ACCT 353 6,7,8

Which of the following allocation methods assumes "step-down" interdepartmental services?

sequential method

The FIFO costing method assumes:

that units in beginning work in process units are completed first, before any new units are started

A production report provides information about:

the manufacturing costs associated with the units produced in a department, physical units processed in a department & units to account for and units accounted for (all the above)

The split-off point can best be defined as

the point at which joint products become separate and identifiable.

The split-off point can best be defined as:

the point at which the joint products become separate and identifiable

Control can be defined as:

the process of setting standards, receiving feedback on actual performance, and taking corrective action whenever actual performance deviates significantly from plan

In a merchandising organization, the merchandise purchases budget replaces what budget from a manufacturing firm?

the production budget

Twinnings Corporation manufactures Scheduling Books. There are two processes: printing and binding. The following information is given for the printing department for September. Units: units, beginning work in process 40,000 (20% complete for materials, 60% complete for conversion) started 300,000 completed ? units, ending work in process 50,000 (25% complete for materials, 80% complete for conversion) Costs: Materials Conversion Total beginning work in process $6,080 $2,160 $8,240 current costs $220,875 $30,600 $251,475 total costs $226,955 $32,760 $259,715 The company uses FIFO inventory assumption. 7. Refer to Figure 6-12. What are the FIFO cost per unit for conversion?

$0.10

Garden of Eden Company manufactures two products, Brights and Dulls, from a joint process. A production run costs $50,000 and results in 250 units of Brights and 1,000 units of Dulls. Both products must be processed past the split-off point, incurring separable costs for Brights of $60 per unit and $40 per unit for Dulls. The market price is $250 for Brights and $200 for Dulls. Refer to Figure 7-7. What is the amount of joint costs allocated to Brights using the net realizable value method?

$11,446

Mannassass Company manufactures chairs. The following information was given for the company: units, beginning work in process 0 units started 20,000 units completed ? units, ending work in process 5,000 cost of direct materials $440,000 cost of conversion $64,000 Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete. Refer to Figure 6-6. What cost is assigned to ending work in process?

$114,000

Asian Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of 2016 are as follows: Month Sales October 10,000 November 14,000 December 13,000 Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales. Asian Lamp expects to sell the lamps for $25 each. January 2016 sales is projected at 16,000 lamps. 10. Refer to Figure 8-2.What is the expected sales revenue for December?

$325,000

Rodriguez Manufacturing prices its products at full cost plus 40 percent. The company operates two support departments and two producing departments. Budgeted costs and normal activity levels are as follows: Support Department A's costs are allocated based on square feet, and Support Department B's costs are allocated based on number of employees. Department C uses direct labor hours to assign overhead costs to products, while Department D uses machine hours. One of the products the company produces requires 4 direct labor hours per unit in Department C and no time in Department D. Direct materials for the product cost $45 per unit, and direct labor is $20 per unit. If the sequential method of allocation is used and the company follows its usual pricing policy, the selling price of the product would be (round service allocations to the nearest whole dollar and the costs per unit to two decimal places)

$159.38

Lennon Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $30,000 are allocated on the basis of standard service used. The Personnel Department costs of $6,000 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $18,000 and $30,000, respectively. Data on standard service hours and number of employees are as follows: Maint. Person. Dept. Dept. Dept. Dept. X Y Standard service hours used 100 50 300 150 Number of employees 5 10 45 45 Direct labor hours 50 50 250 250 Predetermined overhead rates for Departments X and Y, respectively, are based on direct labor hours. What is the overhead rate for Department X assuming the direct method is used?

$164.00

Golden Leaves Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $30,000 are allocated on the basis of standard service used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows: MD PD P1 P2 Standard service hours used 100 50 300 150 Number of employees 10 20 90 90 Direct labor hours 50 50 250 250 Refer to Figure 7-6. Using the sequential method, if the support department with the highest percentage of interdepartmental service is allocated first, the cost of the support departments allocated to Department P1 is

$21,750

Mannassass Company manufactures chairs. The following information was given for the company: units, beginning work in process 0 units started 20,000 units completed ? units, ending work in process 5,000 cost of direct materials $440,000 cost of conversion $64,000 Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete. Refer to Figure 6-6. What are the costs per unit for materials and conversion respectively?

$22; $4

Cumadin Corporation, which manufactures Products W, X, Y, and Z through a joint process costing $18,000, has the following data for 2016: Sales Value Product Units Produced at Split-Off W 10,000 $5,000 X 6,000 2,500 Y 16,000 3,000 Z 8,000 4,500 What is the amount of joint costs assigned to Product Y using the sales-value-at-split-off method?

$3,600

Alpha Beta Company has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60 percent of sales. All goods are purchased in the month used and paid for in the month following their purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired. Beginning accounts payable is $13,000. How much merchandise inventory will Alpha Beta Company need to purchase next month?

$30,500

Dali, Inc. is constructing its marketing budget. 1st quarter 2nd quarter 3rd quarter 4th quarter Sales 30,000 40,000 50,000 60,000 Production 35,000 45,000 55,000 65,000 Commissions are $3 per unit sold. Salesperson salaries are $100,000 per quarter. Depreciation is $25,000 per quarter. Travel is $10,000 per quarter. Advertising is $50,000 in the first quarter; $40,000 in the second quarter; $60,000 in the third quarter; and $55,000 in the fourth quarter. What is the budgeted marketing expense for the third quarter?

$345,000

Discus Productions needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 10 percent of total sales each month. Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale. Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000. Accounts receivable on March 31 were $60,000. Refer to Figure 8-4. Discus Productions would expect to have an accounts receivable balance on June 30 of

$37,800

Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance $15,000 + $4 per machine hour Machining $35,000 + $1 per machine hour Inspection $60,000 + $750 per batch Setups $1,000 per batch Purchasing $50,000 + $10 per purchase order What is the total cost for production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?

$393,750

Garden of Eden Company manufactures two products, Brights and Dulls, from a joint process. A production run costs $50,000 and results in 250 units of Brights and 1,000 units of Dulls. Both products must be processed past the split-off point, incurring separable costs for Brights of $60 per unit and $40 per unit for Dulls. The market price is $250 for Brights and $200 for Dulls. Refer to Figure 7-7. What is the amount of joint costs allocated to Dulls using the physical units method?

$40,000

The records of Morgantown, Inc. show the following forecasted sales: Month Sales September $400,000 October 500,000 November 300,000 December 200,000 Collection pattern: 60 percent in month of sale 40 percent in month following the sale Accounts receivable as of August 31 $70,000 Finished goods inventory as of August 31 8,000 units The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of next month's sales. Refer to Figure 8-6. How many dollars are expected to be collected in October?

$460,000

Laredo Corporation, which manufactures products W, X, Y, and Z through a joint process costing $24,000, has the following data for 2016: Total Sales Value Product Units Produced at Split-Off W 10,000 $5,000 X 6,000 2,500 Y 16,000 3,000 Z 8,000 4,500 What is the amount of joint costs assigned to product W using the physical units method?

$6,000

The Savings Bank of Sarasota has three revenue-generating departments: checking accounts, savings accounts, and loans. The bank also has three service areas: administration, personnel, and accounting. The direct costs per month and the interdepartmental service structure are shown below: The Savings Bank of Sarasota uses the sequential (step) method and the service departments are allocated in the following order: administration, personnel, and accounting. How much cost would be allocated to the loan area from the personnel department using the sequential/step method? (Round to two decimal places.)

$6,000

Discus Productions needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 10 percent of total sales each month. Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale. Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000. Accounts receivable on March 31 were $60,000. Refer to Figure 8-4. The expected cash collections of Discus Productions for June are

$89,000

Which of the following is the most common starting point in the information gathering process for budgeting?

the sales forecast

Asian Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of 2016 are as follows: Month Sales October 10,000 November 14,000 December 13,000 Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales. Asian Lamp expects to sell the lamps for $25 each. January 2016 sales is projected at 16,000 lamps. Refer to Figure 8-2. How many lamps should be produced in October?

10,500 lamps

Roaming Vehicles Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next two months is 500 and 600 units, respectively. Beginning inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months. Refer to Figure 8-3. How many units of wood are expected to be used in production during the second month?

12,000 units

Asian Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of 2016 are as follows: Month Sales October 10,000 November 14,000 December 13,000 Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales. Asian Lamp expects to sell the lamps for $25 each. January 2016 sales is projected at 16,000 lamps. Refer to Figure 8-2. How many lamps should be produced in November?

13,750 lamps

Mannassass Company manufactures chairs. The following information was given for the company: units, beginning work in process 0 units started 20,000 units completed ? units, ending work in process 5,000 cost of direct materials $440,000 cost of conversion $64,000 Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete. Refer to Figure 6-6. What are the units started and completed?

15,000

Mannassass Company manufactures chairs. The following information was given for the company: units, beginning work in process 0 units started 20,000 units completed ? units, ending work in process 5,000 cost of direct materials $440,000 cost of conversion $64,000 Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete. Refer to Figure 6-6. What are the equivalent units for materials and conversion respectively?

20,000; 16,000

Beginning inventory consisted of 10,000 units (20 percent converted) and ending inventory consisted of 20,000 units (40 percent converted). In addition, 60,000 units were started during the period. How many equivalent units for conversion costs were produced using the weighted average method?

58,000 units

The following forecasted sales pertain to Rapid City: Month Sales June $160,000 July 200,000 August 120,000 September 80,000 Finished goods inventory as of May 31 6,000 units Rapid City has a selling price of $5 per unit and expects to maintain ending inventories equal to 25 percent of next month's sales. What is the budgeted beginning balance in units for finished goods inventory on August 1?

6,000 units

Roaming Vehicles Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next two months is 500 and 600 units, respectively. Beginning inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months. Refer to Figure 8-3. What is the number of units of wood that need to be purchased by Roaming Vehicles Company during the first month?

9,500 units

The material cost per equivalent unit using the weighted average method is calculated as

total material costs to account for/equivalent units for materials.

When products and their costs are moved from one process to the next process, these costs are referred to as

transferred-in costs

The term given to units that represents the number of completed units that is equal, in terms of production inputs, to a given number of partially completed units is:

Equivalent units

The whole units that could have been produced in a period given the amount of manufacturing inputs used is(are) called:

Equivalent units of output

___ is a unit-costing method that excludes prior-period work and costs in computing current-period unit work and costs.

FIFO costing method

___ are products with substantial value which are produced simultaneously by the same process up to a split-off point.

Joint products

The budgets that are comprehensive financial plans made up of various individual departmental and activity budgets are the:

Master budget

The unit-costing method that merges prior-period work and costs with current-period work and costs is called:

Weighted average method

Oxide Company has two support departments (S1 and S2) and two producing departments (X and Y). Department S1 serves Departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%. Department S2 serves Departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%. Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively. What is S1's cost equation?

S1 = $15,000 + 0.06S2

Oxide Company has two support departments (S1 and S2) and two producing departments (X and Y). Department S1 serves Departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%. Department S2 serves Departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%. Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively. What is S2's cost equation?

S2 = $8,000 + 0.10S1

Support department costs are accounted for in which one of the following ways?

They are allocated to producing departments and then allocated to units of product.

The cost assigned to goods from a prior process is termed:

Transferred-in cost

What is the formula used to compute the units to be produced?

Units Produced = Units sold - Units in beginning inventory + Units in ending inventory

Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and finishing. The following costs are given for April: Cutting Assembly Finishing direct materials $7,000 $10,000 $3,000 direct labor 3,000 14,000 2,000 applied overhead 4,000 5,000 6,000 There were no work in process inventories and 1,000 podiums were produced. 8. Refer to Figure 6-2. Record the journal entries to record the transfer of goods from process to process.

Work in Process - Assembly 14,000 Work in Process - Cutting 14,000 Work in Process - Finishing 43,000 Work in Process - Assembly 43,000 Finished Goods 54,000 Work in Process - Finishing 54,000

The two methods used to determine equivalent units of production are

weighted average and FIFO

A common cost occurs

when the same resource is used in the output of two or more outputs.

A budget that is developed around one particular level of activity is

a static budget

Which of the following is an operating budget?

budgeted income statement

Operating budgets are

concerned with the income-generating activities of a firm.

The costs included in the cost per equivalent unit using the weighted average method are

current costs & beginning work in process.

Unit cost of materials for a department using the FIFO method of process costing is found by taking the total cost of materials issued to the department during the year divided by

equivalent units of output.

Equivalent units expresses all activity of the period in terms of

fully completed units.

Materials are added to a second production department and will not increase the number of units produced in this department. Adding materials to the second department will

increase total unit cost

When conversion costs are uniform,

labor and overhead are added at the same rate but different materials are added at a different point.

Transferred-in costs are accounted for in the same manner as

materials added at the beginning of the process.

The records of Morgantown, Inc. show the following forecasted sales: Month Sales September $400,000 October 500,000 November 300,000 December 200,000 Collection pattern: 60 percent in month of sale 40 percent in month following the sale Accounts receivable as of August 31 $70,000 Finished goods inventory as of August 31 8,000 units The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of next month's sales. Refer to Figure 8-6. How much is Accounts Receivable as of October 31?

none of the above

A joint cost allocation method that would assign the same amount of cost per unit to two joint products that sell for $10 and $40, respectively, is the

physical unit method

Which of the following characteristics pertains to job-order costing but NOT to process costing?

preparing job-cost sheets

The appropriate cost accounting system to use when inventory items are produced on an assembly line is

process costing.

If the costs of support departments are NOT allocated to producing departments,

product costs would be understated, GAAP requirements would not be met & managers of producing departments may tend to overconsume services.

Which of the following allocation methods fully recognizes services that support departments provide to each other?

reciprocal method

The sales-value-at-split-off method allocates joint production costs based on each product's share of

revenues realized at the split-off point.