Managerial Accounting Final
THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW. The Swiss Clock Shop manufactures clocks on a highly automated assembly line. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Swiss Clock Shop uses weighted-average costing. Data for the Assembly Department for June 20x3 are: Work in process, beginning inventory 250 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 800 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 20x3: Work in process, beginning inventory: Direct materials $180,000 Conversion costs $270,000 Direct materials costs added during June $1,000,000 Conversion costs added during June $1,000,000 What is the conversion cost per equivalent unit in June?
$1,254.32 (270,000+1,000,000= 1,270,000/1,012.5)
THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW. The Swiss Clock Shop manufactures clocks on a highly automated assembly line. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Swiss Clock Shop uses weighted-average costing. Data for the Assembly Department for June 20x3 are: Work in process, beginning inventory 250 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 800 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 20x3: Work in process, beginning inventory: Direct materials $180,000 Conversion costs $270,000 Direct materials costs added during June $1,000,000 Conversion costs added during June $1,000,000 What amount of conversion costs are assigned to ending Work-in-Process account for June?
$141,111 ((150*75%)*1,254.32)
THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW. The Swiss Clock Shop manufactures clocks on a highly automated assembly line. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Swiss Clock Shop uses weighted-average costing. Data for the Assembly Department for June 20x3 are: Work in process, beginning inventory 250 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 800 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 20x3: Work in process, beginning inventory: Direct materials $180,000 Conversion costs $270,000 Direct materials costs added during June $1,000,000 Conversion costs added during June $1,000,000 What is the total amount debited to the Work-in-Process account during the month of June?
$2,000,000 (1,000,000+1,000,000)
The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials $24,000 Conversion costs $35,000 Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000 What is the amount of direct materials cost assigned to ending Work-in-Process inventory at the end of February?
$22,400 (168,000/75,000=2.24*10,000)
Craft Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 5% of the good units. Data for December 20x3 are as follows: WIP, beginning inventory 12/1/20x3 10,000 units Direct materials (100% complete) Conversion costs (75% complete) Started during December 40,000 units Completed and transferred out 12/31/20x3 38,400 units WIP, ending inventory 12/31/20x3 8,000 units Direct materials (100% complete) Conversion costs (65% complete) Costs for December: WIP, beginning Inventory: Direct materials $ 50,000 Conversion costs 30,000 Direct materials added 100,000 Conversion costs added 140,000 What are the amounts of direct materials and conversion costs assigned to ending work-in-process using the weighted-average process-costing method?
$24,000; $19,448 (direct mat 8,000*3= 24,000 conv costs 5,200*3.74=19,448)
The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials $24,000 Conversion costs $35,000 Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000 What is the cost of the goods transferred out during February?
$456,015
Craft Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 5% of the good units. Data for December 20x3 are as follows: WIP, beginning inventory 12/1/20x3 10,000 units Direct materials (100% complete) Conversion costs (75% complete) Started during December 40,000 units Completed and transferred out 12/31/20x3 38,400 units WIP, ending inventory 12/31/20x3 8,000 units Direct materials (100% complete) Conversion costs (65% complete) Costs for December: WIP, beginning Inventory: Direct materials $ 50,000 Conversion costs 30,000 Direct materials added 100,000 Conversion costs added 140,000 What is the total cost per equivalent unit using the weighted-average method of process costing?
$6.74
Craft Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 5% of the good units. Data for December 20x3 are as follows: WIP, beginning inventory 12/1/20x3 10,000 units Direct materials (100% complete) Conversion costs (75% complete) Started during December 40,000 units Completed and transferred out 12/31/20x3 38,400 units WIP, ending inventory 12/31/20x3 8,000 units Direct materials (100% complete) Conversion costs (65% complete) Costs for December: WIP, beginning Inventory: Direct materials $ 50,000 Conversion costs 30,000 Direct materials added 100,000 Conversion costs added 140,000 What cost is allocated to abnormal spoilage using the weighted-average process-costing method?
$8,182 (Direct materials 1,680*3=5,040 Conv. costs 840*3.74 = 3,142 5,040+3,142)
Which of the following manufactured products would not use process costing? a. 767 jet aircraft b. 19-inch television sets c. Custom built houses d. (a) and (c) would not use process costing
(a) and (c) would not use process costing
THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW. The Swiss Clock Shop manufactures clocks on a highly automated assembly line. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Swiss Clock Shop uses weighted-average costing. Data for the Assembly Department for June 20x3 are: Work in process, beginning inventory 250 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 800 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 20x3: Work in process, beginning inventory: Direct materials $180,000 Conversion costs $270,000 Direct materials costs added during June $1,000,000 Conversion costs added during June $1,000,000 What are the equivalent units for direct materials and conversion costs, respectively, for June?
1,050 units; 1,012.5 units
The following information pertains to the Cannady Corporation: Beginning work-in-process inventory $50,000 Ending work-in-process inventory 48,000 Beginning finished goods inventory 180,000 Ending finished goods inventory 195,000 Cost of goods manufactured 1,220,000 What is the cost of goods sold?
1,205,000 (180000+1220000-195000)
Craft Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 5% of the good units. Data for December 20x3 are as follows: WIP, beginning inventory 12/1/20x3 10,000 units Direct materials (100% complete) Conversion costs (75% complete) Started during December 40,000 units Completed and transferred out 12/31/20x3 38,400 units WIP, ending inventory 12/31/20x3 8,000 units Direct materials (100% complete) Conversion costs (65% complete) Costs for December: WIP, beginning Inventory: Direct materials $ 50,000 Conversion costs 30,000 Direct materials added 100,000 Conversion costs added 140,000 Abnormal spoilage totals
1,680 units (3,600-1,920)
Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales revenue; $28,000 of variable costs; and $12,000 of fixed costs. The number of untis that must be sold to achieve $60,000 of operating income is
12,000
Pederson Company reported the following: Manufacturing costs $2,000,000 Units manufactured 50,000 Units sold 47,000 units sold for $75 per unit Beginning inventory 0 units What is the amount of ending finished goods inventory?
120,000 ((50000-47000)*40)
Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs $400, and fixed costs $90,000. How many dresses must the Bridal Shoppe sell in order to yield after-tax net income of $18,000, assuming the tax rate is 40%?
145 dresses
Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales revenue; $28,000 of variable costs; and $12,000 of fixed costs. If sales increase by $25,000, operating income will increase by
15,000 ((80000-20000)/80000)
Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales revenue; $28,000 of variable costs; and $12,000 of fixed costs. Breakeven point in units is
2,000 (1000N-400N-90000=18000/(1-0.4);600N-90000=30000)
The following information is for Barnett Corporation: Product X: Revenue $10.00 Variable Cost $2.50 Product Y: Revenue $15.00 Variable Cost $5.00 Total fixed costs $50,000 What is the breakeven point, assuming the sales mix consists of two units of Product X and one unit of Product Y?
2,000 units of Y and 4,000 units of X
The following information pertains to Harding Company: Beginning finished goods, 1/1/20x3 $80,000 Ending finished goods, 12/31/20x3 67,000 Cost of goods sold 270,000 Sales revenue 500,000 Operating expenses 145,000 What is the cost of goods manufactured for 20x3
257,000 (270000+67000-80000)
Craft Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 5% of the good units. Data for December 20x3 are as follows: WIP, beginning inventory 12/1/20x3 10,000 units Direct materials (100% complete) Conversion costs (75% complete) Started during December 40,000 units Completed and transferred out 12/31/20x3 38,400 units WIP, ending inventory 12/31/20x3 8,000 units Direct materials (100% complete) Conversion costs (65% complete) Costs for December: WIP, beginning Inventory: Direct materials $ 50,000 Conversion costs 30,000 Direct materials added 100,000 Conversion costs added 140,000 What is the number of total spoiled units?
3,600 units ((10,000+40,000)-(38,400+8,000))
Nancy's Niche sells a single product. 8,000 units were sold resulting in $80,000 of sales revenue; $20,000 of variable costs; and $10,000 of fixed costs. The contribution margin percentage is
75% ((80,000-20,000)/80000)
Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales revenue; $28,000 of variable costs; and $12,000 of fixed costs. Contribution margin per unit is
6.00 ((70000-28000)/7000)
Dr. Charles Hunter, MD, performs a certain outpatient procedure for $1,000. His fixed costs are $20,000, while his variable costs are $500 per procedure. Dr. Hunter currently plans to perform 200 procedures this month. What is the margin of safety assuming 100 procedures are budgeted?
60,000 or 60 times
The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials $24,000 Conversion costs $35,000 Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000 How many of the units that were started during February were completed during February?
65,000 (75,000-10,000)
Wheel and Tire Manufacturing currently produces 1,000 tires per month. The following per unit data apply for sales to regular customers: Direct materials $20 Direct manufacturing labor 3 Var. manufacturing overhead 6 Fixed manufacturing overhead 10 Total manufacturing costs $39 The plant has capacity for 3,000 tires and is considering expanding production to 2,000 tires. What is the total cost of producing 2,000 tires?
68,000 (((20+3+6)*2000)+(10*1000))
The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials $24,000 Conversion costs $35,000 Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000 What were the equivalent units for conversion costs during February?
83,500 ((15,000*.7)+65,000+10,000*.8)
Place the four business functions in the order they appear along the value chain: A= customer service B= design C= distribution D= production
B D C A
If scrap, common to all jobs, is returned to the storeroom and the time between the scrap being inventoried and its disposal is quite lengthy, the journal entry is
Materials Control D Man OH Control C
What condition usually exists when comparing normal and abnormal spoilage to controllability?
Normal Spoilage: uncontrollable Abnormal: controllable
Financial accounting...
must comply with GAAP
Costs of normal spoilage are usually accounted for as
part of the cost of goods manufactured
A manufacturing plant produces two product lines: football equipment and hockey equipment. An indirect cost for the hockey equipment line is the
plant supervisor
What is a variable cost in an insurance company?
sales commisions
Unacceptable units of production that are discarded or are sold for reduced prices are referred to as
spoilage
What group would be the LEAST likely to receive detailed management accounting reports?
stockholders
What describes the flow of goods, services, and information from the purchase of materials to the delivery of products to consumers, regardless of whether those activities occur in the same organization or with other organizations
supply chain
All of the following report to the CFO EXCEPT the a. controller b. tax department manager c. production manager d. treasurer
tax department manager
Cost tracing is
the assignment of direct costs to the chosen cost object
Cost allocation is
the assignment of indirect costs to the chosen cost object
What entry reflects the original cost assignment before production items are reworked?
Work-in-Process Control D Materials Control C Wages Pay. Control C Man. OH Allocated C
Transferred-in costs are treated as if they are
a separate direct material added at the beginning of the process
The weighted-average process-costing method calculates the equivalent units by
the equivalent units completed during the current period plus the equivalent units in ending inventory
What statement refers to management accounting information?
there are no regulations governing the reports
At a plant where a union agreement sets annual salaries and conditions, annual labor costs usually
are considered a fixed cost
A difference between job costing and process costing is a. that job-costing systems usually do not distinguish between normal spoilage attributable to all jobs and normal spoilage attributable to a specific job. b. that job-costing systems usually distinguish between normal spoilage attributable to a specific job and spoilage common to all jobs. c. that process costing normally does not distinguish between normal spoilage attributable to a specific job and spoilage common to all jobs. d. both (b) and (c).
both (b) and (c)
What statement about determining the breakeven point is FALSE?
breakeven revenues equal fixed costs divided by the variable cost per unit
The purpose of the equivalent-unit computation is
to convert partially completed units into the amount of completed output units that could be made with that quantity of input
What is NOT an assumption of CVP analysis?
unit selling price, unit variable costs, and unit fixed costs are known and remain constant
When a greater proportion of costs are fixed costs, then
when demand is low the risk of loss is high
On occasion, the FIFO and the weighted-average methods of process costing will result in the same dollar amount of costs being transferred to the next department. What scenario would have that result?
when there is no beginning inventory
The strategy MOST likely to reduce the breakeven point would be to
decrease the fixed costs and increase the contribution margin
What is the detailed planning and engineering of products, services, or processes
design of products, services, or processes
For a computer manufacturer, period costs include the cost of
distribution
What is NOT a function of a management accounting system?
financial reporting
Management accounting is considered successful when it
helps managers improve their decisions
Manufacturing overhead costs in an automobile manufacturing plant MOST likely include
indirect material costs such as lubricants
Costs that are initially recorded as assets and expensed when sold are referred to as
inventoriable costs
The Institute of Management Accountants (IMA) ...
is a professional organization of management accountants
The person directly responsible for the attainment of organizational objectives is/are
line management
The standard-costing method
makes calculating equivalent-unit costs unnecessary