BUS 202 Spring 2010 Test 1

Student: ___________________________________________________________________________ 1. An example of a period cost is: A. fire insurance on a factory building. B. salary of a factory supervisor. C. direct materials. D. rent on a headquarters building.

2. Within the relevant range, the difference between variable costs and fixed costs is: A. variable costs per unit fluctuate and fixed costs per unit remain constant. B. variable costs per unit are constant and fixed costs per unit fluctuate. C. both total variable costs and total fixed costs are constant. D. both total variable costs and total fixed costs fluctuate.

3. Green Company's costs for the month of August were as follows: direct materials, $27,000; direct labor, $34,000; selling, $14,000; administrative, $12,000; and manufacturing overhead, $44,000. The beginning work in process inventory was $16,000 and the ending work in process inventory was $9,000. What was the cost of goods manufactured for the month? A. $105,000 B. $132,000 C. $138,000 D. $112,000

4. Last month a manufacturing company had the following operating results:

What was the cost of goods manufactured for the month? A. $350,000 B. $385,000 C. $377,000 D. $323,000

5. When applying manufacturing overhead to jobs, the formula to calculate the amount is as follows: A. Predetermined overhead rate divided by the actual manufacturing overhead incurred on the particular job. B. Predetermined overhead rate times the actual manufacturing overhead incurred on the particular job. C. Predetermined overhead rate divided by the actual units of allocation base charged to the particular job. D. Predetermined overhead rate times the actual units of allocation base charged to the particular job.

6. Job 607 was recently completed. The following data have been recorded on its job cost sheet:

The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $14 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 607 would be: A. $4,107 B. $6,319 C. $3,432 D. $4,863

7. Harrell 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 its total manufacturing overhead cost at $400,000 and its direct labor-hours at 100,000 hours. The actual overhead cost incurred during the year was $350,000 and the actual direct labor-hours incurred on jobs during the year was 90,000 hours. The manufacturing overhead for the year would be: A. $10,000 underapplied B. $10,000 overapplied C. $50,000 underapplied D. $50,000 overapplied

8. Marton Corporation has provided the following data from its activity-based costing accounting system:

The activity rate for the "designing products" activity cost pool is closest to: A. $124 per product design hour B. $181 per product design hour C. $55 per product design hour D. $1,526,916 per product design hour

The controller of Hallowell Company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below:

The total materials handling cost for the year is expected to be $18,257.40.

9. If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the wall mirrors? (Round off your answer to the nearest whole dollar.) A. $6,086 B. $9,129 C. $11,618 D. $3,961

10. Suoboda Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:

How much overhead cost would be assigned to Product I90W using the activity-based costing system? A. $316.56 B. $105.05 C. $4,371.90 D. $59,038.10

11. A partial listing of costs incurred at Rust Corporation during August appears below:

Required: a. What is the total amount of product cost listed above? Show your work. b. What is the total amount of period cost listed above? Show your work.

12. Job 827 was recently completed. The following data have been recorded on its job cost sheet:

The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $13 per machine-hour. Required: Compute the unit product cost that would appear on the job cost sheet for this job.

13. Alake Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company's inventory balances were as follows:

The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 36,000 machine-hours and incur $216,000 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased, $443,000. b. Raw materials were requisitioned for use in production, $450,000 ($435,000 direct and $15,000 indirect). c. The following employee costs were incurred: direct labor, $229,000; indirect labor, $54,000; and administrative salaries, $117,000. d. Selling costs, $119,000. e. Factory utility costs, $21,000. f. Depreciation for the year was $121,000 of which $114,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities. g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 38,000 machinehours. h. The cost of goods manufactured for the year was $910,000 and was transferred to the warehouse to be shipped. i. Sales for the year totaled $1,173,000 and the costs on the job cost sheets of the goods that were sold totaled $895,000. j. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold. Required: Prepare the appropriate journal entry for each of the items above (a. through j.). You can assume that all transactions with employees, customers, and suppliers were conducted in cash.

14. Viren Corporation has provided the following data from its activity-based costing system:

The company makes 240 units of product T91H a year, requiring a total of 550 machine-hours, 90 orders, and 40 inspection-hours per year. The product's direct materials cost is $16.98 per unit and its direct labor cost is $12.09 per unit. According to the activity-based costing system, what is the average cost of product T91H?

15. Jasmine Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 10,000 units and of Product B is 4,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows:

What is the activity-based costing cost per unit of Product A?

Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system:

The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake. The measure of complexity is the number of tiers in the cake. The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately. Data concerning two recent orders appear below:

16. Assuming that the company charges $556.96 for the Smith wedding cake, what would be the overall margin on the order?

BUS 202 Spring 2010 Test 1 Key

1.D 2.B 3.D 4.D 5.D 6.B 7.B 8.B 9.A 10.C

11. Required: a. What is the total amount of product cost listed above? Show your work. b. What is the total amount of period cost listed above? Show your work. a. Product costs consist of direct materials, direct labor, and manufacturing overhead:

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Garrison - Chapter 002 #141 Learning Objective: 3 Level: Medium

12. Compute the unit product cost that would appear on the job cost sheet for this job.

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Garrison - Chapter 003 #151 Learning Objective: 2 Learning Objective: 5 Level: Easy

13. Prepare the appropriate journal entry for each of the items above (a. through j.). You can assume that all transactions with employees, customers, and suppliers were conducted in cash.

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Garrison - Chapter 003 #153 Learning Objective: 3 Learning Objective: 4 Learning Objective: 5 Learning Objective: 8 Level: Medium

14. According to the activity-based costing system, the average cost of product T91H is closest to:

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Garrison - Chapter 008 #33 Learning Objective: 3 Learning Objective: 4 Level: Medium

15. The activity-based costing cost per unit of Product A is closest to:

Cost per unit = Total cost

Number of units produced= $97,000

10,000 = $9.70

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Garrison - Chapter 008 #35 Learning Objective: 3 Learning Objective: 4 Level: Medium

Garrison - Chapter 008

16. Assuming that the company charges $556.96 for the Smith wedding cake, what would be the overall margin on the order?

Total Cost for Smith Wedding Cake Order:

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Garrison - Chapter 008 #62 Learning Objective: 4 Learning Objective: 5 Level: Medium

BUS 202 Spring 2010 Test 1 Summary

Category AACSB: Analytic AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Garrison - Chapter 002 Garrison - Chapter 003 Garrison - Chapter 008 Learning Objective: 2 Learning Objective: 3 Learning Objective: 4 Learning Objective: 5 Learning Objective: 6 Learning Objective: 8 Level: Easy Level: Hard Level: Medium Source: CMA, adapted # of Questions 13 3 16 16 5 5 8 2 9 7 8 1 2 6 1 9 1