ACCT505 Practice Quiz #1

1. For which of the following businesses would the job order cost system be appropriate? a. Auto repair shop. b. Crude Oil refinery. c. Drug Manufacturer. d. Root beer producer. 2. Which of the following companies would most likely use job costing? a. Paper manufacturer. b. Paint Producer. c. Breakfast cereal maker. d. Advertising agency. 3. An equivalent unit of conversion costs is equal to the amount of conversion costs required to: a. Start a unit. b. Start and complete a unit. c. Transfer a unit in. d. Transfer a unit out.

4. Job 655 was recently completed. The following data has been recorded on its job cost sheet: Direct materials $ 78,000 Direct labor costs 45,000 Number of units completed 4,000 The company applies manufacturing overhead on the basis of direct labor costs. The predetermined overhead rate is 75% of direct labor costs. Required: Compute the unit product cost that would appear on the job cost sheet for this job:

Cost Summary: Direct Materials Direct Labor Manufacturing Overhead ( $45,000 X 75%) $ 78,000 45,000 33,750 ----------

Total Cost $ 156,750/Units Completed 4,000 = Unit Product Cost = $ 39.19

5. Prepare the necessary journal entries from the following information for Kingston Company: a. Purchased raw materials on account, $ 45,000. b. Raw materials requisitioned for use in production. Direct Materials $ 23,000; Indirect materials, $ 12,000. c. Salaries and wages cost incurred: Direct Labor cost, $ 47,000; Indirect Labor Cost, $ 15,000.

d. e. f. g. h.

Depreciation on Factory Equipment, $ 12,000. Depreciation on Office Equipment, $ 5,000. Manufacturing Overhead was applied at a rate of 80% of direct labor costs. Goods costing $ 75,000 were completed during the period. Goods costing $ 36,000 were sold on account for $ 48,000. 45,000 45,000 23,000 12,000 35,000 47,000 15,000 62,000 12,000 12,000 5,000 5,000 37,600 37,600 75,000 75,000 48,000 48,000
36,000 36,000

a. Raw Materials Inventory Accounts Payable b. Work In Process Manufacturing Overhead Raw Materials Inventory c. Work in Process Manufacturing Overhead Salaries and Wages Payable d. Manufacturing Overhead Accumulated Depreciation e. Depreciation Expense Accumulated Depreciation f. Work in Process Manufacturing Overhead g. Finished Goods Work in Process h. Accounts Receivable Sales Revenue
Cost of Goods Sold Finished Goods

6. Ulmer Company uses the weighted-average method in its process-costing system. The Framing Department of Ulmer Company reported the following information for the month of September: Percentage Complete with Units Respect to Conversion Work In Process, September 1 5,000 70% Units Started 26,000 Completed and Transferred Out 22,000 Work in Process, September 30 9,000 40% Costs for September: Work in Process, September 1 Added during the month Materials $ 37,200 $161,200 Conversion $ 48,640 $ 192,000

All materials are added at the beginning of the process. Required: Compute the following items using the weighted-average method: a. The equivalent units of production for conversion costs. b. The cost per equivalent unit for conversion costs. c. The total cost assigned to units transferred out the Framing Department for September. d. The cost assigned to work in process inventory as of September 30.

1. a. Units transferred out Add: equivalent units in ending inventory ( 9,000 X 40%) Equivalent units for conversion costs b. Work in Process, September 1 Conversion Costs added during the current month Total costs

22,000 3,600 25,600 $ 48,640 192,000 $ 240,640

$ 240,640/25,600 Equivalent Units = $ 9.40 per equivalent unit.

c. Units transferred out 22,000 Add: equivalent units in ending inventory ( 9,000 X 100%, since all units are 100% complete with respect to materials) 9,000 Equivalent units for materials 31,000 Materials cost per equivalent unit: ( $ 37,200 + $ 161,200)/31,000 Equivalent Units = $6.40 per equivalent unit. Conversion cost per equivalent unit: ( $ 48,640 + $ 192,000)/25,600 Equivalent Units = $ 9.40 per equivalent unit. Costs transferred out: 22,000 units X ( $6.40 + $9.40) = $ 347,600 d. Materials costs: Conversion costs: 9,000 X $ 6.40 = $ 57,600 9,000 X 40% complete X $ 9.40 = $ 33,840

Cost assigned to ending inventory

$ 91,440

7. The Simmons Company manufactures a product for which materials are added at the beginning of the manufacturing process. A review of the companys inventory and cost records for the most recently completed year revealed the following information: Units
Work In Process, March 1 ( 60% complete With respect to conversion costs) Units started into production Costs added during the year: Materials Conversion Units completed during the year 80,000 170,000

Materials
$ 200,000

Conversion
$ 291,200

$ 600,000 $ 582,400 190,000

The company uses the weighted-average cost method in its process costing system. The ending inventory is 30% complete with respect to conversion costs. Required: a. Compute the equivalent units of production and the cost per equivalent units for materials and for conversion costs. b. Determine the cost transferred to finished goods..

c. Determine the amount of cost that should be assigned to the ending work-in-process inventory.

Materials Units completed and transferred out (all units are 100% complete with respect to materials) Work in Process, March 31: Materials: 60,000 X 100% Conversion: 60,000 X 30% Equivalent Units of Production 190,000 60,000 -------------250,000 Materials $ 200,000 600,000 $800,000 250,000 $3.20

Conversion 190,000

18,000 --------------208,000 Conversion $ 291,200 582,400 873,600 208,000 $ 4.20

Costs in beginning work in process Costs added during the year Total Equivalent Units of Production Cost per Equivalent Unit b. Costs transferred to finished goods 190,000 X ( $3.20 + $4.20) = $ 1,406,000 c. Ending Work in Process: Materials 60,000 X $ 3.20 = $ 192,000 Conversion: 18,000 X 4.20 = $ 75,600

8. XYX Corporation has provided the following data for the month of January: Inventories Raw materials Work In process Finished goods Beginning $21,000 $7,000 Ending $15,000 $9,000

$33,000

$30,000

Additional Information Raw material purchases $35,000

Direct labor costs Manufacturing overhead cost incurred Indirect materials included in manufacturing overhead costs incurred Manufacturing overhead cost applied to work in process

$55,000 $27,000 $2,500 $30,000

Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold in good form.

Honeysuckle Corporation Schedule of Cost of Goods Manufactured January XXX Direct materials: Raw materials inventory, beginning Raw material purchases Total raw materials available Raw materials inventory, ending Raw materials used in production Indirect materials included in manufacturing overhead costs incurred Direct labor Manufacturing overhead applied to work in process Total manufacturing costs Beginning work in process inventory Ending work in process inventory Cost of goods manufactured Honeysuckle Corporation Cost of Goods Sold January XXX $33,000 $121,500 $154,500 30,000 124,500 3,000 121,500

$21,000 35,000 $56,000 15,000 $41,000 2,500 $38,500 55,000 30,000 $123,500 7,000 $130,500 9,000 $121,500

Finished goods inventory, beginning Add cost of goods manufactured Cost of goods available for sale Deduct: finished goods inventory, ending Unadjusted cost of goods sold Deduct overapplied overhead Adjusted cost of goods sold