Managerial Accounting Midterm

In the cost reconciliation report under the weighted-average method, the "Total cost accounted for" equals:

Cost of ending work in process inventory + Cost of units transferred out

Differential costs can:

be either fixed or variable

Majid Corporation sells a product for $160 per unit. The product's current sales are 41,600 units and its break-even sales are 33,390 units. What is the margin of safety in dollars?

$1,313,600

Baka Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $240,000 and 5,000 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $242,200 and actual direct labor-hours were 4,700. The overhead for the year was: (Round your intermediate calculations to 2 decimal places.)

$16,600 underapplied

Acheson Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. Estimated manufacturing overhead = $157,600 Estimated machine-hours = 4,610 Actual manufacturing overhead = $157,100 Actual machine-hours = 4,800 The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year. The applied manufacturing overhead for the year is closest to: (Round your intermediate calculations to 2 decimal places.)

$164,112

In July, one of the processing departments at Okamura Corporation had beginning work in process inventory of $33,000 and ending work in process inventory of $38,000. During the month, the cost of units transferred out from the department was $168,000. In the department's cost reconciliation report for July, the total cost to be accounted for under the weighted-average method would be:

$206,000

Pedregon Corporation has provided the following information: Direct materials = $6.70 Direct labor = $3.80 Variable manufacturing overhead = $1.50 Fixed manufacturing overhead = $15,200 Sales commissions = $0.70 Variable administrative expense = $0.75 Fixed selling and administrative expense $6,800 If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

$21,200

Under a job-order costing system, the dollar amount transferred from Work in Process to Finished Goods is the sum of the costs charged to all jobs:

completed during the period

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 = 30,900 Total fixed manufacturing overhead cost = $154,500 Variable manufacturing overhead per machine-hour $3.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job = 10 Total machine-hours = 30 Direct materials = $740 Direct labor cost = $1,480 The amount of overhead applied to Job T687 is closest to:

$240.00

In April, one of the processing departments at Terada Corporation had beginning work in process inventory of $33,000 and ending work in process inventory of $39,000. During the month, $256,000 of costs were added to production and the cost of units transferred out from the department was $250,000. In the department's cost reconciliation report for April, the total cost to be accounted for under the weighted-average method would be:

$289,000

Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $496,000 or a new model 220 machine costing $481,000 to replace a machine that was purchased 6 years ago for $486,000. The old machine was used to make product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired. Management has decided to buy the new model 220 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product I43L. Management also considered, but rejected, the alternative of simply dropping product I43L. If that were done, instead of investing $481,000 in the new machine, the money could be invested in a project that would return a total of $483,000. In making the decision to buy the model 220 machine rather than the model 370 machine, the sunk cost was:

$486,000

The following accounts are from last year's books at Sharp Manufacturing: Raw Materials Bal 0 (b) 157,200 (a) 172,000 14,800 Work In Process Bal 0 (f) 522,800 (b) 133,600 (c) 171,200 (e) 218,000 0 Finished Goods Bal 0 (g) 476,000 (f) 522,800 46,800 Manufacturing Overhead (b) 23,600 (e) 218,000 (c) 27,600 (d) 159,200 7,600 Cost of Goods Sold (g) 476,000 Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the amount of cost of goods manufactured for the year?

$522,800

Pedregon Corporation has provided the following information: Direct materials = $7.10 Direct labor = $3.80 Variable manufacturing overhead = $1.35 Fixed manufacturing overhead = $14,000 Sales commissions = $0.55 Variable administrative expense = $0.65 Fixed selling and administrative expense $5,000 If 4,000 units are sold, the total variable cost is closest to:

$53,800

Wimpy Inc. produces and sells a single product. The selling price of the product is $220.00 per unit and its variable cost is $66.00 per unit. The fixed expense is $412,020 per month. The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.)

$588,600

Job 910 was recently completed. The following data have been recorded on its job cost sheet: Direct materials = $2,483 Direct labor-hours = 77 labor-hours Direct labor wage rate = $19 per labor-hour Machine-hours = 136 machine-hours The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $20 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 910 would be:

$6,666

On November 1, Arvelo Corporation had $39,000 of raw materials on hand. During the month, the company purchased an additional $71,000 of raw materials. During November, $81,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $4,400. Prepare journal entries to record these events. Use those journal entries to answer the following questions: The credits to the Raw Materials account for the month of November total:

$81,000

Schwiesow Corporation has provided the following information: Direct materials = $7.90 Direct labor = $4.00 Variable manufacturing overhead = $1.50 Fixed manufacturing overhead = $15,500 Sales commissions = $1.00 Variable administrative expense = $0.90 Fixed selling and administrative expense $6,600 If 5,500 units are produced, the total amount of manufacturing overhead cost is closest to:

1.50 X 5,500 = 8250 + 15,500 = $23,750

The Richmond Corporation uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 21,800 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was $3.70 for materials and $5.20 for labor and overhead, the total cost assigned to the ending work in process inventory was:

100% = 1 60% = 0.6 21,800 X 1 X 3.70 = 80,660 21,800 X 0.6 X 5.20 = 68,016 80,660 + 68,016 = $148,676

Gayne Corporation's contribution margin ratio is 18% and its fixed monthly expenses are $53,500. If the company's sales for a month are $318,000, what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change.

318,000 X 0.18 = 57,240 - 53,500 = $3,740

Deidoro Company has provided the following data for maintenance cost: Machine hours = 14,600 17,700 Maintenance cost = $35,600 $39,320 Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to: (Round your intermediate calculations to 2 decimal places.)

39,320 - 35,600 = 3,720 17,700 - 14,600 = 3,100 3,720 / 3,100 = $1.2 1.2 X 17,700 = 21,240 39,320 - 21,40 = $18,080 $18,080 per year; $1.200 per machine hour

Garza Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Machine-hours = 26,000 29,000 Direct labor-hours = 20,000 4,000 Total fixed manufacturing overhead cost = $119,600 $12,000 Variable manufacturing overhead per machine-hour $1.50 Variable manufacturing overhead per direct labor-hour $3.00 The estimated total manufacturing overhead for the Customizing Department is closest to:

4,000 X 3.00 = 12,000 + 12,000 = $24,000

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

During March, Zea Inc. transferred $54,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $60,000. The journal entries to record these transactions would include a:

credit to Work in Process of $54,000.

Property taxes on a company's factory building would be classified as a(n):

product cost

Fiori Corporation's relevant range of activity is 3,500 units to 9,500 units. When it produces and sells 6,500 units, its average costs per unit are as follows: Direct materials= $6.30 Direct labor = $3.50 Variable manufacturing overhead = $2.00 Fixed manufacturing overhead = $3.30 Fixed selling expense = $0.75 Fixed administrative expense = $0.65 Sales commissions = $1.50 Variable administrative expense = $1.00 The incremental manufacturing cost that the company will incur if it increases production from 8,500 to 8,501 units is closest to:

$11.80

Mundes Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in its Painting Department consisted of 3,400 units that were 60% complete with respect to materials and 40% complete with respect to conversion costs. The cost of the beginning work in process inventory in the department was recorded as $10,200. During the period, 9,400 units were completed and transferred on to the next department. The costs per equivalent unit for the period were $5.40 for material and $6.40 for conversion costs. The cost of units transferred out during the month was:

$110,920

Tirri Corporation has provided the following information: Direct materials = $6.90 Direct labor = $3.90 Variable manufacturing overhead = $1.40 Fixed manufacturing overhead = $23,200 Sales commissions = $1.00 Variable administrative expense = $0.70 Fixed selling and administrative expense $7,600 If the selling price is $26.90 per unit, the contribution margin per unit sold is closest to:

$13.00

Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product. Sales (5,000 units) = $150,000 Variable expenses = 65,000 Contribution margin = 85,000 Fixed expenses = 46,000 Net operating income = $39,000 If the company sells 5,100 units, its total contribution margin should be closest to: (Do not round intermediate calculations.)

$86,700

Materials used in a factory that are not an integral part of the final product, such as cleaning supplies, should be classified as:

manufacturing overhead

Erkkila Inc. reports that at an activity level of 6,300 machine-hours in a month, its total variable inspection cost is $425,780 and its total fixed inspection cost is $175,164. What would be the average fixed inspection cost per unit at an activity level of 6,600 machine-hours in a month? Assume that this level of activity is within the relevant range.

175,164 / 6,600 = $26.54

Data concerning Follick Corporation's single product appear below: Selling price per unit = $220.00 Variable expense per unit = $74.80 Fixed expense per month = $141,240 The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.)

220 - 74.80 = 145.2 / 220 = 0.66 141,240 / 0.66 = $214,000

Data concerning Bedwell Enterprises Corporation's single product appear below: Selling price per unit = $230.00 Variable expense per unit = $98.50 Fixed expense per month = $451,190 The unit sales to attain the company's monthly target profit of $33,000 is closest to: (Do not round intermediate calculations.)

230 - 98.50 = 131.5 451,190 + 33,000 = 484190 / 131.5 = 3,682

A cement manufacturer has supplied the following data: Tons of cement produced and sold = 305,000 Sales revenue = $1,009,000 Variable manufacturing expense = $238,000 Fixed manufacturing expense = $331,000 Variable selling and administrative expense = $115,150 Fixed selling and administrative expense = $99,000 Net operating income = $225,850 The company's contribution margin ratio is closest to:

238,000 + 115,150 = 353,150 1,009,000 - 353,150 = 655,850 / 1,009,000 = 0.65 0.65 X 100 = 65% 65.0%

Dake Corporation's relevant range of activity is 2,300 units to 6,500 units. When it produces and sells 4,400 units, its average costs per unit are as follows: Direct materials = $6.40 Direct labor = $3.20 Variable manufacturing overhead = $1.15 Fixed manufacturing overhead = $3.00 Fixed selling expense = $0.75 Fixed administrative expense = $0.45 Sales commissions = $0.55 Variable administrative expense = $0.45 For financial reporting purposes, the total amount of product costs incurred to make 4,400 units is closest to:

4,400 X 6.40 = 28,160 4,400 X 3.20 = 14,080 4,400 X 1.15 = 5,060 4,400 X 3.00 28,160 + 14,080 + 5,060 + 13,200 = $60,500

Mundes Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in its Painting Department consisted of 2,600 units that were 60% complete with respect to materials and 40% complete with respect to conversion costs. The cost of the beginning work in process inventory in the department was recorded as $9,400. During the period, 8,600 units were completed and transferred on to the next department. The costs per equivalent unit for the period were $4.60 for material and $5.60 for conversion costs. The cost of units transferred out during the month was:

4,60 + 5.60 = 10.2 X 8,600 = $87,720

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 = $4.95 Direct labor = $4.90 Variable manufacturing overhead = $1.75 Fixed manufacturing overhead = $8.00 Fixed selling expense = $3.55 Fixed administrative expense = $1.70 Sales commissions = $0.80 Variable administrative expense = $0.75 If the selling price is $26.00 per unit, the contribution margin per unit sold is closest to:

4.95 + 4.90 + 1.75 + 0.80 + 0.75 = 13.15 26 - 13.15 = $12.85

Bolka Corporation, a merchandising company, reported the following results for October: Sales = $411,000 Cost of goods sold (all variable) = $174,300 Total variable selling expense = $26,200 Total fixed selling expense = $23,800 Total variable administrative expense = $15,700 Total fixed administrative expense = $38,700 The gross margin for October is:

411,000 - 174,300 = $236,700

Job 910 was recently completed. The following data have been recorded on its job cost sheet: Direct materials = $2,429 Direct labor-hours = 71 labor-hours Direct labor wage rate = $20 per labor-hour Machine-hours = 134 machine-hours The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $21 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 910 would be:

71 X 20 = 1,420 134 X 21 = 2,814 2,429 + 1,420 + 2,814 = $6,663

If sales volume increases and all other factors remain constant, then the:

margin of safety will increase

The following accounts are from last year's books at Sharp Manufacturing: Raw Materials Bal 0 (b) 157,800 (a) 173,500 15,700 Work In Process Bal 0 (f) 525,200 (b) 133,900 (c) 171,800 (e) 219,500 0 Finished Goods Bal 0 (g) 479,000 (f) 525,200 46,200 Manufacturing Overhead (b) 23,900 (e) 219,500 (c) 27,900 (d) 159,800 7,900 Cost of Goods Sold (g) 479,000

479,000 + 46,200 = $525,200

A cement manufacturer has supplied the following data: Tons of cement produced and sold = 245,000 Sales revenue = $949,000 Variable manufacturing expense = $226,000 Fixed manufacturing expenses = $295,000 Variable selling and administrative expense = $153,600 Fixed selling and administrative expense = $87,000 Net operating income = $187,400 The company's contribution margin ratio is closest to:

60.0%

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:

7.00 + 3.90 + 1.90 + 1.15 + 0.80 = $14.75

Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory were: Complete Materials costs = $5,900 50% Conversion costs = $2,100 20% A total of 7,200 units were started and 6,500 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: Materials costs = $159,100 Conversion costs = $120,800 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?

800 + 7,200 - 6,500 = 1,500

Dacosta Corporation had only one job in process on May 1. The job had been charged with $2,300 of direct materials, $6,966 of direct labor, and $10,076 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $19.40 per direct labor-hour. Raw materials (all direct materials): Beginning balance = $9,000 Purchased during the month = $38,500 Used in production = $39,800 Direct labor-hours worked during the month = 2,400 Direct labor cost incurred = $25,010 Actual manufacturing overhead costs incurred $33,800 Inventories: Raw materials, May 30 = ? Work in process, May 30 = $17,067 Work in process inventory on May 30 contains $3,831 of direct labor cost. Raw materials consist solely of items that are classified as direct materials. The balance in the raw materials inventory account on May 30 was:

9,000 + 38,500 = 47,500 - 39,800 = $7,700

A cement manufacturer has supplied the following data: Tons of cement produced and sold = 235,000 Sales revenue = $1,010,500 Variable manufacturing expense = $416,000 Fixed manufacturing expense = $275,000 Variable selling and administrative expense = $54,000 Fixed selling and administrative expense = $215,000 Net operating income = $50,500 What is the company's unit contribution margin? (Round your intermediate calculations to 2 decimal places.)

= ($1,010,500 ÷ 235,000 units) - (($416,000 + $54,000) ÷ 235,000 units) = ($1,010,500 ÷ 235,000 units) - ($470,000 ÷ 235,000 units) = $4.30 per unit - $2.00 per unit = $2.30 per unit

In the cost reconciliation report under the weighted-average method, the "Costs to be accounted for" section contains which of the following items?

Cost of beginning work in process inventory

Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.

In a job-order costing system, indirect labor cost is usually recorded as a debit to:

Manufacturing Overhead.

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.

Which of the following statements is true? I. Overhead can be applied slowly as a job is worked on. II. Overhead can be applied when the job is completed. III. Overhead should be applied to any job not completed at year-end in order to properly value the work in process inventory.

Statements I, II, and III are all true.

Which of the following is true regarding the contribution margin ratio of a company that produces only a single product?

The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit.

The journal entry to record applying overhead during the production process is:

Work In Process XXX Manufacturing Overhead XXX

During March, Pendergraph Corporation incurred $69,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $71,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:

debit to Manufacturing Overhead of $69,000

During March, Pendergraph Corporation incurred $71,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $73,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:

debit to Manufacturing Overhead of $71,000

Gullett Corporation had $31,000 of raw materials on hand on November 1. During the month, the Corporation purchased an additional $80,000 of raw materials. The journal entry to record the purchase of raw materials would include a:

debit to Raw Materials of $80,000

During June, Buttrey Corporation incurred $68,000 of direct labor costs and $8,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

debit to work in process of $68,000

In describing the cost formula equation, Y = a + bX, which of the following is correct:

in the high-low method, "b" equals the change in cost divided by the change in activity.

An example of a committed fixed cost would be:

taxes on real estate