ACCT 2301 Exam 1 Review
Browning Furniture Company manufactures furniture at its Akron, Ohio, factory. Some of its costs from the past year include: Depreciation on sales office$ 9300 Depreciation on factory equipment 16,800 Factory supervisor salary 50,100 Sales commissions 23,400 Lubricants used in factory equipment 3900 Insurance costs for factory 21,500 Wages paid to maintenance workers 115,300 Fabric used to upholster furniture 10,900 Freight-in (on raw materials) 3000 Costs of delivery to customers 9700 Wages paid to assembly-line workers 115,600 Lumber used to build product 82,100 Utilities in factory 54,500 Utilities in sales office 26,700 Prime costs for Browning Furniture Company totaled
$211,600 Calculations: $3000 + 10,900 + 115,600 + 82,100 = $211,600
Job 563 has a total cost of $29,500. The manufacturing overhead allocation rate is 80% of direct labor. Job 563 has been charged manufacturing overhead costs of $7900. What was the amount of direct materials charged to the job? (Round intermediary calculations to the nearest dollar.)
$11,725 80% (X) = $7900X = $9875Then $29,500 - 7900 - 9875 = $11,725
Quincy's Bottles provided the following expense information for July: Assembly-line workers' wages $56,800 Depreciation on factory equipment $35,500 Caps for bottles $3400 Plastic bottles $52,700 Reconfiguring the assembly line $123,600 Salaries of salespeople $63,200 Customer support hotline $12,400 Salaries of research scientists $65,100 Delivery expenses $40,700 Customer toll-free order line $8400 What is the total cost for the customer service category of the value chain?
$12,400
Quincy's Bottles provided the following expense information for July: Assembly-line workers' wages $56,800 Depreciation on factory equipment $35,500 Caps for bottles $3400 Plastic bottles $52,700 Reconfiguring the assembly line $123,600 Salaries of salespeople $63,200 Customer support hotline $12,400 Salaries of research scientists $65,100 Delivery expenses $40,700 Customer toll-free order line $8400 What is the total cost for the customer service category of the value chain?
$12,400 = customer service support hotline
Total manufacturing overhead costs for part A is (table on phone, question 23)
$12,600
A company has monthly fixed costs of $96,000. The variable costs are $8.00 per unit. If the sales price of a unit is $14.00 and we sell 8000 units, the company's average fixed costs per unit will be
$12.00 per unit 96,000/8000=12
A company has monthly fixed costs of $112,500. The variable costs are $6.00 per unit. If the sales price of a unit is $19.00 and we sell 7500 units, the total sales revenue will be
$142,500 Calculations: $19.00 × 7500 = $142,500
Cameron's Crates manufactures custom crates for a variety of uses. The following data have been recorded for Job 551, which was recently completed. Direct materials used cost $7800. There were 91 machine hours used on this job. The predetermined overhead rate is $38 per machine hour used. There were 183 direct labor hours worked on this job at a direct labor wage rate of $32 per hour. What is the total manufacturing cost of Job 551?
$17,114 $7800 + (183 × $32) + (91 × $38) = $17,114
OP Technologies Manufacturing manufactures small parts and uses an activity-based costing system. (table on phone, question 23) Total packaging fees for all three parts is
$19,200
Selected information regarding a company's most recent quarter follows (all data in thousands). Purchases of direct materials $310 Sales revenue $3590 Manufacturing overhead $480 Direct materials used $380 Direct labor $220 Beginning raw materials inventory $260 What was the ending raw materials inventory?
$190 Calculations: $260 + 310 = 570 - 380 = $190
How would Chevrolet classify its partially completed vehicles?
Work in progress inventory
Many companies are concerned about future manufacturing uncertainties and therefore have instituted a "just in case" inventory balance mindset. Is "just in case" large raw materials, work in process and finished goods inventory balances considered a wasteful decision?
Yes, the large build-up of "just in time" inventory balances is considered wasteful.
Non-value-added activities are
activities that neither enhance the customer's image of the product or service nor provide a competitive advantage. also called waste activities. activities that could be reduced or removed from the process with no ill effect on the end product or service.
Underallocated manufacturing overhead results when
actual overhead is greater than allocated overhead.
A factory janitor's wages would be classified as ________ when determining the cost of a manufactured product.
an indirect cost
The cost of lighting the factory would be classified as ________ when determining the cost of a manufactured product
an indirect cost
The cost of inspection at various stages of production is an example of a(n)
appraisal cost.
The ________ is a subcommittee of the Board of Directors.
audit committee
A ________ is the primary factor that causes a cost to be incurred.
cost driver
According to the textbook, a managerial accountant often works on a (an)
cross-functional team.
Job costing might be used by a
custom home builder
A typical manufacturing overhead cost would be
depreciation on the plant.
Subtracting the costs of one alternative from the costs of the other alternatives would be called the ________ cost.
differential
Using product cost information to determine sales prices is an example of
directing
Using factory utilities would most likely be classified as a ________ cost.
facility-level
The difference between the sales price and the job cost is
gross profit.
The benefits of using the ABC costing system are higher if the company
has high indirect costs and produces many different products that use differing amounts of resources.
The primary goal of managerial accounting is to provide information to
internal decision-makers.
The focus of management accounting is on
internal reporting
The main difference between the current assets on the balance sheet of a service company and a manufacturer is that a manufacturer has
inventory and a service company does not.
A ________ is a source document used to track employee hours
labor time record
A ________ is a source document used to track employee hours.
labor time record
The management strategy designed to eliminate waste is called a(n)
lean thinking.
The balance sheet of a service company has
little or no inventory
Manufacturing overhead can be allocated on the basis of
machine hours. direct labor costs. direct labor hours
________ are a company's decision makers.
managers
Budgets are a way for managers to communicate their
plans
Costs incurred to avoid providing poor quality services would be considered to be
prevention costs.
All of the following are considered to be part of the cost hierarchy often used to implement ABC, with the exception of
production-level activity.
Average variable costs per unit
remain the same no matter if production increases or decreases.
A relevant cost in determining whether to take the train to Phoenix or fly to Phoenix would be
the cost of the plane ticket.
An example of a sunk cost is
the purchase price of the old equipment.
When using a more refined cost allocation system vs. a batch cost allocation system, the estimated overhead costs will be
the same for both the more refined cost allocation system and the batch cost allocation system.
Happy Pup Dog Toy Company's operating activities for the year are listed below. Beginning inventory $1,000,400Ending inventory $351,000Purchases $750,400Sales revenue $1,500,500Operating expenses $700,300 What is the gross profit for the year?
$750,100
The following account balances at the beginning of January were selected from the general ledger of Superior Juice Manufacturing Company: (table on phone, question 19) What is the predetermined manufacturing overhead rate?
140%
Which type of company has the most difficult job determining the total cost of their asset inventory and why?
A manufacturer because they need to include all of the raw materials cost and the work in process costs which may include additional costs to get the product ready to sell.
Which of the following is not one of the primary responsibilities of management?
Adhering to GAAP
Job costing would most likely be used in which of the following companies?
All of the above would use job costing.
Which of the following are merchandising companies?
Both retailers and wholesalers
Which of the following is an example of an industry that would use a process costing—rather than a job costing—system?
Coca-Cola
What position is typically responsible for general financial accounting, managerial accounting, and tax reporting?
Controller
Comparing actual results to budgets is an example of which of the following management functions?
Controlling
Evaluating results against the plan is an example of which of the following management functions?
Controlling
The management accountant at Bayside Cycle Shoppe developed a budget to establish the sales goals at the store in the prior year. In the current year, the management accountant evaluated the performance in the organization, reviewed the performance of the sales staff, and compared the sales results to the actual budget that the managerial accountant developed in the prior year. Which of the following management accounting responsibilities is the management accountant using in this example?
Controlling
Which of the following is being fulfilled when management compares the budget to actual results?
Controlling
How is the cost-plus price determined?
Cost + markup on cost
If the manufacturing overhead costs have been overallocated to jobs completed during the current month by $52,000, how would the balance sheet and cost of goods sold financial statements be impacted if we assume that 59% of the goods have been sold?
Cost of Goods Sold would be overstated by $30,680 and Finished Goods would be overstated by $21,320.
Which of the following is responsible for the ability of foreign companies to compete with domestic companies in the global marketplace?
Decreased barriers to international trade
The costs associated with reengineering machinery and its location within the factory to increase efficiency would be considered which element of the value chain?
Design
Which statement describes direct materials in a manufacturing setting?
Direct materials are used to determine total product costs.
Overseeing the day-to-day operations of a company is an example of which of the following management functions?
Directing
The managerial accountant at Strategic Group Consulting reported the following information about the sales budget for the period ending December 31, 20XX: (table on phone, question3) Observe the Sales Budget and determine which primary responsibility the managerial accountant uses to determine which quarter generated the most per-unit product sales data in order to adjust the marketing strategy?
Directing The managerial accountant used the directing responsibility in managerial accounting to determine which quarter generated the most sales. This information is important to a manager because the information found in the sales budget report can help the manager adjust the marketing strategy.
When management reviews product sales reports to set goals and objectives and then evaluates the results of sales operations against the plan and performance results, which of management's three primary responsibilities is fulfilled?
Directing, controlling, and planning
If manufacturing overhead is allocated using a predetermined overhead rate of $15 per direct labor hour and during the month total direct labor hours were 2700 if the actual manufacturing overhead was $46,500 what would be the adjustment needed to the financial statements if we assume 45% of the products were sold and all of the work in process units were completed?
Increase Cost of Goods Sold $2700 and Increase Finished Goods $3300 The manufacturing overhead would be underallocated by $6000
Classify each of the following costs as direct or indirect as it relates to one Best Buy retail location: CFO salary, that Best Buy's sales associates, that Best Buy's property insurance, and the legal department for Best Buy
Indirect, direct, direct, and indirect
Which of the following cost of quality categories represent the cost incurred to rework a defective product before the product is shipped to a consumer?
Internal failure costs
Cooper's Bags Company manufactures cloth grocery bags to be sold to grocery stores and other retailers. Cooper's Bags Company sells the bags in cases of 2000 bags. The bags come in three sizes: Large, Medium, and Small. Currently, Cooper's Bags Company uses a single plantwide overhead rate to allocate its estimated $8,214,000 of annual manufacturing overhead. Of this amount, $2,180,000 is associated with the Large Bag line, $3,418,000 is associated with the Medium Bag line, and $2,616,000 is associated with the Small Bag line. Cooper's Bags Company is estimated to run a total of 42,000 machine hours: 13,200 in the Large Bag line, 15,800 in the Medium Bag line, and 13,000 in the Small Bag line. Cooper's Bags Company uses machine hours as the cost driver for manufacturing overhead costs. Which product line(s) have been overcosted or undercosted by using the plantwide manufacturing overhead rate?
Large Bags has been overcosted; Medium and Small have been undercosted.
Which of the following items is not a characteristic of a lean company?
Machines are arranged by function.
________ is designed to meet the needs of internal decision makers.
Managerial accounting
Which of the following statements is true about managerial accounting?
Managerial accounting reports provide detailed internal information
Which of the following are the internal decision makers of a company?
Managers
Which of these documents notifies the storeroom to send specific materials to the factory floor?
Materials requisition
ABC can be used by which of the following companies?
Merchandisers Manufacturers Service Providers
Creating budgets are part of which primary management responsibility?
Planning
Which of the following is an example of indirect labor in a manufacturing plant?
Plant managers
Which element of the value chain would depreciation on a factory be classified as?
Production
Which of the following activities is not included in the value chain?
Reporting
An example of a fixed cost for a manufacturer would be which of the following?
Salary of plant manager
Which of the following items is not used when calculating the cost of goods manufactured?
Salesperson salaries
Barnes Auto Repair, an automotive maintenance company, is primarily what type of company?
Service
Planning involves which of the following activities?
Setting goals and objectives for the company
Which of the following is NOT a technical competency that a managerial accountant needs to possess?
Tax return preparation
What factor has changed the roles of managerial accountants?
Technology
Which person is hired directly by the board of directors to manage the daily operations of the company?
The CEO
Whether a cost is defined as a direct cost, which is traceable, or an indirect cost, which must be allocated is dependent upon which of the following?
The specific cost object
What will the use of departmental overhead rates generally result in?
The use of a separate cost allocation base for each department in the factory.
How do variable costs per unit behave?
They remain the same throughout production levels within the relevant range.
Life-cycle assessment integrates the environmental impact of a product in order to minimize problematic long-run ecological negative outcomes. Which of the following provides an example of a company integrating environmental minimizing factors into their product?
Tide packages their product into a more energy efficient washing container.
When calculating a departmental overhead rate, what should the numerator be?
Total estimated departmental overhead cost pool
Which of the following is an example of manufacturing overhead expense in a factory?
Wages of factory maintenance personnel
Cooper's Bags Company manufactures cloth grocery bags to be sold to grocery stores and other retailers. Cooper's Bags Company sells the bags in cases of 900 bags. The bags come in three sizes: Large, Medium, and Small. Currently, Cooper's Bags Company uses a single plantwide overhead rate to allocate its estimated $8,818,000 of annual manufacturing overhead. Of this amount, $2,220,000 is associated with the Large Bag line, $3,415,000 is associated with the Medium Bag line, and $3,183,000 is associated with the Small Bag line. Cooper's Bags Company is estimated to run a total of 38,000 machine hours: 13,100 in the Large Bag line, 14,900 in the Medium Bag line, and 10,000 in the Small Bag line. Cooper's Bags Company uses machine hours as the cost driver for manufacturing overhead costs. The departmental manufacturing overhead rate for the Small Bag line would be closest to (Round your final answer to the nearest cent.)
$318.30 per machine hour
Goldfish Corporation uses a predetermined overhead rate based on direct labor hours to allocate manufacturing overhead to jobs. The company estimated that it would incur $600,900 of manufacturing overhead during the year and estimated 150,700 direct labor hours would be worked. During the year, the company actually incurred manufacturing overhead costs of $582,400 and 135,000 direct labor hours were worked. By how much was manufacturing overhead overallocated or underallocated for the year? (Round intermediary calculations to the nearest cent and the final answer to the nearest dollar.)
$43,750 underallocated
Finnish Corporation manufactures custom molds for use in the extrusion industry. The company allocates manufacturing overhead based on machine hours. Selected data for costs incurred for Job 532 are as follows: Direct materials used $5800 Direct labor cost $36,000 Predetermined manufacturing overhead rate based on machine hours $20 Direct labor hours worked3900 Machine hours used250 What is the manufacturing cost of Job 532?
$46,800
Allbright Running Company manufactures running shoes and has the following costs during the past month: What are the total period costs for Allbright Running Company for the month? (table on phone, question 7)
$47,950
Allbright Running Company manufactures running shoes and has the following costs during the past month: (table on phone, question 7) What are the total period costs for Allbright Running Company for the month?
$47,950 $25,000 + $3,000 + $5700 + $7000 + $7000 + $250 = $47,950
Relax, Don't Do It Company manufactures lawn chairs using an activity-based costing system to allocate all manufacturing conversion costs. The following information is provided for the month of June: ActivityEstimated IndirectActivity CostsAllocation BaseEstimated Quantity ofAllocation BaseMaterials handling$16,000Number of parts8000 partsAssembling$15,600Number of parts8000 partsPackaging$5000Number of lawn chairs1000 lawn chairs Each lawn chair consists of 8 parts; the total direct materials cost per lawn chair is $19.What is the total cost of packaging per lawn chair? (Round intermediate and the final answer to the nearest cent.)
$5.00 Packaging $5000/1000=$5.00
Selected financial information for Delicious Food Producers is presented in the following table (000s omitted). Beginning raw materials inventory $380 Ending raw materials inventory$270 Direct labor $320 Operating expenses $720 Purchases of direct materials $460 Beginning work in process inventory $410 Ending work in process inventory $640 Sales revenue $4700 Manufacturing overhead $720 Beginning finished goods inventory $350 Ending finished goods inventory $300 What was the cost of direct materials used?
$570
Boston's Toys has monthly fixed costs of $90,000, while its variable costs are $4.10 per unit. If the sales price of a unit is $14.75 and Boston's Toys sell 14,400 units, the company's total variable costs will be
$59,040
Chamomile Tea Corp. provided the following expense information for May: Assembly-line workers' wages$72,800 Caps for tea bottles 3400 Reconfiguring the assembly line125,200 Customer support hotline10,200 Delivery expenses20,700 Depreciation on factory equipment75,600 Plastic bottles to package tea52,700 Salaries of salespeople63,700 Salaries of research scientists70,800 Customer toll-free order line6200 What is the total cost for the marketing category of the value chain?
$69,900
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 $60 per machine hour, while the Sanding Department uses a departmental overhead rate of $20 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the two departments: (table on phone, Question 21) How much manufacturing overhead would be allocated to Job 603 using the departmental overhead rates?
$700
