Assignment
1. Inventoriable costs are also known as
A. product costs.
B. conversion costs.
C. variable costs.
D. fixed costs
2. Gustavson Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Wholesaling.
|
|
Service Department
|
Operating Department
|
|
|
Administrative
|
Facilities
|
Assembly
|
Wholesaling
|
|
Departmental costs
|
526,840
|
559,400
|
5183,430
|
5321.190
|
|
Employee hours
|
4.000
|
2.000
|
29.000
|
15.000
|
|
Space occupied
|
2,000
|
2,000
|
30.000
|
6.000
|
Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied. The total Wholesaling Department cost after the allocations of service department costs is closest to which value?
A. $340,426
B. $331,090
C. $337,530
D. $340,240
3. Which of the following entries would correctly record the application of overhead cost?
|
A)
|
Work in Process
|
XXX
|
|
|
|
Accounts Payable
|
|
XXX
|
|
B)
|
Manufacturing Overhead
|
XXX
|
|
|
|
Accounts Payable
|
|
XXX
|
|
C)
|
Manufacturing Overhead
|
XXX
|
|
|
|
Work in Process
|
|
XXX
|
|
D)
|
Work in Process
|
XXX
|
|
|
|
Manufacturing Overhead
|
|
XXX
|
A. Option B
B. Option A
C. Option C
D. Option D
4. The following accounts are from last year's books at Sharp Manufacturing:
|
Raw Materials
|
|
Bal
|
0
|
(b)
|
87,000
|
|
(a)
|
93.000
|
|
|
|
|
5,000
|
|
|
|
|
Work In Process
|
|
|
Bal
|
0
|
(f)
|
251,000
|
|
(b)
|
69,000
|
|
|
|
(c)
|
82,000
|
|
|
|
(e)
|
100,000
|
|
|
|
|
0
|
|
|
|
|
Finished Goods
|
|
|
Bal
|
0
|
(g)
|
226,000
|
|
(f)
|
251,000
|
|
|
|
|
25,000
|
|
|
|
|
Manufactunng Overhead
|
|
|
(b)
|
18,000
|
(e)
|
100,000
|
|
(c)
|
12,000
|
|
|
|
(d)
|
67,000
|
|
|
|
(h)
|
3,000
|
|
3,000
|
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?
A. $251,000
B. $226,000
C. $255,000
D. $223,000
5. What will happen to variable costs when the level of activity decreases?
A. Increase in total
B. Decrease in total
C. Decrease per unit
D. Increase per unit
6. Rariton Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.
|
|
Units
|
Percent Complete with Respect to Conversion
|
|
Beginning work in process inventory
|
4.800
|
60%
|
|
Transferred in from the prior department during January
|
78,000
|
|
|
Completed and transferred to the next department during January
|
80.900
|
|
|
Ending work in process inventory
|
1.900
|
40%
|
The Molding Department's cost per equivalent unit for conversion cost for January was $5.37.
How much conversion cost was assigned to the ending work in process inventory in the Molding Department for January?
A. $4,081.20
B. $10,203.00
C. $10,310.40
D. $6,121.80
7. What does contribution margin represent?
A. What remains from total sales after deducting all variable expenses
B. The sum of cost of goods sold and variable expenses
C. What remains from total sales after deducting cost of goods sold
D. What remains from total sales after deducting fixed expenses
8. What would be an example of a discretionary fixed cost?
A. Depreciation on manufacturing equipment
B. Insurance
C. Research and development
D. Taxes on the factory
9. In describing the cost equation, Y = a + bX, what is "a"?
A. The total fixed cost
B. The dependent variable cost
C. The independent variable level of activity
D. The variable cost per unit of activity
10. In February, one of the processing departments at Manger Corporation had beginning work in process inventory of $25,000 and ending work in process inventory of $34,000. During the month, $290,000 of costs was added to production and the cost of units transferred out from the department was $281,000. In the department's cost reconciliation report for February, what would the total cost to be accounted for under the weighted-average method be?
A. $630,000
B. $59,000
C. $605,000
D. $315,000
11. The following data pertains to activity and utility cost for two recent periods:
Activity level (units) 8,000 5,000
Utility cost $8,000 $6,500
Utility cost is a mixed cost with both fixed and variable components. Using the high-low method, what would be the cost formula for utility cost?
A. Y = $1.00 X
B. Y = $1.25 X
C. Y = $4,000 + $0.50 X
D. Y = $1,500 + $1.25 X
12. Bagley Corporation has two service departments and two operating departments. The space occupied by each department can be seen in the chart below.
The fixed costs of Custodial Services are allocated on the basis of square feet. If these costs are budgeted at $38,000, what would be the amount of cost allocated to General Administration under the direct method?
A. $0
B. $6,000
C. $7,125
D. $5,700
13. Garson Corporation uses the FIFO method in its process costing system. The Grinding Department started the month with 18,000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. An additional 98,000 units were transferred in from the prior department during the month to begin processing in the Grinding Department. During the month 115,000 units were completed in the Grinding Department and transferred to the next processing department. There were 1,000 units in the ending work in process inventory of the Grinding Department that were 20% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Grinding Department for the month?
A. 113,400
B. 115,000
C. 115,200
D. 81,000
14. Given the cost formula, Y = $7,000 + $1.80X, what would be the total cost for an activity level of 4,000 units?
A. $7,200
B. $14,200
C. $7,000
D. $200
15. Dapper Corporation had only one job in process on May 1. The job had been charged with $3,400 of direct materials, $4,640 of direct labor, and $9,200 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $23.00 per direct labor-hour.
During May, the following activity was recorded:
|
Raw materials (all direct materials):
|
|
Beginning balance
|
$8,500
|
|
Purchased during the month
|
$42,000
|
|
Used in production
|
$48,500
|
|
Labor:
|
|
|
Direct labor-hours worked during the month
|
2,200
|
|
Direct labor cost incurred
|
$25,520
|
|
Actual manufacturing overhead costs incurred
|
$52,800
|
|
Inventories:
|
|
|
Raw materials, May 30
|
?
|
|
Work in process, May 30
|
$32,190
|
Work in process inventory on May 30 contains $7,540 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.
What was the balance in the raw materials inventory account on May 30?
A. $2,000
B. $6,500
C. $40,000
D. $33,500
16. Which of the following costs is classified as a prime cost?
A. Neither direct materials nor indirect materials
B. Both direct materials and indirect materials
C. Indirect materials
D. Direct materials
17. Narver Corporation uses the weighted-average method in its process costing system. Operating data for the Lubricating Department for the month of October appear below:
|
|
Units
|
Percent Complete with Respect to Conversion
|
|
Beginning work in process inventory
|
6.600
|
60%
|
|
Transferred in from the prior department during October
|
40.100
|
|
|
Completed and transferred to the next department during October.
|
37,100
|
|
|
Ending work in process inventory
|
9.600
|
80%
|
What were the equivalent units for conversion costs in the Lubricating Department for October?
A. 43,100
B. 47,780
C. 44,780
D. 37,100
18. Eagle Company's quality cost report is to be based on the following data:
|
Quality data gathering, analysis, and reporting
|
$59,000
|
|
Test and inspection of incoming materials
|
$48,000
|
|
Final product testing and inspection
|
$27,000
|
|
Depreciation of test equipment
|
$30,000
|
|
Cost of field servicing and handling complaints
|
$52,000
|
|
Disposal of defective products
|
$13,000
|
|
Downtime caused by quality problems
|
$52,000
|
|
Technical support provided to suppliers
|
$18,000
|
|
Returns arising from quality problems
|
$18,000
|
What would be the total appraisal cost appearing on the quality cost report?
A. $75,000
B. $100,000
C. $105,000
D. $78,000
19. Under the FIFO method, unit costs would
A. contain some element of cost from the prior period.
B. not include costs incurred to complete beginning inventory.
C. not contain some elements of cost from the prior period.
D. result from costs in the beginning inventory being added in with current period costs.
20. Which of the following is an example of a cost that is variable with respect to the number of units produced?
A. Salaries of top marketing executives
B. Direct labor cost, where the direct labor workforce is adjusted to the actual production of the period
C. Rent on the administrative office building
D. Rent on the factory building and insurance costs.