Question - The Lee Company uses a job-order costing system. The following data were recorded for June:
|
Job
Number
|
June 1
Work in Process
Inventory
|
Added During June
|
|
Direct
Materials
|
Direct
Labor
|
|
235
|
$2,500
|
$600
|
$400
|
|
236
|
$1,500
|
$800
|
$1,000
|
|
237
|
$1,000
|
$1,200
|
$1,750
|
|
238
|
$800
|
$1,500
|
$2,250
|
Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers.
1. Lee Company's cost of goods sold for June was
A. $14,640.
B. $9,730.
C. $10,170.
D. $15,520.
Question - The following cost data pertain to the operations of Lefthand Department Stores, Inc., for the month of December.
|
Corporate legal office salaries
|
$74,000
|
|
Shoe Department cost of sales,
Brentwood Store
|
$35,000
|
|
Corporate headquarters building lease
|
$78,000
|
|
Store manager's salary
Brentwood Store
|
$14,000
|
|
Shoe Department sales commissions,
Brentwood Store
|
$5,000
|
|
Store utilities,
Brentwood Store
|
$14,000
|
|
Shoe Department manager's salary,
Brentwood Store
|
$3,000
|
|
Central warehouse lease cost
|
$10,000
|
|
Janitorial costs, Brentwood Store
|
$8,000
|
The Brentwood Store is just one of many stores owned and operated by the company. The Shoe Department is one of many departments at the Brentwood Store. The central warehouse serves all of the company's stores.
2. What is the total amount of the costs listed above that are direct costs of the Shoe Department?
A. $35,000
B. $43,000
C. $40,000
D. $79,000
Question - Abis 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
|
Cost
|
Percent Complete
|
|
Material costs
|
$6,000
|
50%
|
|
Conversion costs
|
$9,900
|
30%
|
A total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
|
Cost
|
|
Material costs
|
$113,900
|
|
Conversion costs
|
$322,500
|
The ending inventory was 80% complete with respect to materials and 20% complete with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that's the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.
3. The cost per equivalent unit for conversion costs for the first department for the month is closest to
A. $37.68.
B. $33.24.
C. $40.77.
D. $38.83.
4. Melillo Corporation has provided data concerning the company's manufacturing overhead account for the month of October. Prior to the closing of the overapplied or underapplied balance to cost of goods sold, the total of the debits to the manufacturing overhead account was $67,000, and the total of the credits to the account was $57,000.
Which statement is true?
A. Manufacturing overhead applied to work in process for the month was $67,000.
B. Actual manufacturing overhead for the month was $67,000.
C. Manufacturing overhead transferred from finished goods to cost of goods sold during the month was $57,000.
D. Manufacturing overhead for the month was overapplied by $10,000.
5. Assume there's no beginning work-in-process inventory and the ending work-in-process inventory is 70% complete with respect to conversion costs. Under the weighted-average method, the number of equivalent units of production with respect to conversion costs would be
A. the same as the units started during the period.
B. less than the units completed.
C. less than the units started during the period.
D. the same as the units completed.
Question - Abis 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
|
Cost
|
Percent Complete
|
|
Material costs
|
$6,000
|
50%
|
|
Conversion costs
|
$9,900
|
30%
|
A total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
|
Cost
|
|
Material costs
|
$113,900
|
|
Conversion costs
|
$322,500
|
The ending inventory was 80% complete with respect to materials and 20% complete with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that's the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.
6. The cost per equivalent unit for materials for the month in the first processing department is closest to
A. $11.82.
B. $11.99.
C. $12.44.
D. $11.39.
Question - Sanker Inc. has provided the following data for the month of August. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.
|
Work In
Process
|
Finished
Goods
|
Cost of
Goods Sold
|
Total
|
|
Direct materials
|
$2,790
|
$7,680
|
$18,240
|
$28,710
|
|
Direct labor
|
9,700
|
19,200
|
45,600
|
74,500
|
|
Manufacturing
overhead applied
|
5,440
|
8,000
|
18,560
|
32,000
|
|
Total
|
$17,930
|
$34,880
|
$82,400
|
$135,210
|
Manufacturing overhead for the month was overapplied by $5,000. The company allocates any underapplied or overapplied overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
7. The journal entry to record the allocation of any underapplied or overapplied overhead for August would include
A. credit to finished goods of $1,250.
B. debit to finished goods of $1,250.
C. debit to finished goods of $34,880.
D. credit to finished goods of $34,880.
Question - Abis 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
|
Cost
|
Percent Complete
|
|
Material costs
|
$6,000
|
50%
|
|
Conversion costs
|
$9,900
|
30%
|
A total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
|
Cost
|
|
Material costs
|
$113,900
|
|
Conversion costs
|
$322,500
|
The ending inventory was 80% complete with respect to materials and 20% complete with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that's the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.
8. The total cost transferred from the first processing department to the next processing department during the month is closest to
A. $420,414.
B. $452,300.
C. $436,400.
D. $512,700.
Question - The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just-completed year.
|
Sales
|
$910
|
|
Raw materials, inventory, beginning
|
$80
|
|
Raw materials, inventory, ending
|
$20
|
|
Purchases of raw materials
|
$100
|
|
Direct labor
|
$130
|
|
Manufacturing overhead
|
$200
|
|
Administrative expenses
|
$160
|
|
Selling expenses
|
$140
|
|
Work in process inventory, beginning
|
$40
|
|
Work in process inventory, ending
|
$10
|
|
Finished goods inventory, beginning
|
$130
|
|
Finished goods inventory, ending
|
$150
|
9. The net operating income for the year (in thousands of dollars) was
A. $40.
B. $110.
C. $410.
D. $180.
Question - Malaviya Corporation uses the FIFO method in its process-costing system. Operating data for the Casting Department for the month of September appear below:
|
Units
|
Percent Complete
with Respect to
Conversion
|
|
Beginning work in process inventory
|
17,000
|
40%
|
|
Transferred in from the prior department
during September
|
72,000
|
|
|
Ending work in process inventory
|
18,000
|
30%
|
10. According to the company's records, the conversion cost in the beginning work-in-process inventory was $63,104 at the beginning of September. Additional conversion costs of $654,240 were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for September? (Round off to three decimal places.)
A. $8.060
B. $9.280
C. $9.400
D. $9.087
Question - The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just-completed year.
|
Sales
|
$910
|
|
Raw materials, inventory, beginning
|
$80
|
|
Raw materials, inventory, ending
|
$20
|
|
Purchases of raw materials
|
$100
|
|
Direct labor
|
$130
|
|
Manufacturing overhead
|
$200
|
|
Administrative expenses
|
$160
|
|
Selling expenses
|
$140
|
|
Work in process inventory, beginning
|
$40
|
|
Work in process inventory, ending
|
$10
|
|
Finished goods inventory, beginning
|
$130
|
|
Finished goods inventory, ending
|
$150
|
11. The cost of goods manufactured (finished) for the year (in thousands of dollars) was
A. $500.
B. $520.
C. $460.
D. $530.
Question - The following cost data pertain to the operations of Lefthand Department Stores, Inc., for the month of December.
|
Corporate legal office salaries
|
$74,000
|
|
Shoe Department cost of sales,
Brentwood Store
|
$35,000
|
|
Corporate headquarters building lease
|
$78,000
|
|
Store manager's salary
Brentwood Store
|
$14,000
|
|
Shoe Department sales commissions,
Brentwood Store
|
$5,000
|
|
Store utilities,
Brentwood Store
|
$14,000
|
|
Shoe Department manager's salary,
Brentwood Store
|
$3,000
|
|
Central warehouse lease cost
|
$10,000
|
|
Janitorial costs, Brentwood Store
|
$8,000
|
The Brentwood Store is just one of many stores owned and operated by the company. The Shoe Department is one of many departments at the Brentwood Store. The central warehouse serves all of the company's stores.
12. What is the total amount of the costs listed above that are not direct costs of the Brentwood Store?
A. $36,000
B. $78,000
C. $162,000
D. $43,000
13. The Sarbanes-Oxley Act of 2002 contains all of the following provisions except which one?
A. Severe penalties are established for altering or destroying documents that may eventually be used in an official proceeding.
B. The audit committee of the board of directors of a company must hire, compensate, and terminate the public accounting firm that audits the company's financial reports.
C. A CFO must be a CPA or CMA.
D. Both the CEO and CFO must certify in writing that their company's financial statements and accompanying disclosures fairly represent the results of operations.
Question - The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just-completed year.
|
Sales
|
$910
|
|
Raw materials, inventory, beginning
|
$80
|
|
Raw materials, inventory, ending
|
$20
|
|
Purchases of raw materials
|
$100
|
|
Direct labor
|
$130
|
|
Manufacturing overhead
|
$200
|
|
Administrative expenses
|
$160
|
|
Selling expenses
|
$140
|
|
Work in process inventory, beginning
|
$40
|
|
Work in process inventory, ending
|
$10
|
|
Finished goods inventory, beginning
|
$130
|
|
Finished goods inventory, ending
|
$150
|
14. The cost of the raw materials used in production during the year (in thousands of dollars) was
A. $180.
B. $40.
C. $120.
D. $160.
Question - Abis 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
|
Cost
|
Percent Complete
|
|
Material costs
|
$6,000
|
50%
|
|
Conversion costs
|
$9,900
|
30%
|
A total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
|
Cost
|
|
Material costs
|
$113,900
|
|
Conversion costs
|
$322,500
|
The ending inventory was 80% complete with respect to materials and 20% complete with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that's the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.
15. What are the equivalent units for conversion costs for the month in the first processing department?
A. 8,560
B. 8,200
C. 360
D. 10,000
16. Freeman Company uses a predetermined overhead rate based on direct-labor hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000 and direct-labor hours would be 10,000. The actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct-labor hours. The cost records for the year will show
A. overapplied overhead of $6,000.
B. underapplied overhead of $6,000.
C. underapplied overhead of $30,000.
D. overapplied overhead of $30,000.
17. An operation costing system is
A. identical to a process-costing system, except that actual manufacturing overhead costs are traced to units of product.
B. the same as a process-costing system, except that direct materials costs are accounted for in the same way as in job-order costing.
C. the same as a job-order system, except that direct materials costs are accounted for in the same way as in process costing.
D. identical to a job-order costing system, except that actual manufacturing overhead costs are traced to units of product.
Question - The Lee Company uses a job-order costing system. The following data were recorded for June:
|
Job
Number
|
June 1
Work in Process
Inventory
|
Added During June
|
|
Direct
Materials
|
Direct
Labor
|
|
235
|
$2,500
|
$600
|
$400
|
|
236
|
$1,500
|
$800
|
$1,000
|
|
237
|
$1,000
|
$1,200
|
$1,750
|
|
238
|
$800
|
$1,500
|
$2,250
|
Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers.
18. Lee Company's work-in-process inventory balance on June 30 was
A. $4,100.
B. $3,940.
C. $3,300.
D. $9,450.
19. Which person would occupy a line position in a department store?
I. Sales manager
II. Manager, furniture department
III. Manager, advertising department
IV. Manager, personnel department
A. Only I
B. I, II, III, IV
C. Only I, II, III
D. Only I and II
20. When would the direct method and the step-down method of service department cost allocation result in identical allocations being made to the operating departments?
A. The only time is when all costs in the service departments are fixed costs.
B. That can happen only if there's an equal amount of service departments and operating departments.
C. The only time is when there is just one service department.
D. That can happen if there is only one service department or, if the company has more than one service department, if all the costs in those departments are fixed costs.