Bad 2 chapter 1, 2, & 4
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 department's operations in March. Beginning work in process inventory 7,100 20% Transferred in from the prior department during March 62,400 Ending work in process inventory 10,600 60% The Fitting Department's cost per equivalent unit for conversion cost for March was $6.16. How much conversion cost was assigned to the units transferred out of the Fitting Department during March?
1) Units transferred to the next department = Units in beginning work in process + Units started into production - Units in ending work in process = 7,100 + 62,400 - 10,600 = 58,900 -------------------------------------------------------------- 2) (a)Units transferred to the next department 58,900 (b)Cost per equivalent unit $6.16 Cost of units completed and transferred out (a) × (b) = $362,824
Which of the following types of companies would typically use process costing rather than job-order costing?
A breakfast cereal manufacturer.
Administrative costs are indirect costs
False
Depreciation is always considered a period cost for external financial reporting purposes in a manufacturing company.
False
Under the weighted-average method, the cost of units transferred out of a department is computed as follows for a cost category:
Units transferred to the next department × Cost per equivalent unit
Dejarnette Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: - Total machine-hours 80,000 - Total fixed manufacturing overhead cost $416,000 - Variable manufacturing overhead per machine-hour $3.10 The predetermined overhead rate is closest to:
$416,000 + ($3.10 per machine-hour × 80,000 machine-hours) =$664,000 ------------------------------ $664,000 ÷ 80,000 machine-hours = $8.30 per machine-hour
Gerstein Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $90,000, variable manufacturing overhead of $3.70 per direct labor-hour, and 50,000 direct labor-hours. The company recently completed Job M800 which required 150 direct labor-hours. The estimated total manufacturing overhead is closest to:
$90,000 + ($3.70 per direct labor-hour × 50,000 direct labor-hours) = 275,000 Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base)
Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: - Total direct labor-hours 40,000 - Total fixed manufacturing overhead cost $96,000 - Variable manufacturing overhead per direct labor-hour$3.00 Recently, Job P951 was completed with the following characteristics: -Number of units in the job 20 -Total direct labor-hours 100 -Direct materials $755 -Direct labor cost $4,000 The estimated total manufacturing overhead is closest to:
****Estimated total manufacturing overhead cost = $96,000 + ($3.00 per direct labor-hour × 40,000 direct labor-hours) = $216,000 ------------------------------ For other ones: Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $216,000 ÷ 40,000 direct labor-hours = $5.40 per direct labor-hour ------------------------------ Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $5.40 per direct labor-hour × 100 direct labor-hours = $540
All of the following statements are correct when referring to process costing except: - Process costing would be appropriate for a jeweler who makes custom jewelry to order. - A process costing system has the same basic purposes as a job-order costing system. - Units produced are indistinguishable from each other. - Costs are accumulated by the department.
*Process costing would be appropriate for a jeweler who makes custom jewelry to order.
In May direct labor was 40% of conversion cost. If the manufacturing overhead for the month was $75,000 and the direct materials cost was $27,200, the direct labor cost was:
- Conversion cost = (0.40 × Conversion cost) + $75,000 - 0.60 × Conversion cost = $75,000 - Conversion cost = $75,000 ÷ 0.60 -Conversion cost = $125,000 - 0.40 × $125,000 = $50,000*
Macy Corporation's relevant range of activity is 9,000 units to 18,000 units. When it produces and sells 13,500 units, its average costs per unit are as follows: - Direct materials $5.65 - Direct labor $4.10 - Variable manufacturing overhead $2.10 - Fixed manufacturing overhead $3.90 - Fixed selling expense $1.40 - Fixed administrative expense $0.70 - Sales commissions $1.35 - Variable administrative expense $0.60 If the selling price is $33.50 per unit, the contribution margin per unit sold is closest to:
- Selling price per unit $33.50 - Direct materials (-$5.65) - Direct labor (-$4.10) - Variable manufacturing overhead ($-2.10) - Sales commissions (-$1.35) - Variable administrative expense (-$0.60) -------------------------------------------------------------- Contribution margin per unit $19.70*
Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year: - Direct materials $6,000 - Direct labor $20,000 - Rent on factory building $15,000 - Sales salaries $25,000 - Depreciation on factory equipment $8,000 - Indirect labor $12,000 - Production supervisor's salary $15,000 Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:
1) - Rent on factory building$15,000 + - Depreciation on factory equipment 8,000 + - Indirect labor 12,000 + - Production supervisor's salary 15,000 + = Manufacturing overhead$50,000 ------------------------------------------------------------ 2) Predetermined overhead rate = $50,000 ÷ 20,000 direct labor-hours = $2.50 per direct labor-hour
Dake Corporation's relevant range of activity is 4,000 units to 8,000 units. When it produces and sells 6,000 units, its average costs per unit are as follows: - Direct materials $7.15 - Direct labor $3.40 - Variable manufacturing overhead $1.95 - Fixed manufacturing overhead $3.20 - Fixed selling expense $0.85 - Fixed administrative expense $0.55 - Sales commissions $0.65 - Variable administrative expense $0.55 For financial reporting purposes, the total amount of product costs incurred to make 6,000 units is closest to:
1) Direct materials$7.15 Direct labor $3.40 Variable manufacturing overhead $1.95 = Variable manufacturing cost per unit$12.50 ------------------------------------------------------------- Total variable manufacturing cost($12.50 per unit x 6,000 units produced)$75,000 Total fixed manufacturing overhead cost($3.20 per unit x 6,000 units produced) 19,200 = Total product (manufacturing) cost $94,200*
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: - Total machine-hours 30,000 - Total fixed manufacturing overhead cost $252,000 - Variable manufacturing overhead per machine-hour $2.10 Recently, Job T687 was completed with the following characteristics: - Number of units in the job 10 - Total machine-hours 30 - Direct materials $675 - Direct labor cost $1,050 The amount of overhead applied to Job T687 is closest to:
1) Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) $252,000 + ($2.10 per machine-hour × 30,000 machine-hours) = $252,000 + $63,000 = $315,000 -------------------------------------------------------------- 2) Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $315,000 ÷ 30,000 machine-hours = $10.50 per machine-hour -------------------------------------------------------------- 3)Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $10.50 per machine-hour × 30 machine-hours = $315
Bettie Corporation uses a weighted-average process costing system to collect costs related to production. The following selected information relates to production for October: Materials Conversion --- ------------------------------------------------------------------------- Units completed and transferred out 50,000 50,000 Equivalent units: work in process, October 31 10,000 4,000 = = Total equivalent units 60,000 54,000 ---------------------------------------------------------------------------- Costs in work in process on October 1 $9,000 $5,400 Costs added to production during October 243,000 513,000 = = Total cost $252,000 $518,400 ----------------------------------------------------------------------------- All materials at Bettie are added at the beginning of the production process. What total amount of cost should be assigned to the units in work in process on October 31?
1) total cost $252,000 $518,400 ÷ ÷ Total equivalent units 60,000 54,000 Cost per equivalent unit = $4.20 $9.60 -------------------------------------------------------------- 2) Cost per equivalent unit = $4.20 $9.60 x x Equivalent units of production 10,000 4,000 Cost of ending work in process inventory: $42,000 + $38,400 = $80,400
Raider Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January. units percent complete - Beginning work in process inventory 700 10% - Transferred in from the prior department during January 64,000 - Completed and transferred to the next department during January 63,800 - Ending work in process inventory 7,900 80% The Molding Department's cost per equivalent unit for conversion cost for January was $3.19. How much conversion cost was assigned to the ending work in process inventory in the Molding Department for January?
1)Ending work in process: Conversion: 7,900 units × 80% 6,320 ------------------------------------------------------------- 2)Ending work in process inventory: Equivalent units of production 6,320 x Cost per equivalent unit $3.19 = Cost of ending work in process inventory$20,160.80
Longobardi Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the labor-hours for the upcoming year at 34,700 labor-hours. The estimated variable manufacturing overhead was $5.66 per labor-hour and the estimated total fixed manufacturing overhead was $902,200. The actual labor-hours for the year turned out to be 32,100 labor-hours. The predetermined overhead rate for the recently completed year was closest to:
1)Estimated total manufacturing overhead = $902,200 + ($5.66 per labor-hour × 34,700 labor-hours) = $1,098,602 -------------------------------------------------------------- 2)$1,098,602 ÷ 34,700 labor-hours = $31.66 per labor-hour
An income statement for Sam's Bookstore for the first quarter of the year is presented below: Sales $930,000 Cost of goods sold 655,000 ---------------------------------- Gross margin 275,000 Selling and administrative expenses Selling$105,000 Administration 114,000 ($105,000+114,000)=219,000 Net operating income $56,000 On average, a book sells for $60. Variable selling expenses are $5 per book with the remaining selling expenses being fixed. The variable administrative expenses are 4% of sales with the remainder being fixed. The contribution margin for Sam's Bookstore for the first quarter is:
1)Unit sales = $930,000 ÷ $60 per book = 15,500 books -------------------------------------------------------------- 2)Sales $930,000 Variable expenses: Cost of goods sold (-$655,000) Variable selling ($5 per book × 15,500 books) =(-77,500) Variable administrative (4% of $930,000) = (-37,200) = Contribution margin $160,300
Haffner Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: - Units in beginning work in process inventory 1,300 - Materials costs $8,600 - Conversion costs$9,900 - Percent complete with respect to materials 85% - Percent complete with respect to conversion 55% - Units started into production during the month 7,800 - Units transferred to the next department during the month 6,900 - - Materials costs added during the month$103,500 - Conversion costs added during the month$185,200 Ending work in process inventory: - Units in ending work in process inventory 2,200 - Percent complete with respect to materials 60% - Percent complete with respect to conversion 50% The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to
1)Units transferred to the next department 6,900 6,900 Ending work in process: Materials: (2,200 units × 60%) = 1,320 Conversion: (2,200 units × 50%)= 1,100 = Equivalent units of production 8,220 8,000 -------------------------------------------------------------- 2) Cost of beginning work process inventory$8,600 $9,900 + + Costs added during the period 103,500 185,200 ----------------- Total Cost $112,100 $195,100 -------------------------------------------------------------- Total cost $112,100 / 8220 = $13.637 $195,100 / 8000 =$24.388 Coster per Equivlant = $13.637 & $24.388 ------------------------------------------------------------- 3) $13.637 x 1,320 = $18,000.840 $24.388 x 1,100 = $26,826.800 Total = $18,000.840 + $26,826.800 = $44,828
Bims Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 3,400 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 64,500 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 25,000 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?
1)Units transferred to the next department = Units in beginning work in process + Units started into production - Units in ending work in process = 3,400 + 64,500 - 25,000 = 42,900 ------------------------------------------------------------- Units transferred to the next department 42,900 Conversion: (25,000 units × 60%) = 15,000 -------- Equivalent units of production 57,900
Which of the following journal entries would be used to record direct labor costs in a company having two processing departments (Department A and Department B)? 1) Work in Process XXX Salaries and Wages Payable XXX ------------------------------------------------------------------------ 2) Work in Process-Department A XXX Work in Process-Department B XXX Salaries and Wages Payable XXX ----------------------------------------------------------------------------- 3) Salaries and Wages Expense XXX Salaries and Wages Payable XXX ----------------------------------------------------------------------------- 4) Salaries and Wages Payable XXX Work in Process XXX
2
Which of the following statements about using a plantwide overhead rate based on direct labor is correct? 1)Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs. 2)Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs. 3)The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs. 4)It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.
4) It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.
The costs of direct materials are classified as: 1. Conversion Cost 2.Manufactuiring cost 3. Prime Cost A) Yes, Yes, Yes B) No, No, No C) Yes, Yes, No D) No, Yes, Yes
Choice D
Which of the following is correct concerning reactions to INCREASES in activity? 1) Variable Cost 2) Variable Cost Per Unit A) Increase, Decrease B)Constant, Decrease C) Decrease, Constant D) Increase, Constant
Choice D
A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $5,190 and is paid at the beginning of the first year. Ninety percent of the premium applies to manufacturing operations and ten percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage? Product Period A) $5,190 $0 B) $4,671 $519 C) $3,114 $346 D) $1,557 $173
Choice D* - Annual insurance expense = $5,190 ÷ 3 = $1,730 - Portion applicable to product cost = 0.90 × $1,730 = $1,557 - Portion applicable to period cost = 0.10 × $1,730 = $173
Abburi Company's manufacturing overhead is 60% of its total conversion costs. If direct labor is $52,000 and if direct materials are $28,000, the manufacturing overhead is:
Conversion cost = $52,000 + (0.60 × Conversion cost) ----------------------------- 0.40 × Conversion cost = $52,000 ------------------------------ Conversion cost = $52,000 ÷ 0.40 = $130,000 ------------------------------ Manufacturing overhead = 0.60 × Conversion cost ------------------------------ Manufacturing overhead = 0.60 × $130,000 = $78,000
The following costs were incurred in May: - Direct materials $47,700 - Direct labor $32,800 - Manufacturing overhead $26,400 - Selling expenses $17,900 - Administrative expenses $35,000 Conversion costs during the month totaled:
Conversion cost = Direct labor + Manufacturing overhead = $32,800 + $26,400 = $59,200*
In July, one of the processing departments at Okamura Corporation had beginning work in process inventory of $13,000 and ending work in process inventory of $18,000. During the month, the cost of units transferred out from the department was $148,000. In the department's cost reconciliation report for July, the total cost to be accounted for under the weighted-average method would be:
Cost of ending work in process inventory$18,000 + Cost of units transferred out $148,000 -------------------------------------------------------------- Total cost accounted for$166,000
Haack Inc. is a merchandising company. Last month the company's cost of goods sold was $63,700. The company's beginning merchandise inventory was $20,100 and its ending merchandise inventory was $21,800. What was the total amount of the company's merchandise purchases for the month?
Cost of goods sold = Beginning merchandise inventory + Purchases - Ending merchandise inventory $63,700 = $20,100 + Purchases - $21,800 Purchases = $63,700 - $20,100 + $21,800 = $65,400*
Which of the following is NOT a period cost? - Depreciation of factory maintenance equipment. - Salary of a clerk who handles customer billing. - Insurance on a company showroom where customers can view new products. - Cost of a seminar concerning tax law updates that was attended by the company's controller.
Depreciation of factory maintenance equipment.
The following costs were incurred in May: - Direct materials $41,000 - Direct labor $13,000 - Manufacturing overhead $46,000 - Selling expenses $18,000 - Administrative expenses $15,000 Conversion costs during the month totaled:
Direct labor ($13,000) + Manufacturing overhead ($46,000 ) = $59,000
Perkey Corporation has provided the following information: Cost per Unit - Direct materials$5.00 - Direct labor$2.90 - Variable manufacturing overhead$1.25 - Sales commissions$1.00 - Variable administrative expense$0.55 Cost per Period - Fixed manufacturing overhead $21,000 - Fixed selling and administrative expense $7500 If 4,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:
Direct materials $5.00 + Direct labor 2.90 -------------------------------- Direct manufacturing cost per unit (a)$7.90 x Number of units produced (b) 4,000 ----------------------------------- Total direct manufacturing cost (a) × (b)$31,600
The following costs were incurred in May: - Direct materials $45,200 - Direct labor $29,400 - Manufacturing overhead $23,500 - Selling expenses $20,800 - Administrative expense $28,900 Prime costs during the month totaled:
Direct materials + Direct labor = Prime cost $45,200 + $29,400 = $74,600
Job 910 was recently completed. The following data have been recorded on its job cost sheet: - Direct materials $2,454 - Direct labor-hours 71 labor-hours - Direct labor wage rate $15 per labor-hour - Machine-hours 137machine-hours The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $16 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 910 would be:
Direct materials$2,454 + Direct labor (71 direct labor-hours × $15 per direct labor-hour) 1,065 + Overhead (137 machine-hours × $16 per machine-hour) 2,192 -------------------------------------------------------------- Total manufacturing cost for Job 910 $5,711*
The following data have been recorded for recently completed Job 450 on its job cost sheet. Direct materials cost was $3,044. A total of 46 direct labor-hours and 104 machine-hours were worked on the job. The direct labor wage rate is $15 per labor-hour. The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $13 per machine-hour. The total cost for the job on its job cost sheet would be:
Direct materials$3,044 +------------------------- Direct labor (46 direct labor-hours × $15.00 per direct labor-hour) 690 +-------------------------- Overhead (104 machine-hours × $13.00 per machine-hour) 1,352 =---------------------------- Total manufacturing cost for Job 450 $5,086
Perkey Corporation has provided the following information: Cost per Unit - Direct materials$5.00 - Direct labor$2.90 - Variable manufacturing overhead$1.25 - Sales commissions$1.00 - Variable administrative expense$0.55 Cost per Period - Fixed manufacturing overhead $21,000 - Fixed selling and administrative expense $7500 If 4,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:
Direct materials$5.00 + Direct labor 2.90 ---------------------------- Direct manufacturing cost per unit (a)$7.90 Number of units produced (b) 4,000 ---------------------------- Total direct manufacturing cost (a) × (b)$31,600
Mccaskell Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: - Direct materials $6.30 - Direct labor $3.65 - Variable manufacturing overhead $1.75 - Fixed manufacturing overhead $9.90 - Fixed selling expense $2.25 - Fixed administrative expense $1.80 - Sales commissions $1.00 - Variable administrative expense $0.50 If 8,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:
Direct materials$6.30 Direct labor 3.65 -------------------------------------- Direct manufacturing cost per unit (a)$9.95 x Number of units produced (b) 8,000 --------------------------------------- Total direct manufacturing cost (a) × (b) = $79,600
Thach Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $665,000, variable manufacturing overhead of $3.00 per machine-hour, and 70,000 machine-hours. Recently, Job T321 was completed with the following characteristics: - Number of units in the job 30 - Total machine-hours 90 - Direct materials $630 - Direct labor cost $2,880 The unit product cost for Job T321 is closest to:
Direct materials$630 + Direct labor 2,880 + Manufacturing overhead applied 1,125 = Total cost of Job T321$4,635 ------------------------------ $4,635 / Number of units 30 = Unit product cost (a) ÷ (b)$154.50
Paolucci Corporation's relevant range of activity is 7,800 units to 16,000 units. When it produces and sells 11,900 units, its average costs per unit are as follows: - Direct materials $7.00 - Direct labor $3.90 - Variable manufacturing overhead $1.90 - Fixed manufacturing overhead $3.20 - Fixed selling expense $1.20 - Fixed administrative expense $0.90 - Sales commissions $1.15 - Variable administrative expense $0.80 If 10,900 units are sold, the variable cost per unit sold is closest to:
Direct materials$7.00 Direct labor $3.90 Variable manufacturing overhead $1.90 Sales commissions $1.15 Variable administrative expense $0.80 ------------------------------------------------------------- Variable cost per unit sold $14.75*
Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: - Total direct labor-hours 40,000 - Total fixed manufacturing overhead cost $96,000 - Variable manufacturing overhead per direct labor-hour$3.00 Recently, Job P951 was completed with the following characteristics: -Number of units in the job 20 -Total direct labor-hours 100 -Direct materials $755 -Direct labor cost $4,000 The total job cost for Job P951 is closest to:
Direct materials$755 + Direct labor 4,000 + Manufacturing overhead applied 540 ----------------------------- Total cost of Job P951 $5,295
Arona Corporation manufactures canoes in two departments, Fabrication and Waterproofing. In the Fabrication Department, fiberglass panels are attached to a canoe- shaped aluminum frame. The canoes are then transferred to the Waterproofing department to be coated with sealant. Arona uses a weighted-average process cost system to collect costs in both departments. All materials in the Fabrication Department are added at the beginning of the production process. On July 1, the Fabrication Department had 30 canoes in process that were 20% complete with respect to conversion cost. On July 31, Fabrication had 20 canoes in process that were 40% complete with respect to conversion cost. During July, the Fabrication Department completed 90 canoes and transferred them to the Waterproofing Department. What are the Fabrication Department's equivalent units of production related to materials for July?
Equivalent units of production = Units transferred to the next department or to finished goods + Equivalent units in ending work in process inventory = 90 + 1.00 × 20 = 110
Tarrant Corporation has two manufacturing departments--Casting and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: 1) Casting 2) Finishing 3) Total - Estimated total machine-hours (MHs) 1) 1,000 2) 4,000 3),5000 - Estimated total fixed manufacturing overhead cost 1) $5,700 2) $11,200 3) $16,900 - Estimated variable manufacturing overhead cost per MH 1) $1.30 2) $2.90 Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. The departmental predetermined overhead rate in the Casting Department is closest to:
Estimated fixed manufacturing overhead $5,700 + Estimated variable manufacturing overhead ($1.30 per MH × 1,000 MHs) = $7,000 ------------------------------ $7,000 / Estimated total machine-hours (b) 1,000MHs = $7.00 per MH
Krier Corporation uses a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $738,000 and 30,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $792,000 and 31,500 total direct labor-hours during the period. The predetermined overhead rate is closest to:
Estimated total fixed manufacturing overhead $738,000 / Estimated activity level 30,000 = Predetermined overhead rate $24.60
If a job is not completed at year end, then no manufacturing overhead cost would be applied to that job when a predetermined overhead rate is used.
False
If the allocation base in the predetermined overhead rate does not drive overhead costs, it will nevertheless provide reasonably accurate unit product costs because of the averaging process.
False
Process costing is employed in industries that produce basically homogeneous products such as bricks, flour, or cement but would not be appropriate for assembly-type operations such as those that manufacture computers. Group startsTrue or False
False
The amount of overhead applied to a particular job equals the actual amount of overhead caused by the job.
False
The equivalent units in beginning work in process inventory plus the equivalent units in ending work in process inventory equals the units transferred out plus the equivalent units for the work done during the period.
False
The following journal entry would be made in a processing costing system when units that have been completed in the final processing department are transferred to the finished goods warehouse: Finished Goods xxx Materials xxx
False
When computing the cost per equivalent unit, it is necessary to consider the percentage completion of the units in beginning inventory under the weighted-average method.
False
Fasheh Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: - Direct materials $5.50 - Direct labor $3.90 - Variable manufacturing overhead $1.30 - Fixed manufacturing overhead $13.50 - Fixed selling expense $2.25 - Fixed administrative expense $1.80 - Sales commissions $0.50 - Variable administrative expense $0.45 If 10,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to
Fixed manufacturing overhead per unit $13.50 x Number of units produced* 9,000 Total fixed manufacturing overhead cost = $121,500
Schonhardt Corporation's relevant range of activity is 4,400 units to 10,000 units. When it produces and sells 7,200 units, its average costs per unit are as follows: - Direct materials $7.45 - Direct labor $3.90 - Variable manufacturing overhead $1.50 - Fixed manufacturing overhead $4.00 - Fixed selling expense $1.10 - Fixed administrative expense $0.80 - Sales commissions $0.90 - Variable administrative expense $0.80 If 9,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:
Fixed manufacturing overhead per unit$4.00 x Number of units produced 7,200 -------------------------------------------------------------- Total fixed manufacturing overhead cost$28,800*
Sargent Corporation applies overhead cost to jobs on the basis of 90% of direct labor cost. If Job 210 shows $18,810 of manufacturing overhead cost applied, how much was the direct labor cost on the job?
Manufacturing overhead applied = Predetermined overhead rate × Amount of the allocation base incurred $18,810 = 0.90 × Direct labor cost Direct labor cost = $18,810 ÷ 0.90 = $20,900*
The following data were taken from the accounting records of the Mixing Department of Kappa Corporation which uses the weighted-average method in its process costing system: Beginning work in process inventory: - Cost $19,000 - Units 30,000units - Percent completion with respect to materials 100% - Percent completion with respect to conversion 60% - Units completed and transferred out 82,000 units Cost per equivalent unit: - Material $1.50 - Conversion $0.75 The cost of units transferred out was:
Materials Conversion Units transferred next department 82,000 82,000 x x Cost per equivalent unit $1.50 $0.75 -------------------------------------------------------------- Cost of units completed: $123,000 + $61,500 = $184,500
Walbin Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 19,000 units, 100% complete with respect to materials cost and 30% complete with respect to conversion costs. The total cost in the beginning work in process inventory was $25,600. A total of 55,000 units were transferred out of the department during the month. The costs per equivalent unit were computed to be $1.80 for materials and $3.50 for conversion costs. The total cost of the units completed and transferred out of the department was:
Materials Conversion Units transferred to department 55,000 55,000 Cost per equivalent unit $1.80 $3.50 ------- -------- $99,000 + 192,500 total: $291,500
Which of the following is the correct formula to compute the predetermined overhead rate?
Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Estimated total units in the allocation base
Shelp Corporation has provided the following information Cost per Unit - Direct materials$7.15 - Direct labor$3.35 - Variable manufacturing overhead$1.40 - Sales commissions$0.50 - Variable administrative expense$0.50 Cost per Period - Fixed manufacturing overhead $81,000 - Fixed selling and administrative expense $40,500 For financial reporting purposes, the total amount of period costs incurred to sell 9,000 units is closest to:
Sales commissions$0.50 Variable administrative expense 0.50 ------------------------------------------ Variable selling and administrative expense per unit$1.00 ------------------------------------------ Total variable selling and administrative expense ($1.00 per unit × 9,000 units sold) $9,000 x Total fixed selling and administrative expense 40,500 ------------------------------------------ Total period (nonmanufacturing) cost $49,500
Tirri Corporation has provided the following information: Direct materials $7.20 Direct labor $4.50 Variable manufacturing overhead $1.25 Fixed manufacturing overhead $23,800 Sales commissions $1.30 Variable administrative expense $0.55 Fixed selling and administrative expense $8,200 If the selling price is $27.50 per unit, the contribution margin per unit sold is closest to:
Selling price per unit $27.50 Direct materials (-$7.20) Direct labor (-$4.50) Variable manufacturing overhead (-$1.25) Sales commissions (-$1.30) Variable administrative expense (-$0.55) ------------------------------------------------------------ Contribution margin per unit $12.70
Kogler Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: - Direct materials $5.30 - Direct labor $5.60 - Variable manufacturing overhead $1.35 - Fixed manufacturing overhead $11.00 - Fixed selling expense $3.90 - Fixed administrative expense $1.70 - Sales commissions $0.50 - Variable administrative expense $0.45 If the selling price is $29.00 per unit, the contribution margin per unit sold is closest to:
Selling price per unit $29.00 - Direct materials (-$5.30) - Direct labor (-$5.60) - Variable manufacturing overhead (-$1.35) - Sales commissions (-$0.50) Variable administrative expense (-$0.45) = Variable cost per unit sold 13.20 -------------------------------------------------------------- $29.00 per unit - Variable cost per unit sold 13.20 = Contribution margin per unit $15.80*
Kneeland Corporation has provided the following information Cost per Unit - Direct materials$6.80 - Direct labor$4.15 - Variable manufacturing overhead$1.65 - Sales commissions$1.00 - Variable administrative expense$0.50 Cost per Period - Fixed manufacturing overhead $121,500 - Fixed selling and administrative expense $40,500 If 10,000 units are produced, the total amount of manufacturing overhead cost is closest to:
Total variable manufacturing overhead cost ($1.65 per unit × 10,000 units)$16,500 + Total fixed manufacturing overhead cost 121,500 ---------------------------------- Total manufacturing overhead cost (a)$138,000
Perteet Corporation's relevant range of activity is 4,500 units to 9,500 units. When it produces and sells 7,000 units, its average costs per unit are as follows: - Direct materials $6.60 - Direct labor $3.35 - Variable manufacturing overhead $1.70 - Fixed manufacturing overhead $3.80 - Fixed selling expense $0.80 - Fixed administrative expense $0.50 - Sales commissions $0.60 - Variable administrative expense $0.65 If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:
Total variable manufacturing overhead cost ($1.70 per unit × 5,000 units)$8,500 + Total fixed manufacturing overhead cost ($3.80 per unit × 7,000 units*) 26,600 -------------------------------------------------------------- Total manufacturing overhead cost $35,100*
A bill of materials is a document that lists the type and quantity of each type of direct material needed to complete a unit of product.
True
A direct cost is a cost that can be easily traced to the particular cost object under consideration.
True
A factory supervisor's salary would be classified as an indirect cost with respect to a unit of product.
True
A step-variable cost is a cost that is obtained in large chunks and that increases or decreases only in response to fairly wide changes in activity.
True
Actual overhead costs are not assigned to jobs in a job costing system.
True
An employee time ticket is an hour-by-hour summary of the employee's activities throughout the day.
True
Conversion cost is the sum of direct labor cost and manufacturing overhead cost.
True
Depreciation on equipment a company uses in its selling and administrative activities would be classified as a period cost.
True
If managers are reluctant to lay off direct labor employees when activity declines leads to a decrease in the ratio of variable to fixed costs.
True
In calculating cost per equivalent unit under the weighted-average method, prior period costs are combined with current period costs.
True
Job-order costing would be more likely to be used than process costing in situations where many different products or services are produced each period to customer specifications.
True
The costs attached to products that have not been sold are included in ending inventory on the balance sheet.
True
The Assembly Department started the month with 25,600 units in its beginning work in process inventory. An additional 310,600 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 30,600 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month? Multiple Choice
Units completed and transferred out = 25,600 + 310,600 - 30,600 = 305,600
Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 400 units. The costs and percentage completion of these units in beginning inventory were: Cost Percent Complete Material Cost $5,500 50% Conversion Cost $1,700 20% A total of 6,800 units were started and 6,100 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: Cost Material Costs $158,700 Conversion Costs $120,400 The ending inventory was 85% complete with respect to materials and 75% complete with respect to conversion costs. How many units are in ending work in process inventory in the first processing department at the end of the month?
Units in beginning work in process + Units started into production - Units transferred to the next department = Units in ending work in process 400 + 6,800 - 6,100 = 1,100
The Werner Corporation uses the weighted-average method in its process costing system. The company recorded 24,400 equivalent units for conversion costs for November in a particular department. There were 4,000 units in the ending work in process inventory on November 30 which were 60% complete with respect to conversion costs. The November 1 work in process inventory consisted of 5,000 units which were 40% complete with respect to conversion costs. A total of 22,000 units were completed and transferred out of the department during the month. The number of units started during November in the department was:
Units started into production = 4,000 + 22,000 - 5,000 = 21,000
Tript Corporation has a process costing system and uses the weighted-average method. The company had 3,000 units in work in process on February 1 that were 60% complete with respect to conversion costs. During the month, 10,000 units were completed. At the end of the month, 4,000 units remained in work in process that were 40% complete with respect to conversion costs. Materials are added at the beginning of the process. The equivalent units for February for conversion costs were:
Units transferred to the next department 10,000 + Conversion: (4,000 units × 40%) 1,600 ----------------------------------------------------------- Equivalent units of production 11,600
Haffner Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: - Units in beginning work in process inventory 500 - Materials costs $7,800 - Conversion costs$9,100 - Percent complete with respect to materials 85% - Percent complete with respect to conversion 55% - Units started into production during the month 7,000 - Units transferred to the next department during the month 6,100 - - Materials costs added during the month$102,700 - Conversion costs added during the month$184,400 Ending work in process inventory: - Units in ending work in process inventory 1,400 - Percent complete with respect to materials 60% - Percent complete with respect to conversion 50% What are the equivalent units for conversion costs for the month in the first processing department?
Units transferred to the next department 6,100 Ending work in process: + Conversion: (1,400 units × 50%) 700 -------------------------------------------------------------- Equivalent units of production 6,800
Inacio Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: - Units in beginning work in process inventory 800 - Materials costs$12,900 - Conversion costs$5,000 - Percent complete with respect to materials 75% - Percent complete with respect to conversion 20% - Units started into production during the month 9,500 - Units transferred to the next department during the month 8,400 - - Materials costs added during the month$172,000 - Conversion costs added during the month$240,200 Ending work in process inventory: - Units in ending work in process inventory 1,900 - Percent complete with respect to materials 90% - Percent complete with respect to conversion 30% What are the equivalent units for conversion costs for the month in the first processing department?
Units transferred to the next department 8,400 Ending work in process: + Conversion: (1,900 units × 30%) 570 -------------------------------------------------------------- Equivalent units of production 8,970
Carrington Corporation produces canned vegetable soup. The company uses the weighted-average method in its process costing system. The company sold 300,000 units in January. Data concerning inventories follow: Inventory at January 1: - Work in process None - Finished goods 75,000 units Inventory at January 31: - Work in process (75% complete with respect to conversion costs) 24,000 units - Finished goods 60,000 units What were the equivalent units for conversion costs for January?
Weighted-average method Units in beginning work in process inventory + Units started into production or transferred in = Units in ending work in process inventory + Units completed and transferred out Finished Goods Inventory: 75,000 + Units completed and transferred to finished goods = 60,000 + 300,000 Units completed and transferred to finished goods = 60,000 + 300,000 - 75,000 = 285,000 -------------------------------------------------------------- - Units transferred to the next department 285,000 + - Ending work in process inventory:Conversion: (24,000 units × 75%) 18,000 = Equivalent units of production 303,000
Kota Toy Corporation manufactures lizard dolls in two departments, Molding and Assembly. In the Molding Department, plastic is injected into a lizard-shaped mold. The dolls that come out of the molds are then transferred to the Assembly Department where hair is applied. Kota uses a weighted-average process cost system to collect costs in both departments. On January 1, the Molding Department had 4,000 dolls in process. These dolls were 100% complete with respect to direct materials and 70% complete with respect to conversion cost. During January, Molding completed 79,000 dolls. On January 31, Molding had 7,000 dolls in work in process. These dolls were 100% complete with respect to direct materials and 25% complete with respect to conversion cost. What account would Kota debit to record the transfer of dolls out of the Molding Department?
Work in Process -- Assembly* - When the goods are transferred from the Molding Department to the Assembly Department, Work in Process - Assembly is debited, and Work in Process - Molding is credited.