Cost Accounting Final Review
Puritan Apparels is a clothing retailer. Unit costs associated with one of its products, Product AHF 130, are as follows: Direct materials $130 Direct manufacturing labor 60 Variable manufacturing overhead 55 Fixed manufacturing overhead 37 Sales commissions (2% of sales) 14 Administrative salaries 18 Total $314 What are the direct variable manufacturing costs per unit associated with Product AHF 130?
$245
Jupiter Corporation incurred fixed mfg costs of 18,000 during 2017. Other information for 2017 includes: The budgeted denominator level is 2,400 units Units produced total 2,700 units Units sold total 1,900 units Variable cost per unit is $4 Beginning inventory is zero The fixed mfg cost rate is based on the budgeted denominator level. Under absorption costing, total mfg costs expensed on the income statement (excluding adjustments for variances) total __________________.
$21,850
All Rite Manufacturing reported the following: Revenue 460,000 Beg Inv DM 26,000 Purchase DM 156,000 End Inv DM 14,000 DMfgL 30,000 ID Mfg Costs 41,000 Beg Inv FG 46,000 COGMfg 239,000 End Inv FG 45,000 Op Costs 150,000 What is Leslie's cost of goods sold?
$240,000
Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $110,000 11,000 hours Account billing $210,000 6,000,000 lines Account verification accounts $79,000 40,000 accounts Correspondence letters $51,750 9,000 letters Total costs $450,750 The above activities are used by Departments A and B as follows: Dept A Dept B Account inquiry hours 2,500 hours 4,000 hours Account billing lines 700,000 lines 550,000 lines Account verification accounts 13,000 accounts 11,000 accounts Correspondence letters 2,000 letters 2,400 letters How much of the account inquiry cost will be assigned to Department A?
$25,000
Fast Track Auto produces and sells an auto part for 60/unit. In 2017, 120,000 parts were produced and 75,000 units were sold. Other information for the year includes: DM 20/unit DMfgL 5/unit Var Mfg costs 3/unit Sales commissions 7/part Fixed mfg costs 760,000/year Admin exp fixed 270,000/year What is the inventoriable cost per unit using variable costing?
$28
Stark Corporation has two departments, Car rental and Truck Rental. Central costs may be allocated to the two departments in various ways. Car Rental Truck Rental # of vehicles in fleet 840 480 # of employees 120 50 Sales 760,000 400,000 If admin expense of $52,955 is allocated on the basis of number of employees, the cost per cost driver rate would be ____________-.
$311.50
SaleCo sells 8,000 units resulting in $100,000 of sales revenue, $40,000 of variable costs, and $45,000 of fixed costs. To achieve $150,000 in operating income, sales must total __________________.
$325,000
Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Case High School Job Direct materials $40,000 $2,000 Direct labor $15,000 $400 Manufacturing overhead costs $45,000 Machine-hours 100,000 mh 900 mh What amount of manufacturing overhead costs will be allocated to this job?
$405
Quality Stores, Inc., sells several products. Information of average revenue and costs is as follows: Selling price per unit $22 Variable costs per unit: Direct material $5 Direct manufacturing labor $1.80 Manufacturing overhead $0.4 Selling costs $2 Annual fixed costs $98,000 The revenues that the company must earn annually to make a profit of $146,000 are _____________.
$419,375
Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been complied: Product # Setups # Components #DL Hours Standard 13 7 260 Deluxe 28 17 230 OH Costs $73,800 $79,200 Number of setups and number of components are identified as activity cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model?
$46,500
Columbus Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Labor $328,000 8,000 hours Gas $36,000 6,000 gallons Invoices $180,000 7,500 invoices The above activities used by their three departments are: Lawn Department Bush Department Plowing Department Labor 3,100 hours 1,200 hours 3,700 hours Gas 1,700 gallons 900 gallons 3,400 gallons Invoices 1,500 invoices 300 invoices 5,700 invoices How much of the labor cost will be assigned to the Bush Dept?
$49,200
Stores Mfg sells a marble slab for $1,200. Fixed costs are $34,000, while the variable costs are $400 per slab. The company currently plans to sell 220 slabs this month. What is the margin of safety assuming 85 slabs are actually sold?
$50,400
Buildz Manufacturing currently produces 3,000 tables per month. The following per unit data for 3,000 tables apply for sales to regular customers: Direct materials $60 Direct manufacturing labor 14 Variable manufacturing overhead 17 Fixed manufacturing overhead 34 Total manufacturing costs $125 The plant has capacity for 5000 tables and is considering expanding production to 5000 tables. What is the total cost of producing 5000 tables?
$557,000
Canton's Corporation manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period: Cost pool OH Costs Activity cost driver Material Handling 50,000 91,000 orders Machine Maint. 320,000 15,000 maint hours Setups 226,000 45,200 setups Inspections 126,000 21,000 inspections Total support costs 722,000 Production units: Production Estimates Regular = 8,000,000 units Jumbo = 16,000,000 units Machine Hours = 600,000 mh Labor Hours = 1,200,000 dlh Expected direct costs amounts to 916,000 for the period. Support cost requirements of both products are substantially different from one another. Canton's uses an ABC costing system. The inspection activity cost driver rate is _____________.
$6.00
Three Bears Manufacturing produces an auto-quartz watch movement called OM362. Three Bears expects to sell 17,000 units of OM362 and to have an ending finished goods inventory of 3000 units. Currently, it has a beginning finished goods inventory of 800 units. Each unit of OM362 requires two labor operations, two labor hours of assembling and one labor hour of polishing. The DL rate for assembling is 12 per assembling hour and the DL rate for polishing is 13.50 per polishing hour. The expected cost of DL for OM362 is _________.
$720,000
Smith Office Equipment Company's budgeted manufacturing overhead is $4,500,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 60,000. What is the manufacturing overhead rate?
$75.00
Wallace Company provides the following data for next year: Month Budgeted Sales January 127,000 February 112,000 March 138,000 April 152,000 The gross profit rate is 35% of sales. Inventory at the end of December is 29,600 and target ending inventory levels are 30% of next month's sales, stated at cost. What is the amount of purchases budgeted for February?
$77,870
Rapid Cabinet Makers Inc. provided the following information for last month: Sales $35,000 Variable costs 12,000 Fixed costs 3,000 Operating income $20,000 If sales reduce to half the amount in the next month, what is the projected operating income?
$8,500
Sparkle Jewelry sells 800 units resulting in $10,000 of sales revenue, $3,000 of variable costs, and $1,500 of fixed costs. Contribution margin per unit is ________. (Round the final answer to the nearest cent.)
$8.75
Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $120,000 12,000 hours Account billing $270,000 6,000,000 lines Account verification accounts $131,250 70,000 accounts Correspondence letters $24,000 4,000 letters Total costs $545,250 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,800 hours 4,300 hours Account billing lines 700,000 lines 550,000 lines Account verification accounts 9,000 accounts 7,000 accounts Correspondence letters 1,500 letters 1,900 letters How much of the total costs will be assigned to Department A?
$85,375
Frazer Corp sells several products. Information of average revenue and costs is as follows: Selling price per unit $35.00 Variable costs per unit: $7.00 Direct manufacturing labor $1.15 Manufacturing overhead $0.85 Selling costs $2.80 Annual fixed costs $125,000 If the company decides to lower its selling price by 14.25%, the operating income is reduced by ________.
$89,820
Jalbert Incorporated planned to use materials of $9 per unit but actually used materials of $14 per unit, and planned to make 1,640 units but actually made 1,770 units. The sales-volume variance for materials is ________. A) $1,170 unfavorable B) $1,820 unfavorable C) $1,170 favorable D) $1,820 favorable
1,170 favorable
Craylon Manufacturing produces a single product that sells for $130. Variable costs per unit equal $30. The company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. Suppose that management believes that a 10,000 increase in monthly advertising expense will result in a considerable increase in sales. Sales must increase by __________ to justify this additional expenditure.
100 units
The following information is for Alex Corp: Product X: Rev $11.50 Var Cost $4.00 Product Y: Rev $37.00 Var Cost $12.00 Total Fixed Cost $48,000 What is the break-even point assuming the sales mix consists of two units of Product X and one unit of Product Y?
1200 units of Y and 2400 units of X
Swan Textiles Inc produces and sells a decorative pillow for 98.00/unit. In the first month of operation, 2,300 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Var mfg costs 23/unit Var mkt costs 6/unit Fixed mfg costs 15/unit Admin exp fixed 21/unit End inv DM -0- WIP -0- FG 500 units What is the contribution margin using variable costing?
124,200
Zebra Corporation currently produces baseball caps in an automated process. Expected production per month is 20,000 units, DM costs are 5.50 per unit, and mfg OH costs are 70,000 per month, mfg OH is entirely costs. What is the flexible budget for 14,000 and 20,000 units, respectively?
147,000; 180,000
Ruben is a travel agent. He intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline for $140 each. The round-trip tickets will be sold for $210 each and the airline intends to reimburse Ruben for any unsold ticket packages. Fixed costs include $5,300 in advertising costs. How many ticket packages will Ruben need to sell in order to achieve $100,000 of operating income?
1505 packages
Home Plate Corporation manufactures baseball uniforms and uses budgeted machine hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: Budgeted output units 7,000 units Budgeted machine hours 19,000 hours Budgeted var mfg oh costs for 7,000 units 119,000 Actual output units produced 6,000 units Actual machine hours used 18,000 hours Actual var mfg OH costs 108,000 What is the budgeted variable overhead cost rate per output unit?
17.00
Lazy Guy Corporation manufactured 4,000 chairs during June. The following variable overhead data relates to June: Budgeted variable overhead cost per unit $10.00 Actual variable manufacturing overhead cost $49,000 Flexible-budget amount for variable manufacturing overhead $46,800 Variable manufacturing overhead efficiency variance $720 unfavorable What is the variable OH flexible budget variance?
2,200 unfavorable
Raposa Inc produces a special line of plastic toy racing cars. Raposa Inc produces the cars in batches. To manufacture a batch of the cars, Raposa Inc must set up the machines and molds. Setup costs are batch level costs because they are associated with batches rather than individual units of products. A separate setup dept is responsible for setting up machines and molds for different styles of car. Set up OH costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup hours. The following info pertains to June 2015: Actual Amts Static Budget Units produced & sold 14,800 11,800 Batch size (#units/batch) 285 245 Setup hrs/batch 2 2.75 Var OH cost/setup hr 48 45 Total fixed setup OH costs 8,670 6,620 Calculate flexible budget variance for variable OH setup costs.
2,490 favorable
Sales of Blistre Autos are $380,000, variable cost is $230,000, fixed cost is $90,000, tax rate is 40%. Calculate the operating leverage of the company.
2.50 times
Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,400, variable costs are $800, and fixed costs are $90,000. How many dresses must the Bridal Shoppe sell to yield after-tax net income of $20,000, assuming the tax rate is 40%?
206 dresses
Orange Corporation has budgeted sales of 23,000 units, targeted ending finished goods inventory of 4,000 units, and beginning finished goods inventory of 5,000 units. How many units should be produced next year?
22,000 units
Sparkle Jewelry sells 800 units resulting in $90,000 of sales revenue, $30,000 of variable costs, and $18,000 of fixed costs. Breakeven point in units is ______________________.
240 units
Cold Products Corporation manufactured 32,000 ice chests during September. The variable overhead cost allocation is $13.45 per machine hour. The following variable overhead data pertain to September: Actual Budgeted Production 32,000 units 26,000 units Machine Hours 15,200 hours 10,800 hours Variable OH cost per MH 13.25 13.45 What is the variable overhead spending variance?
3,040 favorable
Jalbert Incorporated planned to use materials of $11 per unit but actually used materials of $13 per unit, and planned to make 1,590 units but actually made 1,780 units. The flexible-budget amount for materials is ________.
3,560 unfavorable
Standard material cost per kg of raw material is 6.50. Standard material allowed per unit is 5kg. Actual material used per unit is 6.00 kg. Actual cost per kg is 6.00. What is the standard cost per output unit?
32.50
Schooner Corporation used the following data to evaluate its current operating system. The company sells items for $23 each and used a budgeted selling price of $23 per unit. Actual Budgeted Units sold 171,000 units 187,000 units Variable costs $1,081,000 $1,285,000 Fixed costs $800,000 $774,000 What is the static-budget variance of revenues?
368,000 unfavorable
Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products. Budgeted quantity Budgeted price Direct materials 2 pounds $2.30 per pound Direct labor 0.40 hours $15.00 per hour During September, MCP produced and sold 1,000 units using 2,200 pounds of direct materials at an average cost per pound of $2.00 and 360 direct labor hours at an average wage of $15.15 per hour. The direct material efficiency variance during September is _________.
460 unfavorable
Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units 3,000 units Budgeted machine-hours 15,000 hours Budgeted variable mfg overhead costs for 3,000 units $180,000 Actual output units produced 3,350 units Actual machine-hours used 14,700 hours Actual variable manufacturing overhead costs $250,000 What is the flexible-budget amount for variable manufacturing overhead?
49,000 unfavorable
Hockey Accessories Corporation manufactured 23,000 duffle bags during March. The following fixed overhead data pertains to March: Actual Static Budget Production 23,000 units 23,500 units Machine hours 13,100 hours 14,100 hours Fixed OH cost for March 626,100 634,500 What is the amount of fixed overhead allocated to production?
621,000
SaleCo sells 8,000 units resulting in $130,000 of sales revenue, $35,000 of variable costs, and $55,000 of fixed costs. The contribution margin percentage is ________.
73.08%
Ms Sopia Jones the company president has heard there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some info about the company for 2017 is as follows: Total fixed mfg oh 184,000 Total other fixed expense 205,000 Total var mfg expense 240,000 Total other var expense 280,000 Units produced 70,000 units Budgeted production 70,000 units Units sold 50,000 units Selling price 40 What are the breakeven sales in units using absorption costing if the production units are actually 50,000?
8,601 units
The following information pertains to Monroe Co: Month Sales Purchases January 66,000 34,000 February 80,000 49,000 March 105,000 58,000 Cash is collected from customers in the following manner: Month of sale 40% Month following the sale 60% 45% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month. Labor costs are 20% of sales. Other operating costs are 35,000 per month (including 9,000 of depreciation) Both of these are paid in the month incurred. The cash balance on March 1 is 10,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000. How much cash will be collected from customers in March?
90,000
For 2018, Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base. The estimated manufacturing overhead costs are $360,000 and estimated machine hours are 50,000. The actual manufacturing overhead costs are $480,000 and actual machine hours are 60,000. What is the difference between the budgeted and the actual manufacturing overhead using job costing?
$0.80
Dalrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $12,500. The budgeted number of nozzles to be inserted is 10,000. What is the budgeted indirect cost allocation rate for this activity?
$1.25
First Class Inc expects to sell 26,000 pool cues for 14 each, DM costs are 4, DmfgL is 4, and Mfg OH is .86 per pool cue. The following inventory levels apply to 2019: Beg Inv End Inv DM 30,000 units 30,000 units WIP Inv 0 units 0 units FG Inv 1,800 units 2,700 units What are the 2019 budgeted costs for DM, DMfgL, and Mfg OH, respectively?
$107,600; $23,134
Sky High Company has two departments, X and Y. The following estimates are for the coming year: X Y Direct manufacturing labor-hours 20,000 30,000 Machine-hours 30,000 20,000 Manufacturing overhead $300,000 $330,000 A single indirect-cost rate based on direct manufacturing labor-hours for the entire plant is ________.
$12.60 per DL hour
Better Products Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $16 per direct labor-hour. The following data are obtained from the accounting records for October 2018: Direct materials $ 390,000 Direct labor (3,300 hours @ $17/hour) 35,000 Indirect labor 22,000 Plant facility rent 58,000 Depreciation on plant machinery and equipment 41,000 Sales commissions 18,000 Administrative expenses 25,000 The actual amount of manufacturing overhead costs incurred in October 2018 totals ________.
$121,000
The American West Co manufactures several different products. Unit costs associated with product ORD210 as follows: DM 90 DMfgL 24 Var Mfg OH 20 F Mfg OH 10 Sales Comm (2% sales) 18 Admin Salaries 38 Total 200 What are the inventoriable costs per unit associated with Product ORD210?
$144
Mary's Baskets Company expects to manufacture and sell 28,000 baskets in 2019 for $7 each. There are 4,000 baskets in beginning finished goods inventory with target ending inventory of 9,000 baskets. The company keeps no work-in-process inventory. What amount of sales revenue will be reported on the 2019 budgeted income statement?
$196,000
X-Industries manufactures 3-D printers. For each unit, $3,500 of direct material is used and there is $2,800 of direct manufacturing labor at $12 per hour. Manufacturing overhead is applied at $18 per direct manufacturing labor hour. Calculate the profit earned on 42 units if each unit sells for $11,000.
$21,000
When 25,000 units are produced, variable costs are $9.00 per unit. Therefore, when 15,000 units are produced ___________.
variable costs will remain at $9.00 per unit
Which of the following statements about ABC is not true?
ABC should be implemented solely by accountants as they are the guardians of the accounting information system.
The Robinson Corp manufactures auto parts. During the year, the company sold $5,500,000 of parts that had a cost of $3,300,000. At year end, these are the balances for COGS and its manufacturing overhead accounts: COGS 3,300,000 Mfg OH allocated 1,000,000 Mfg OH control 1,895,000 What would be the correct journal entry to close out the OH accounts assuming that the write-off to COGS approach used?
COGS 895,000 Mfg OH allocated 1,000,000 Mfg OH control 1,895,000
Which account is debited if materials costing 100,000 are sold?
Cost of Goods Sold account
A manufacturer utilizes three separate indirect cost pools. Which of the following is true?
Each indirect cost pool utilizes a separate cost allocation rate
Which of the following is true of indirect costs?
Indirect costs cannot be traced to a particular cost object in an economically feasible way.
Which of the following is not one of the reasons why absorption costing might also be used for internal reporting?
It is more useful for managerial decision making than variable costing
Which of the following is true of cost accounting?
It is part of both management and financial accounting systems.
Johnson Superior Products Inc. produces hospital equipment and the setup requirements vary from product to product. Johnson produces its products based on customer orders and uses ABC costing. In one of its indirect cost pools, setup costs and distribution costs are pooled together. Costs in this pool are allocated using number of customer orders for the easiness of costing operations. Based on the information provided, which of the following arguments is valid?
Johnson has failed to use the correct cost driver as the cost allocation base for setup costs
Which of the following is a reason why top managers want lower-level managers to participate in the budgeting process?
To benefit from their experience with th9e day to day aspects of running the business.
Which of the following is true of CVP analysis?
Total revenues and total costs are linear in relation to output units.
When machine-hours are used as an overhead cost-allocation base and annual leasing costs for equipment unexpectedly increase the most likely result would be to report an _________________.
unfavorable fixed overhead flexible-budget variance
While calculating the costs of products and services, a standard costing system ________.
uses standard costs to determine the cost of products
The contribution-margin format is used for ________________.
variable costing income statement
In ____________________, fixed manufacturing costs are included as inventoriable costs.
absorption costing
Which of the following statements is true of absorption costing?
absorption costing allocates fixed mfg oh to actual units produced during the period
Process costing _____________.
allocates all product costs, including materials, and labor
An efficiency variance reflects the difference between ________.
an actual input quantity and a budgeted input quantity
Budgeted production equals ___________.
budgeted unit sales + targeted ending finished goods inventory - beginning finished goods inventory
An unfavorable sales-volume variance could result from _____________.
competitors taking market share
In a flexible budget _________________.
fixed costs are kept at the same level of static budget
Management accounting ____________
focuses on estimating future revenues, costs, and other measures to forecast activities and their results
Responsibility accounting _____________.
focuses on who should be asked about the information
Cost behavior refers to __________________.
how costs react to a change in the level of activity
When 24,000 units are produced, fixed costs are $24.00 per unit. Therefore, when 20,000 units are produced, fixed costs will ________.
increase to $28.80 per unit
Activity based costing system differs from traditional costing systems in the treatment of _____________.
indirect costs
Which of the following statements about the direct/indirect cost classification is true?
indirect costs are always allocated
Costs that are initially recorded as assets and expensed when goods are sold are called ______________.
inventoriable costs
A budget serves as much as a control tool as a planning tool because _______________.
it is a benchmark against which actual performance can be compared
In designing strategy, a company must match its opportunities in the marketplace with _________
its resources and capabilities
An unfavorable production volume variance ____________.
measures the amount of extra fixed costs planned for but not used
Which of the following measures capacity levels in terms of demand for the output of the plant?
normal capacity utilization and master budget capacity utilization
Budgeted costs are __________________.
planned or expected costs
A purchasing manager's performance is best evaluated using information such as:
price and terms bargaining effectiveness, achievement of quality goals, and direct materials price variance
Rally Synthesis Inc. manufactures and sells 60 bottles per day. Fixed costs are $25,000 and the variable costs for manufacturing 60 bottles are $30,000. Each bottle is sold for $1,400. How would the daily profit be affected if the daily volume of sales drop by 10%?
profits are reduced by $5,400
Ways to "produce for inventory" that result in increasing operating income include ________.
switching production to products that absorb the most amounts of fixed manufacturing costs
Operating decisions primarily deal with
the best use of scarce resources
A variance is ____________.
the difference between an actual result and a budgeted performance
