assembly) 5 (Sanding) The cost for direct labor is $35 per direct labor hour and the cost of the direct materials used by Job 542 is $1,200. What was the total cost of Job 542 if Lucas Industries used the departmental overhead rates to allocate manufacturing overhead?
$2,120.
(4) Pierce and Pierce, Attorneys at Law, provide a variety of legal services. The law firm uses an activity−based costing system and has developed the following activity pool cost rates: Activity cost pool - Activity rate Legal research - $55 per hour of paralegal time Court filing costs - $620 per case filed Document preparation - $22 per document Cost and activity data related to two clients is as follows: Client 82 - Client 122 Number of paralegal hours - 35 - 77 Number of cases filed - 1 - 3 Number of documents - 14 - 34 How much overhead cost would be allocated to Client 82 using the activity−based costing system?
$2,853.
(5) If conversion costs are added evenly throughout the production process, and the units have made it 50% of the way through the production process, then the percentage completion for conversion costs is
50%.
(5) Materials are added at the beginning of the process and conversion costs are added uniformly. Work in process, beginning: Number of units - 11,000 Transferred−in costs - $94,000 Direct materials (100%) - $22,500 Conversion costs (75%) - $25,400 Units transferred−in: Number of units - 56,500 Transferred−in costs - $640,500 Units completed - 33,000 Costs during the period: Direct materials - $155,475 Conversion costs - $213,225 Work in process, ending: Number of units - 34,500 (100% complete for materials and 35% complete for conversion) At period end, what would be the total equivalent units for direct materials?
67,500.
(5) In a particular department, 9,200 units were started and all but 1,700 were completed at the end of the period. These 1,700 were 80% complete for materials and 40% for conversion costs. Costs added were $55,400 for materials and $52,100 for conversion costs. What is the total number of equivalent units for conversion costs?
8,180.
(5) Which of the following statements is true regarding a production cost report?
A. Each process department prepares its own production cost report each month. B. The transferred−in costs, direct materials cost, and conversion costs assigned to the units in ending work−in−process inventory become the beginning work−in−process inventory balances on the next month's cost report. C. The production cost report summarizes the 5−step process on one schedule. D. All of the above are true statements.
(4) Why are large amounts of inventory considered wasteful?
A. It ties up cash that could be used for other, more useful purposes. B. Storing inventory is very expensive. C. Inventory could spoil, get broken or stolen, or become obsolete. D. All of the above are reasons large amounts of inventory are considered wasteful.
(4) Non−value−added activities are
A. activities that could be reduced or removed from the process with no ill effect on the end product or service. B. also called waste activities. C. activities that neither enhance the customer's image of the product or service nor provide a competitive advantage. D. All of the above.
(5) What does direct labor costs plus Manufacturing Overhead equal?
Conversion costs.
(6) Which of the following would be considered a committed fixed cost?
Depreciation.
(4) Which of the following cost of quality categories represent the cost incurred to provide "warranty repair on a juicer?"
External failure costs.
(4) Which of the following cost of quality categories represent the cost incurred to rework a product after the company detects a poor−quality product before the company delivers the product to a consumer?
Internal failure costs
(4) On a Cost of Quality report, which of the following cost items should be classified as an internal failure cost?
Net cost of scrap.
(6) How is operating income affected if the number of units sold exceeds the number of units produced?
Operating income would be higher under a variable costing income statement.
(4) Which of the following is a lean strategy?
Produce in smaller batches than a traditional system.
(4) Which of the following is an example of a cost item that should be classified as an internal failure cost?
Rework costs.
(6) Which method are managers using when they plot all the data points to see if there is a linear relationship among the data?
Scatterplot.
(4) All of the following statements regarding total quality management are true except
TQM increases time spent on rework and warranty work.
(6) With respect to total variable costs, which of the following statements is true?
They will decrease as production decreases within the relevant range.
(5) How is the cost per equivalent unit calculated?
Total costs to account for divided by total equivalent units
(5) How is the cost per equivalent unit calculated?
Total costs to account for divided by total equivalent units.
(5) When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. What are these costs called?
Transferred costs
(5) Conversion costs are generally added evenly throughout a process.
True.
(5) The journal entry a company would make under process costing to record allocated manufacturing overhead incurred in the Assembly Department would be
WIP Inventory − Assembly XXX Manufacturing Overhead XXX
(5) Whiffle Company produces children's whiffle ball sets using a three−step sequential process that includes molding, coloring and finishing. When the sets are completely finished, out of which account should the cost be transferred?
WIP Inventory−Finishing.
(5) Candle Company has two sequential processing departments: Assembly and Shaping. The Shaping Department reports the following information. Conversion costs are applied evenly throughout the process. Beginning WIP Inventory - 9,000 units Transferred−in costs in beginning WIP Inventory - $94,000 Direct materials costs in beginning WIP Inventory - $25,600 Conversion costs in beginning WIP Inventory - $23,750 Units transferred−in - 47,000 units Transferred−in costs - $647,000 Units completed - 43,000 Costs added: materials - $155,040 Costs added: conversion - $230,710 Ending WIP Inventory - 13,000 units (50% complete for materials and 40% complete for conversion) What would have been the journal entry to record the transfer of product from the assembly department to the Shaping Department?
WIP—Shaping (Dr); WIP—Assembly (Cr) $647,000
(4) ABM stands for
activity−based management.
(4) Machine set−up would most likely be classified as a ________ cost.
batch-level.
(5) Flying Disks Manufacturing produces frisbees using a three−step process that includes molding, coloring and finishing. Requisition of materials to molding includes a
credit to Raw Materials Inventory.
(4) The cost of product liability claims is an example of a(n) ________ cost.
external failure.
(4) Using traditional costing instead of ABC costing might lead to all of the following except
raising the selling price of low−volume products.
(6) In the equation y = $11.75x + $550, "y" represents
total costs.
(6) Bowling Corporation wants to know how closely its current cost driver is correlated with its monthly operating costs. The managerial accountant runs a regression analysis using a statistical software program and produces the following data: Intercept Coefficient = 12,200,567 X Variable 1 Coefficient = 95.65 R−square = 0.8574 What is the Bowling Corporation's monthly cost equation?
y = $95.65x + $12,200,567.
(4) OP Technologies Manufacturing manufactures small parts and uses an activity−based costing system. Activity - Est. Indirect Activity Costs - Allocation base - Cost allocation rate Materials - $77,000 - Material moves - $5.00/move Assembling - $245,000 - Direct labor hours - $11.00/dir. labor hour Packaging - $90,000 - # of finished units - $2.00/finished unit ___________________________________________________________ The following parts were produced in October with the following information: Part - # Produced - Materials Costs - # Moves - Dir. Labor Hrs. A - 2,150 - $3,000 - 800 - 350 B - 3,000 - $4,500 - 1,600 - 325 C - 4,750 - $8,000 - 2,200 - 1,300 Total manufacturing overhead costs for part A is
$12,150.
(5) At Ruby Incorporated, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: WIP beginning (70% for conversion) - 17,200 units Units started - 160,000 units Units completed and transferred out - 112,000 units WIP ending (50% for conversion) - 65,200 units Beginning WIP direct materials - $46,500 Beginning WIP conversion costs - $25,200 Costs of materials added - $440,100 Costs of conversion added - $260,000 What is the cost per equivalent unit for direct materials?
$2.75.
(4) Cast Iron Fabrication allocates manufacturing overhead to each job using departmental overhead rates. The company's operations are divided into a casting department and a finishing department. The casting department uses a departmental overhead rate of $53 per machine hour, while the finishing department uses a departmental overhead rate of $27 per direct labor hour. Job A216 used the following direct labor hours and machine hours in the two departments: Actual results - Casting Department - Finishing Department Direct labor hours used - 6 - 14 Machine hours used - 2 - 3 The cost for direct labor is $32 per direct labor hour and the cost of the direct materials used by Job A216 is $1,900. What was the total cost of Job A216 if Cast Iron Fabrication used the departmental overhead rates to allocate manufacturing overhead?
$3,024.
(5) The managerial accountant at Seaside Manufacturing reported the following data: Units: Beginning WIP - 56,500 75% for materials 45% for conversion Transferred−in - 216,000 Completed - 242,000 Ending WIP 60% for materials 20% for conversion - 30,500 Costs: Beginning WIP Direct materials - $67,500 Conversion - 152,400 Transferred−in - 104,000 Transferred−in from department 1 - $1,557,050 Direct materials added - 919,375 Conversion added - 548,875 Costs of units transferred to Finished Goods Inventory would be closest to
$3,078,240.
(6) Robert was reviewing the water bill for his carwash business and determined that the highest bill, $5,200, occurred in July when 2,200 cars were washed and the lowest bill, $3,100, occurred in February when 1,500 cars were washed. What was the variable cost per carwash?
$3.00.
(6) Total fixed costs for Global Enterprises are $600,000. Total costs, including both fixed and variable, are $900,000 if 150,000 units are produced. The fixed cost per unit at 200,000 units would be
$3.00/unit.
(4) Telecom uses activity−based costing to allocate all manufacturing conversion costs. Telecom produces cellular telephones; each phone has $30.00 of direct materials, includes 20 parts and requires 2 hours of machine time. Additional information follows: Activity - Allocation Base - Cost Allocation Rate Materials handling - Number of parts - $1.50 per part Machining - Machine hours - $2.00 per machine hour Assembling - Number of parts - $5.00 per part Packaging - Number of finished units - $7.00 per finished unit What is the cost of materials handling per phone?
$30.
(4) Rollergirl produces old−fashioned style roller skates and skateboards. The annual production and sales of roller skates is 900 units, while 1,750 skateboards are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Roller skates require 4.5 direct labor hours per unit, while skateboards require 3.25 direct labor hours per unit. The total estimated overhead for the period is $114,500. The company is looking at the possibility of changing to an activity−based costing system for its products. If the company used an activity−based costing system, it would have the following three activity cost pools: Expected activity Activity cost pool - Estimated overhead cost - Roller skates - Skateboards - Total Setup costs - $6,950 - 365 - 320 - 685 Engineering costs - $16,200 - 440 - 620 - 1,060 Maintenance costs - $91,350 - 4,050 - 5,687.5 - 9,737.5 The overhead cost per skateboard using an activity−based costing system would be closest to (Round all answers to two decimal places.)
$37.76.
(5) A hair product manufacturer offers the following information: WIP Inventory, January 1 - 0 units Units started - 26,600 units Units completed and transferred out - 19,200 units WIP Inventory, December 31 - 7,400 units Direct materials - $284,480 Direct labor - $583,000 Manufacturing Overhead - $337,920 The units in ending WIP Inventory were 60% complete for materials and 40% complete for conversion costs. On December 31, the cost per equivalent unit for conversion costs would be closest to
$41.56.
(5) Brick Company adds direct materials at the beginning of the process and adds conversion costs throughout the process. Data for the Finishing Department follows: WIP, April 1 - 9,000 units Transferred−in costs in WIP, April 1 - $79,940 Direct materials (100%) in WIP, April 1 - $24,420 Conversion costs (70%) in WIP, April 1 - $26,400 Units transferred−in - 51,000 Transferred−in costs during April - $550,900 Units completed - 44,000 April direct materials cost - $155,500 April conversion costs - $241,250 WIP, April 30 - 16,000 units (100% for materials and 50% for conversion costs) The cost per equivalent unit for conversion costs would be closest to
$5.15.
(6) Future Enterprises is trying to predict the cost associated with producing its telescopes. At a production level of 5500 telescopes, Future Enterprises' average cost per telescope is $54. If $18,000 of the total costs are fixed, what is the variable cost of producing each telescope?
$50.73
(5) The mixing department has 19,000 units and $54,000 in costs for which to account. Of the 19,000 units, 13,000 were completed and transferred to the next department. The 6,000 remaining were 25% complete for conversion costs. Direct materials are added at the beginning of the process, and the conversion costs are added evenly throughout the process. The cost per equivalent unit is $4.25 for direct materials and $0.70 for conversion costs. The total costs to account for are
$54,000.
(4) O&G Company manufactures console tables and uses an activity−based costing system. Each console table consists of 30 separate parts totaling $250 in direct materials, and requires 5.0 hours of machine time to produce. Additional information follows: Activity - Allocation Base - Cost Allocation Rate Materials handling - Number of parts - $2.00 per part Machining - Machine hours - $4.70 per machine hour Assembling - Number of parts - $3.00 per part Packaging - Number of finished units - $7.00 per finished unit What is the cost of materials handling per console table?
$60.
(4) All Things Auto uses an activity−based costing system to assign costs in its auto−parts division. Activity - Est. Indirect Activity Costs - Allocation base - Cost allocation rate Materials - $60,000 - Material moves - $4.00/move Assembling - $185,000 - Direct labor hours - $6.00/dir. labor hour Packaging - $80,000 - # of finished units - $2.50/finished unit _______________________________________________________ The following units were produced in December with the following information: Part # - # Produced - Materials Costs - # Moves - Dir. Labor Hrs. Part 001 - 1,250 - $3,500 - 300 - 200 Part 002 - 3,500 - $8,000 - 400 - 400 Part 003 - 3,550 - $9,000 - 2,200 - 1,250 Total manufacturing costs for Part 001 is
$9,025.
(6) The Hoops Corporation manufactures and sells hula hoops. The following data is related to sales and production of the hula hoops for last year. Selling price per unit - $8.40 Variable manufacturing costs per unit - $1.87 Variable selling and administrative expenses per unit - $4.55 Fixed manufacturing overhead (in total) - $79,000 Fixed selling and administrative expenses (in total) - $80,000 Units produced during the year - 500,000 Units sold during year - 150,000 Using absorption costing, what is gross profit for last month? (Round any intermediary calculations to the nearest cent.)
$955,500
