Managerial Accounting Final

Aztec Industries produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. Next year's expected costs and activities are shown below. Compute Aztec's departmental overhead rate for the mixing department based on direct labor hours. *Chart

$1.50 per DLH 600,000 / 400,000

The following information is available for a company's cost of sales over the last five months. Using the high-low method, what is the estimated variable cost of sales per unit sold?

$15.00 (61,000 - 31,000) / (2,400 - 400)

Compute cost of goods manufactured Direct material used: $5,000 Direct labor: 7,000 Total FOH: 5,100 Beg goods in process: 3,000 End goods in process: 4,000

$16,100 Manufacturing costs + BGIP - EGIP (5,000 + 7,000 + 5,100) + 3,000 - 4,000

A company has two products: A and B. Annual production and sales level of Product A is 137,200 units, and the annual production and sales level of Product B is 278,200 units. It uses activity-based costing and has prepared the following analysis showing budgeting cost and activity for each of its three activity cost pools below. What is the approximate overhead cost per unit of Product B under activity-based costing?

$2.00 ??

The following information is available for a company's utility cost for operating its machines over the last four months. Using the high-low method, what is the estimated variable cost per unit for utilities?

$2.50 (8,100 - 3,600) / (2,400 - 600)

Given the information in the table below, what is the cost per equivalent unit with regards to Direct Materials if 150.000 units were transferred out and an additional 41,000 units were in ending goods in process inventory (80% complete with respect to materials and 30% complete with respect to conversion cost)

$2.65 per EUP *Scratch work in notebook

A company estimates that overhead costs for the next year will be $8,320,000 for indirect labor and $155,500 for factory utilities The company uses machine hours as its overhead allocation base. If 400.000 machine hours are planned for this next year, wha is the company's plantwide overhead rate? (Round your answer to two decimal places.)

$21.19 per machine hour (8,320,000 + 155,500) / 400,000

A company incurred $50,000 in total utility cost ($15,000 were for the company headquarters) $200,000 in property taxes (75% were for factory and production equipment) $80,000 for direct materials, $15,000 for indirect materials, and direct labor of $180,000. The company utilizes an overhead application rate of 125% of direct labor cost. How much overhead would be allocated to the job (work in process inventory) and credited to the factory overhead account

$225,000 *Not sure on calculation.

The following costs are included in a recent summary of data for a company: advertising expense $85,000; depreciation expense - factory building $133,000; direct labor $250,000; direct material used $300,000; factory utilities $105,000; and sales salaries expense $150,000. Determine the dollar amount of period costs.

$235,000 advertising expense + sales salaries expense

The following costs are included in a recent summary of data for a company: advertising expense $85,000; depreciation expense - factory building $133,000; direct labor $250,000; direct material used $300,000; factory utilities $105,000; and sales salaries expense $150,000. Determine the dollar amount of overhead costs.

$238,000 factory depreciation expense, factory utilities

O Corporation produces and sells a single product. Its contribution format income statement for March is provided below. If the company sells 5,400 units, its net operating income should be closest to which of the following possible answers?

$24,000

The following costs are included in a recent summary of data for a company: advertising expense $25,000; depreciation expense - factory building $200,000; office building $350,000 direct labor $350,000; direct material used $400,000; factory utilities $50,000; $25,000 in office utilities, and and sales salaries expense $150,000. Determine the dollar amount of overhead costs.

$250,000 factory building depreciation expense, factory utilities

During July, the equivalent full units of direct materials worked on by Department A amounted to a total of 100,000 applied as follows: beginning inventory 20,000 units, units started and completed in July, 60,000 units, and ending inventory 20,000 units. Assuming that the cost of direct materials requisitioned by the department in July was $135,000; the amount of materials cost to be assigned to the ending inventory would be:

$27,000 Not sure about calculation

A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. What is the company's break-even point in dollars?

$275,040 68,760/(120 - 90) = 2,292 2,292 * 120

A company has two products: A and B. Annual production and sales level of Product A is 137,200 units, and the annual production and sales level of Product B is 278,200 units. It uses activity-based costing and has prepared the following analysis showing budgeting cost and activity for each of its three activity cost pools below. What is the approximate overhead cost per unit of Product B under activity-based costing?

$3.00

Given the information below as it relates to Spurrier Company's estimated amounts for next year, what is the company's plantwide overhead rate if direct labor hours are the allocation base? Round your answer to two decimal places

$3.31 per direct labor hour (1,100,000 + 3,300,000)/(540,000 + 790,000)

Company "A" manufactures a product called Zee. All direct materials are added at the beginning of the process, and direct labor and overhead are added uniformly throughout production. The beginning work in process inventory is 60% complete with respect to direct labor and 50% complete for Overhead. The ending work in process inventory is 20% complete for direct labor and 30% as to overhead. Given the information below and using the weighted-average method of process costing, what is the cost per equivalent unit of Overhead?

$3.90 *Scratch work in notebook

Company "A's" manufacturing costs for August are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production equipment, $800; heat, lights and power, $1,000; and insurance on plant and equipment, $200. The company's actual FOH incurred for August is?

$8,500 FOH = indirect labor + prop taxes on equip + heat light and power + insurance on P&E FOH = all indirect costs related to the production

Cost per EUP =

(Beginning costs + costs added) / EUP

Which of the following formulas is used to calculate the contribution margin ratio?

(Sales - Variable expenses) / Sales

High-low method variable cost per unit =

(cost at highest vol - cost at lowest vol ) / (highest vol - lowest vol)

'B' Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 8,000 units in its beginning work in process inventory that were 90% complete with respect to conversion costs. An additional 95,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 11,000 units in the ending work in process inventory of the Assembly Department that were 90% complete with respect to conversion costs. What were the equivalent units of production for conversion costs in the Assembly Department for the month?

101,900

At the beginning of the month, the Painting Department of Skye Manufacturing had 20,000 units in inventory, 70% complete as to materials, and 20% complete as to conversion. During the month the department started 115,000 units. At the end of the month, the department had 15,000 units in inventory, 40% complete as to material,10% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the equivalent units for materials and conversion respectively for the Painting Department.

126,000 materials; 121,500 conversion ??

F Corporation produces and sells a single product. Its contribution format income statement for March is provided below. If the company sells 5,900 units, its net operating income should be closest to which of the following possible answers?

14,000 Have to calculate a new contribution margin and var expense

Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Total fixed costs are $340,000. Unit price and cost data are provided in the table below. What is the break-even point in composite units for the current sales mix (round to the nearest cent)?

17,000 Break even point in composite units = total fixed costs/cont margin of composite unit contribution margin in this case = mix * (sales-var) ^then add them all up for M,N,O

Company "A's" manufacturing accounting system uses direct labor costs to apply overhead to goods in process inventory. "A" Company's manufacturing costs for the year were: direct labor $30,000 direct materials $50,000 FOH applied: $6,000 The OH application rate was

20% 6,000 (applied) / 30,000 (direct labor)

The ending balance of goods in process inventory was $4,400. The manufacturing company uses an OH rate based on DL costs. The cost sheet of the job still in process shows DM cost of $2,000 and DL cost of $800. The company's OH application rate is:

200% Predetermined OH rate = OH/activity base in this case the activity base is DIRECT LABOR COST. so: OH rate = (4,400 - 2,000 - 800) / 800

The work in process inventory of a manufacturing company has an ending balance of $8,580. The company applies overhead using direct labor costs. The cost sheet of the only job still in the process shows direct material cost of $3,000 and direct labor cost of $1,800. Therefore, the company's predetermined overhead rate is:

210% of direct labor costs Predetermined OH rate = (OH/activity base) (8,580 - 3,000 - 1,800) / 1,800 = 2.1

Morse company reports total contribution margin of $48,000 and pretax net income of $12,000 for the current month. The degree of operating leverage is:

4.0 Contribution Margin / Net Income 48,000/12,000

Mott Company's sales mix is 3 units of A, 2 units of B, and 1 unit of C. Selling prices for each product are $20, $30, and $40, respectively. Variable costs per unit are $12, $18, and $24, respectively. Fixed costs are $320,000. What is the break-even point in composite units?

5,000 composite units

Fuschia Company's contribution margin per unit is $12. Total fixed costs are $84,000. What is Fuschia's break-even point in units?

7,000 84,000/12

J corporation uses the weighted average method in its process costing system. Given the operating rate for the painting department for the month of April appear below, what we're the equivalent units for direct materials in the painting department for April? Beginning inventory: units: 6,300 %complete: 10% Units started: units: 65,600 Ending inventory: units 4,600 %complete: 70%

70,520 Units completed and transferred out = (Beg inventory) + (units started or transferred in) - (Ending Inventory)

Aurora Corporation produces outdoor security lighting products. All products go through three processes before completion. use the expected OH costs and related data shown below to compute departmental OH rates based on machine hours in Dept A direct labor hours in Dept B machine hours in Dept C

A $10, B $2, C $4 540,000/54,000 160,000/80,000 216,000/54,000

Period costs for a manufacturing company flow directly to: A) The income statement as an expense. B) Factory overhead. C) The balance sheet as inventory. D) Cost of goods sold on the income statement. E) The current schedule of cost of goods manufactured.

A) The income statement as an expense

Factory Overhead

Also called manufacturing OH All manufacturing costs that are not direct materials or direct labor includes: indirect materials, indirect labor, and other indirect costs

What would I debit if I were a merchandiser and bought $5,000 worth of merchandise for resale

Merchandise inventory

Which of the following would usually NOT be used in computing plantwide overhead rates?

Number of quality inspections

Plantwide OH rate =

budgeted OH cost / budgeted department allocation base

Activity Rate =

budgeted activity cost / budgeted activity usage

Departmental OH rate =

budgeted department OH cost / budgeted department allocation base

Fixed costs do not Fixed costs per unit of output

change when the volume of activity changes decreases as volume increases

Degree of operating leverage =

Contribution Margin / Net Income

A manufacturing statement is also known as a schedule or listing of the

Cost of goods manufactured

Portside Watercraft uses a job order costing system. During the month Portside purchased$153,000 of raw materials on credit; issued materials to production of $164,000, of which$24,000 were indirect. Portside incurred a factory payroll cost of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the application of factory overhead to production is

Debit Factory Overhead $119,000; credit Work in Process Inventory $119,000

Total contribution margin in dollars divided by pretax income is the

Degree of operating leverage

Which types of overhead allocation methods result in the use of ore than one overhead rate during the same period?

Departmental overhead rate method and activity-based costing

Equivalent units is usually computed for

Direct materials, direct labor, and factory overhead costs

Equivalent Units of Production (EUP) =

EU completed and transferred out + Ending WIPI

A key idea in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as:

Equivalent units of production (EUP)

The margin of safety is the excess of

Expected sales over break-even sales.

Which of the following is not part of the production activity of work in process? Direct labor Factory OH Cost of goods manufactured Direct materials Total finished goods available for sale

Factory OH

Internal Controls are designed to accomplish all of the following except

Guarantee that fraud cannot occur

Days' sales in raw materials inventory is a measure of

How long it takes raw materials to be used in production

Omega Construction manufactures homes to customer specifications. It most likely uses

Job order costing

An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called:

Just-in-time manufacturing

A source document that an employee that an employee uses to report how much time was spent working on a ob or on overhead activities and that is sued to determine the amount of direct labor to charge to the job or to determine the amount of indirect labor to charge to factory overhead

Labor time ticket

A statistical method for deriving an estimated line of cost behavior is the

Least-squares regression method

Which of the following is NOT a broad, cost classification category typically used in activity-based costing?

Management level

Contribution margin per unit =

Selling price per unit - variable cost per unit

The difference between total sales in dollars and total variable expenses is valled

the contribution margin

The cost objective of the plantwide overhead rate method is:

The unit of product

The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as

Underapplied overhead

In comparison to general accounting system for a manufacturing company, a cost accounting system places emphasis on

Unit costs and cost control

4 Categories of cost in ABC

Unit level Batch level Product level Facility level

A cost that changes in total proportionately to changes in volume of an activity is a(n):

Variable cost

Another title for goods in process inventory is

Work in process inventory

When calculating unit costs under the weighted-average process-costing method, the unit cost is based on:

a summation of the costs in the beginning work-in-process inventory plus costs INCURRED in the current period

Which of the following is a characteristic of process costing? a. it is employed by companies that use standardized processes b. it can only be used for manufacturing firms and not service firms c. products are unique d. costs are traced to products rather than to production processes

a. it is employed by companies that use standardized processes

Allocated Cost =

actual activity usage x activity rate

A typical job-cost record would provide information about all of the following items related to an order except: A. the cost of direct materials used. B. administrative costs. C. direct labor costs incurred. D. applied manufacturing overhead. E. direct labor hours worked.

administrative costs

Job A3B was ordered by a customer on September 25. During the month of September,Jaycee Corporation requisitioned $2,000 of direct materials and used $3,500 of direct labor. The job was not finished by the end of the month. An additional $2,500 of direct materials and $6,000of direct labor were needed to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. What is the total cost of the job when it is completed in October?

$33,000 September DM, DL, OH applied + October DM, DL, OH applied = total job cost (OH applied = direct labor cost * %) Sept: 2,000 + 3,500 + (3,500*200% = 7,000) Oct: 2,500 + 6,000 + (6,000 * 200% = 12,000)

A company's prime costs total $9,400,000 and its conversion costs total $19,400,000. If direct materials are $5,400,000 and FOH is $15,400,000 then direct labor is

$4,000,000 Bc prime costs = direct materials + direct labor

M company has a goal of earning $70,000 after tax income . Ivan would need to pay $20,000 of income taxes at the target level of income. The contribution margin ratio is 30%. What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000

$420,000 ??

Canberra Company uses a job order cost accounting system. During the current month, the factory payroll of $180,000 was paid in cash. The amount of labor classified as direct labor was three times greater than the amount classified as indirect labor. Canberra uses an OH application rate of 100% of direct labor. What amount should be debited to Factory Overhead for indirect labor for this month?

$45,000 45,000 x 3 = 135,000 135,000 + 45,000 = 180,000

The following costs are included in a recent summary of data for a company: advertising expense $85,000; depreciation expense - factory building $133,000; direct labor $250,000; direct material used $300,000; factory utilities $105,000; and sales salaries expense $150,000. Determine the dollar amount of prime costs

$550,000 prime costs = DM + DL

Ending finished goods inv: $66,000 COGS: $54,000 Beginning finished goods inv: $60,000 Compute the cost of goods manufactured

$60,000 Cost of goods manufactured = Ending finished goods inv - beginning finished goods inventory + COGS

M Company has a goal of earning $70,000 after-tax income. Ivan would incur a 30% income tax rate on pre-tax income. The contribution margin ratio is 30%. What amount of dollar sales must be achieved to reach the foal if fixed costs are $80,000?

$600,000 Sales to earn target income = (Fixed cost + Target profit)/ Contribution margin ratio Target profit = target income after tax/(1-tax rate) ... = 70,000/(1-0.3) = 100,000 Sales to earn target income = (80,000 + 100,000) / 0.3 = 600,000

Managerial accounting information: A) Is used mainly by external users. B) Involves gathering information about costs for planning and control decisions. C) Is generally the only accounting information available to managers. D) Can be used for control purposes but not for planning purposes. E) Has little to do with controlling costs.

B. Involves gathering information about costs for planning and control decisions

Which of the following statements both pertain to variable costing? A. This method must be used for external financial reporting B. Fixed manufacturing overhead is attached to each unit produced C. The income statement discloses a company's contribution margin D. Variable manufacturing overhead becomes part of a unit's cost

Both C and D C. The income statement discloses a company's contribution margin D. Variable manufacturing overhead becomes part of a unit's cost

Which of the following is a result of a facility-level activity?

Both utility costs related to heating and lighting a manufacturing facility and the cost of landscaping the grounds for the manufacturing unit are correct

If a company applies overhead to production with a predetermined overhead rate, a credit balance in the Factory Overhead account at the end of the period means that: A) The bookkeeper has made an error because the debits don't equal the credits. B) The balance will be carried forward to the next period as an overhead cost. C) Actual overhead incurred was less than the overhead amount applied to production. D) The overhead was underapplied for the period. E) Actual overhead was greater than the overhead amount applied to production

C) Actual overhead incurred was less than the overhead amount applied to production.

Managerial accounting is different from financial accounting in that:

C) Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions

(Question #46) Using the job order cost summary below, what would the company's cost of goods sold and ending goods in process inventory be if on May 31, Job #136 was completed but not transferred and Jobs #134 and #135 were completed and shipped to customers in May. Job # / Balance on May 1 / May production costs 134 / 2,650 / 0 135 / 2,150 / 490 136 / 0 / 1,090

COGS = 5,290 Ending goods in process = 1,090

(Question #45) Using the job order cost summary below, what would the company's cost of goods sold and ending goods in process inventory be if on May 31, Job #126 was completed but not transferred and Jobs #124 and #125 were completed and shipped to customers in May. Job # / Balance on May 1 / May production costs 124 / 1,700 / 0 125 / 1,200 / 300 126 / 0 / 900

COGS: 3,200 Ending goods in process inventory: 900 1,700 + 1,200 + 300 = 3,200

Cost accounting systems used by manufacturing companies are based on the

Perpetual inventory system

A method of assigning overhead costs to a product using a single overhead rate is:

Plantwide overhead rate method

Costs that are first assigned to inventory are called

Product costs

Which of the following costs are most likely to be classified as fixed? Shipping costs Direct labor Property taxes Direct materials Sales commissions

Property taxes

In a job order costing system, the use of indirect materials is recorded as a credit to

Raw materials inventory

A company's normal operating range is called the

Relevant range

Equivalent units of production are equal to:

The number of units that could have been completed if all effort had been applied to units that were started and completed that period.

Which of the following is used to assess the cost of quality? a. internal failure incurred after the company has manufactured a defective product, but before delivery to the customer b. prevention and appraisal to reduce the chance customer is provided a defective product c. only b and c d. all of the above e. external failure incurred after the company has manufactured a defective product and delivered to the customer

d. all of the above

Which of the following costs generally can be traced directly to units of product? a. indirect materials and assembly labor b. indirect materials c. overhead costs d. assembly labor

d. assembly labor

All of the following are examples of facility sustaining costs except: a. costs of personnel support b. costs of custodial work c. costs of cleaning the workplace d. costs of sampling product quality e. costs of employee recreational facilities

d. costs of sampling product quality

Which of the following is NOT one of the four steps in accounting for production activity in a period? a. analyze the physical flow of units b. determine the cost per equivalent unit c. analyze equivalent units d. determine over- or under-applied overhead e. prepare a cost reconciliation

d. determine over- or under-applied overhead

Prime costs include

direct materials and direct labor

Break even point in units =

fixed costs / contribution margin per unit

In activity-based costing, unit products computed for external financial reports include manufacturing overhead computed by

multiplying the activity rate for each cost pool by the corresponding amount of activity required per unit of the product

An equivalent unit is calculated by

multiplying the number of physical units by the percentage of completion.

Facility-level activities

sustain facility capacity as a whole and are not caused by any specific product. Incurred no matter what is being produced