Oakton Community CollegeAccounting 154 – Managerial Accounting Robert Bruebach Review Questions for Exam I CHAPTER 1 1. Salaries and wages incurred in the factory would be product costs. T / F 2. The cost of goods manufactured is included in the cost of goods available for sale in a manufacturing company. T / F 3. Which of the following would most likely be included as part of manufacturing overhead in the production of a wooden table? A) The amount paid to the individual who stains the table. B) The commission paid to the salesperson who sold the table. C) The cost of glue used in the table. D) The cost of the wood used in the table. 4. Using the following data for April, calculate the cost of goods manufactured: Direct materials................................................ Direct labor...................................................... Manufacturing overhead.................................. Beginning work in process inventory.............. Ending work in process inventory................... The cost of goods manufactured was: $23,00 0 $21,00 0 $37,00 0 $13,00 0 $18,00 0 000 Work in process.... Indirect labor................ Rent... factory...000 24... Supplies...........000 1.....................000 30..... Advertising expense............5............ Maintenance....00 0 80. Purchases of raw materials.. Work in Process... Utilities............ Depreciation............... Under.000 69..........000 8. office equipment.. The following journal entry would be made to apply overhead cost to jobs in a joborder costing system: Manufacturing Overhead..... Beginnin g $ 9............... factory building............. factory equipment...... Inventories: Raw materials............ factory equipment.....................or overapplied overhead represents the difference between actual overhead costs and applied overhead costs.....000 54.............. Finished goods..500 70.............000 Required: Prepare a schedule of cost of goods manufactured...... The following data were taken from the cost records of the Beca Company for last year: Depreciation............00 0 21.. CHAPTER 2 6............ ....................500 20......000 90............................ factory..............000 $30.000 124......00 0 7....................... Sales commissions.. Direct labor cost............000 Ending $11............ 6. XX X XXX T / F 7.... ........ the only job still in process on April 30... This error will result in: A) the ending balance of Finished Goods to be understated. In computing its predetermined overhead rate..... Salary of production supervisor. To finished goods...... Direct materials.....000 .....000 80. $20.....800 (48. 5............................ Brady Company included its factory insurance cost twice... C) the Cost of Goods Manufactured to be overstated.00 0 60...... 9.......... Steele Company uses a predetermined overhead rate based on machine hours to apply manufacturing overhead to jobs.................. has been charged with direct labor of $2..000 ) Birk applies overhead to jobs at a predetermined rate of 80% of direct labor cost........ Rent on factory equipment........000 16....... Advertising expense.......... The following debits (credit) appeared in Birk’s Work in Process account for the month of April: Apri l 1 30 30 30 30 Description Amount Balance........000 machine hours will be worked during the year...000 20......................000 8.......... Birk Co.. uses a job order cost system.. What was the amount of direct materials charged to Job No.........000 direct labor hours and 16. D) the Net Operating Income to be overstated.......... Direct labor... Indirect materials.......... $ 4.............. Sales commissions... Direct labor......................T / F 8... The predetermined overhead rate per hour will be: 10..000 B) $5.....................000 Steele estimates that 10....000 40.....000 24.. Steele Company has provided the following estimated costs for next year: Direct materials.............800 D) $24.. Manufacturing overhead.. 5? A) $3.......................000 12.....000 16..200 C) $8. Job No..............000. B) the credits to the Manufacturing Overhead account to be understated......... .200 of manufacturing overhead to Job KN672? A) B) Work in Process................... Last year..... $1.......000 in actual manufacturing overhead cost...... uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs.000 and 40.. Snappy’s manufacturing overhead for the year was: $_______________ underapplied / overapplied (circle one) Use the following to answer questions 14-15: Munos Publishing Company uses a job-order costing system to collect costs related to the manufacture of specialty publications for corporate training...... respectively.....000 in direct materials and $2........20 0 Manufacturing Overhead. 12..............20 0 Manufacturing Overhead. Pinnini Co.250 actual manufacturing overhead cost.. By the end of the year.......500 for the year.... If Job #334 contained 200 units............. The labor rate is $6 per hour..............000 hours.....20 0 ............ how many hours did the company work during the year? Use the following to answer questions 12-13: Snappy Company has a job-order cost system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.........00 per direct labor hour...........11.. If the predetermined overhead rate was $5.. for the year.. Snappy had worked a total of 45..... Manufacturing overhead cost and direct labor-hours were estimated at $100.....20 0 Cost of Goods Manufactured..... 14.... $1........400 in direct labor........................................................................ Job #334 was completed at a cost of $5...........000 direct labor-hours and had incurred $110.......... What journal entry would Munos make to record the application of $1.... Pinnini Company incurred $225... The Manufacturing Overhead account showed that overhead was overapplied $14.. In July... $1................... the unit cost on the completed job cost sheet would be: 13.......................... $1....................... ............... Vex had been using a traditional overhead allocation system based on machine hours.......... For the current year.................................... T / F 17................................. Estimated Activity 50. $7...... Number of inspections......... Information on these measures of activity and related overhead rates for the current year are as follows: Machine hours.............. In activity-based costing.................. $7..............20 0 Cost of Goods Manufactured...............20 0 Work in Process................................... Would this job have been overcosted or undercosted under the traditional system and by how much? A) undercosted by $36.... $7. $1..............60 0 Work in Process...........................20 0 Work in Process.............................................................................60 0 Work in Process....................................................60 0 Finished Goods..........C) D) Manufacturing Overhead........................ $7............ $1................................20 0 15........................... Vex Corporation manufactures a variety of products...............................................................................................60 0 C) Finished Goods......60 0 D) Cost of Goods Manufactured....................... $7................................................................. ...................................................................... What journal entry would Munos make to record the completion of Job KN668 at a total cost of $7...................... $7..................... $7............... unit product costs computed for external financial reports include direct materials.......60 0 Finished Goods.....................600? Work in Process.....................................60 0 CHAPTER 3 A) 16...................... $1.......................................................60 0 B) Cost of Goods Manufactured. direct labor................................................................. $1........000 3................ In the past......... $7.................. Vex decided to switch to an activity-based costing system using machine hours and the number of inspections as measures of activity............................. and manufacturing overhead costs......000 Activity Rate $8 per machine hour $40 per inspection Job #812 for the current year required 15 machine hours and 2 inspections............. The activity rate for Activity 3 is closest to: A) $87..96..75.010 $32. Information on these cost pools for next year are as follows: Activity Cost Pool Machine Setups.... Other Overhead. C) $37..... Activity Measure Number of setups Number of inspections Machine hours Estimated Activity 400 1......66............500 30....000 Estimated Overhead Cost $150.....500 1..482 Expected Activity Product A Product B 1.. 19.. The company has two products: A and B... The overhead cost per unit of Product A is: Use the following to answer questions 20-22: Nimbe Corporation manufactures a variety of products. Activity 2.......600 1... Estimated Cost $29.. Direct labor cost... There are three activity cost pools.....400 200 720 500 Total 1............. D) undercosted by $80...000 units. Activity 3.. D) $24. B) $90...................000 $480. with estimated costs and expected activity as follows: Activity Cost Pool Activity 1....448 $45......000 Information (on a per unit basis) related to three popular products at Nimbe are as follows: Direct material cost........ Nimbe has decided to switch to an activity-based costing system for manufacturing overhead costs using three activity cost pools...220 18...B) undercosted by $44... Number of setups. In the past. Nimbe has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost.. Number of inspections.. Use the following to answer questions 18-19: Acker Company uses activity-based costing... Model #19 $400 $810 2 1 Model #36 $540 $600 3 3 Model #58 $310 $220 1 1 ....000 $180....100 400 1.... The annual production and sales of Product A is 1. C) overcosted by $80..............28....................800 units and of Product B is 1.. Quality Control........... .000 12...800 Expected Activity Product X Product Y 3..000 2.. General factory (direct labor-hours)...30 D) $193..000 8. General factory.000 Estimated Overhead Cost $81...........000 5............. what would be the total cost of one unit of Model #36? 21.... Total 8....50 ....000 10.............. which of Nimbe's Models had higher unit product costs under the traditional system? A) #19 B) #58 C) #19 and #58 D) #36 and #58 E) #19..40 B) $38.... In comparing the traditional system with the activity-based costing system...... #36... The company has provided the following data concerning its activity-based costing system: Activity Cost Pools (and Activity Measures) Machine related (machine-hours).Number of machine hours...... The activity rate for the batch setup activity cost pool is closest to: A) $48.000 23..... 4 8 10 20... Under the traditional system..........000 7........ what would be the total cost of one unit of Model #36? 22...000 5................... Batch setup (setups)........ Batch setup...........70 C) $74.. Under the activity-based costing system.......... and #58 Use the following to answer questions 23-24: Angel Corporation uses activity-based costing to determine product costs for external financial reports..000 $274....... Activity Cost Pools Machine related...600 $387.. .. Product C and Product D....80 hour $23. Costs $ 12...... b.. and determine the unit product cost of each product for the current year...60 $10.20 hours $11.. The company estimated it would incur $177. Product C 3... Data relating to these activities for the current period are given below: Estimate d Overhea d Activity Cost Pool Machine setups.. Direct labor cost per unit.. The company is considering using an activity-based costing system to compute unit product costs for external financial reports instead of its traditional system based on direct labor-hours.. Data concerning the current period's operations appear below: Estimated volume... General factory....910 in manufacturing overhead costs during the current period..960 .....240 90..980 4...... Purchase orders. Direct labor-hours per unit....20 Required: a.80 Product D 3....800 units 1. The activity-based costing system would use three activity cost pools. Compute the predetermined overhead rate under the current method...160 1.000 units 0......560 2. Direct materials cost per unit......400 6...480 $177........... Assuming that actual activity turns out to be the same as expected activity... Cabat Company manufactures two products.190 75....... the total amount of overhead cost allocated to Product X would be: 25.910 Expected Activity Product Product C D Total 110 120 230 820 1.. Overhead currently is applied to the products on the basis of direct labor-hours.....24.....70 $ 7... .240 Required: a...420 General factory...standard quantity allowed for output).....) CHAPTER 8 27. D) actual price × (actual quantity of inputs used .800 $79.200 Expecte d Activity 800 2..830 2.(standard quantity allowed for output at standard price).. How much total overhead was applied to products during the year? b. Ermine Company uses activity-based costing to compute product costs for external reports..970 2..Determine the unit product cost of each product for the current period using the activity-based costing approach......standard price).......standard quantity allowed for output)....200 Actual costs and activities for the current year were as follows: Actual Overhea d Actual Cost Activity Batch setups.. The general model for calculating a quantity variance is: A) actual quantity of inputs used × (actual price . B) standard price × (actual quantity of inputs used .... $5. ..600 $88...060 850 Material handling.. General factory. Estimated costs and activities for the current year are presented below for the three activity centers: Batch setups....400 2..... $77. The company has three activity centers and applies overhead using predetermined overhead rates for each activity center. Material handling. $87. By how much was overhead overapplied or underapplied? (Be sure to clearly label your answer as to whether the overhead was overapplied or underapplied.... When more hours of labor time are necessary to complete a job than the standard allows... C) (actual quantity of inputs used at actual price) .. the labor rate variance is unfavorable. Estimate d Overhea d Cost $5..... T / F 28. 26. ........................................000 5.. $15............standard quantity allowed for output)..... The entry to record the purchase of materials having a standard cost of $0...........000 133.. The general model for calculating a price variance is: A) actual quantity of inputs × (actual price ...7 grams Standard price.......(standard quantity allowed for output at standard price)......... True 2..000 ...............600 grams Actual output............. 30............ 3..........900 grams Actual cost of materials purchased.... (circle one) Use the following to answer questions 31-32: The following materials standards have been established for a particular product: Standard quantity per unit of output... What is the materials price variance for the month? 32..........standard quantity allowed for output)................ Answer: Beca Company Schedule of Cost of Goods Manufactured Direct Materials: Beginning raw materials inventory .......standard price).......... 8. $56.... Add: Purchases of raw materials ........... $76.29..50 per pound from a supplier at $0.... True 3..... What is the materials quantity variance for the month? Answers 1..... C) (actual quantity of inputs at actual price) ...................60 per pound would include a: Increase / Decrease to the Materials Price Variance expense account..... Raw materials available for use $ 9.. Dolittle Company purchased materials on account..... B) standard price × (actual quantity of inputs .......... D) actual price × (actual quantity of inputs . C 4.. 3....550 Actual materials used in production...................30 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased....000 124........................ 400 units 31....... ............ 12...000 21..753 A B $268.....00 $2.............................. 9................ Deduct: Ending raw materials inventory ........... Indirect labor .......... Add: Beginning work in process inventory.......250 overapplied A C True B C $42....00 0 $371..........000 6...............300 25...............040 $2..50 $2..... 24......................000 184. 18.............. factory building ...................... 21...000 $122........500 30................ factory ........ Direct labor........000 54.........00 0 392... Maintenance. Cost of goods manufactured...................... 8...... Manufacturing overhead: Rent.......... 17. 6............................ Depreciation......500 8.... Answer: 11...... Raw materials used in production.............................. Utilities........ 20. 15...................000 70.......... 7............00 0 80................................... factory .................................................................. factory equipment .... 22............25 B 47........00 0 386. False True C $4..............000 1.......................................... 16........ Total manufacturing costs............................................. 10...................00 0 ...... 11. Deduct: Ending work in process inventory........ 23.................................. 14. factory equipment .......... 13.................... Supplies.........000 20.... 19........ Total overhead costs..........900 Hours $42.... . 4..240 $90...... Direct labor.... General factory.. Total overhead cost..080 4......70 7.70 7..270 ÷ 3.....00 The overhead cost charged to each product is: Machine setups.....35 b.160 44.640 ÷ 3.960 = $25..............560 59....160 1..80 25..21 $58..... Estimated Overhead Costs $12..60 10. Total unit product cost....960 hours Using these hours as a base......400 hours Total direct labor hours............. 2...... Product D: $81... 6...560 hours Product D: 3...... Product C $11............000 units = $27...... Using activity based costing.960 Overhead Rate $53.190 $75...640 Overhead cost per unit: Product C: $96...a...60 10........00 $13.. The overhead rates for each activity center are as follows: Machine setups... Product C Product D Activity Amount Activity Amount 110 $ 5... Total unit product cost.800 units × 1..... Direct labor........ Purchase orders..980 6..... The expected total direct labor hours during the period are computed as follows: Product C: 3.. the unit product costs are: Direct materials...56/DLH Using this overhead rate.....480 Expected Activity 230 1....80 30..280 2... Product C $11.200 $96... Purchase orders. the predetermined overhead using direct labor hours would be: Estimated overhead cost ÷ Estimated direct labor hours = $177.33 $47...... Manufacturing overhead.910 ÷ 6..00 $38... the unit product cost of each product would be: Direct materials..45 $51...830 120 $ 6.73 Product D $23.......11 ....67 $53........8 hour per unit.800 units = $25........400 31...07 Product D $23.........000 units × 0..20 20....270 $81.2 hour per unit...........20 27......360 820 31.21 per unit.. General factory........ Manufacturing overhead..33 per unit.. ......................................270 Activity Cost Pool Batch setups......................................... 31......120 Favorable $1...................................130 $176................860 Overhead overapplied (underapplied).... Material handling...........83 General factory.................. 27..............400 2....... 0 Actual overhead costs: $ 5.......................... Answer: a............06 Batch setups..........................200 Expected Activity 800 2........600 Material handling.................13 Overhead applied...... 0 Material handling........ 32........................ b............ Estimated Overhead Activity Cost Pool Costs Batch setups............26.....540 80............... General factory....... 29....................200 Activity Rate $7 $37 $36 The amount of overhead applied to production is determined as follows: Overhead Applied $ 5.970 77.............................800 General factory........ 28........... Total overhead applied........836 Unfavorable Activity Rate $7 $37 $36 Actual Activity 850 2.............. $5......................... $ 5...640 $176................. 87..420 2............. $88.....240 ........ False B A Increase $3................950 89...................... 30. $79.. 0 170..