Final 2 Flashcards Preview

Cost Accounting > Final 2 > Flashcards

Flashcards in Final 2 Deck (50):
1

The following information is for Brennan Company's September production:

Standards:
Material 4.0 feet per unit @ $3.75 per foot
Labor 3.0 hours per unit @ $8.25 per hour

Actual:
Production 3,500 units produced during the month
Material 14,200 feet used; 14,700 feet purchased @ $3.70 per foot
Labor 10,400 direct labor hours @ $8.35 per hour

(Round all answers to the nearest dollar.)
Refer to Brennan Company. What is the material quantity variance?

750 U

2

A company that manufactures custom bridal gowns will use a process costing system to track costs.

F

3

Ultimate Vision Corporation has two product lines: LCD televisions and projection televisions. The company has budgeted the following production and overhead costs for the upcoming year:

LCD TV's Projection TV's
Units Produced 1,500 2,250
Direct labor hours per Unit 20 30
Material Moves per Product Line 15 25
Budgeted Materials Handling Cost $75,000
Total Machine Hours 10,000 16,000
Machine Maintenance Costs $180,000

Refer to Ultimate Vision Corporation. If the company uses number of units produced to allocate factory overhead, the materials handing cost allocated to LCD TV's would be:

30,000

4

Riggs Company uses a FIFO process costing system. The company had 5,000 units that were 60 percent complete as to conversion costs at the beginning of the month. The company started 22,000 units this period and had 7,000 units in ending Work in Process Inventory that were 35 percent complete as to conversion costs. What are equivalent units for material, if material is added at the beginning of the process?

22,000

5

The usage variance reflects the difference between the quantity of inputs used and the standard quantity allowed for the output of a period.

T

6

A traditional costing system has fewer cost pools that does an activity-based costing (ABC) system.

T

7

Equivalent units are computed to assign costs to partially completed units.

T

8

Ultimate Vision Corporation has two product lines: LCD televisions and projection televisions. The company has budgeted the following production and overhead costs for the upcoming year:

LCD TV's Projection TV's
Units Produced 1,500 2,250
Direct labor hours per Unit 20 30
Material Moves per Product Line 15 25
Budgeted Materials Handling Cost $75,000
Total Machine Hours 10,000 16,000
Machine Maintenance Costs $180,000

Refer to Ultimate Vision Corporation. If the company uses total direct labor hours to allocate factory overhead, the materials handing cost allocated to projection TV's would be:

51,923

9

Baker Company produces three products: A, B, and C from the same process. Joint costs for this production run are $2,100.

Pounds Sales price
per lb. at
split-off Disposal
cost per
lb. at
split-off Further
processing
per pound Final
sales price
per pound
A 800 $6.50 $3.00 $2.00 $ 7.50
B 1,100 8.25 4.20 3.00 10.00
C 1,500 8.00 4.00 3.50 10.50

If the products are processed further, Baker Company will incur the following disposal costs upon sale: A, $3.00; B, $2.00; and C, $1.00.
Refer to Baker Company. Using net realizable value at split-off, what amount of joint processing cost is allocated to Product C (round to the nearest dollar)?

951

10

The price variance reflects the difference between the price paid for inputs and the standard price for those inputs.

T

11

Riley Company produces two products from a joint process: A and C. Joint processing costs for this production cycle are $9,000.

Yards Sales price
per yard at
split-off Disposal
cost per
yard at
split-off Further
processing
per yard Final sale
price per
yard
A 1,800 $7.00 $4.50 $1.50 $ 8.00
C 2,600 10.00 6.00 3.50 12.25

If A and C are processed further, no disposal costs will be incurred or such costs will be borne by the buyer.
Refer to Riley Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product A (round to the nearest dollar)?

2,938

12

Which is the best cost accumulation procedure to use for continuous mass production of like units?

Process

13

Ultimate Vision Corporation has two product lines: LCD televisions and projection televisions. The company has budgeted the following production and overhead costs for the upcoming year:

LCD TV's Projection TV's
Units Produced 1,500 2,250
Direct labor hours per Unit 20 30
Material Moves per Product Line 15 25
Budgeted Materials Handling Cost $75,000
Total Machine Hours 10,000 16,000
Machine Maintenance Costs $180,000
Refer to Ultimate Vision Corporation. If the company uses total direct labor hours to allocate factory overhead, the materials handing cost allocated to LCD TV's would be:

23,077

14

In a standard job-order costing system, factory overhead is applied using predetermined rates times actual input.

F

15

The following information pertains to Romano Company for September:

Direct Material Direct Labor Overhead
Job #323 $3,200 $4,500 ?
Job #325 ? 5,000 ?
Job #401 5,670 ? $5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.
Refer to Romano Company. What is the amount of direct materials for Job #325?

1500

16

Activity-based costing is appropriate for a company that has high overhead costs that are not proportional to unit volumes of individual products.

T

17

Joint costs occur before the split-off point in a production process.

T

18

A company should strive to reduce all non-value added activities to a minimum.

T

19

Ellis Company uses activity-based costing. The company produces two products: IPods and MP3 players. The annual production and sales volume of IPods is 8,000 units and of MP3 players is 6,000 units. There are three activity cost pools with the following expected activities and estimated total costs:

Activity
Cost Pool Estimated
Cost Expected Activity
IPods Expected Activity
MP3 players
Total
Activity 1 $20,000 100 400 500
Activity 2 $37,000 800 200 1,000
Activity 3 $91,200 800 3,000 3,800

Refer to Ellis Company. Using ABC, the cost per unit of IPods is approximately:

6.60

Activity 1=(20,000/500)=$40
Activity 2=(37000/1000)=$37
Activity 3=(91200/3800)=$24
Hence total costs for IPods=(100*40)+(37*800)+(24*800)=$52800.
Hence cost per unit of IPods=($52800/8000)=$6.6/unit.

20

Chambers Company produces two products from a joint process: X and Z. Joint processing costs for this production cycle are $8,000.


Yards Sales price
per yard at
split-off Disposal
cost per
yard at
split-off Further
processing
per yard Final sale
price per
yard
X 1,500 $6.00 $3.50 $1.00 $ 7.50
Z 2,200 9.00 5.00 3.00 11.25

If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the buyer.

Refer to Chambers Company. Which products would be processed further?

Only Product X

21

A company has a favorable variable overhead spending variance, an unfavorable variable overhead efficiency variance, and underapplied variable overhead at the end of a period. The journal entry to record these variances and close the variable overhead control account will show which of the following?

VOH spending
variance VOH efficiency
variance VMOH

Credit Debit Credit

22

Process costing is most appropriate when manufacturing large batches of homogenous products.

T

23

Pearce Company uses a standard cost system for its production process. Pearce Company applies overhead based on direct labor hours. The following information is available for July:

Standard:
Direct labor hours per unit 2.20
Variable overhead per hour $2.50
Fixed overhead per hour
(based on 11,990 DLHs) $3.00


Actual:
Units produced 4,400
Direct labor hours 8,800
Variable overhead $29,950
Fixed overhead $42,300

Refer to Pearce Company Using the four-variance approach, what is the variable overhead spending variance?

7,950 U

24

Chapman Company uses a job-order costing system. At the beginning of March, the company had two jobs in process with the following costs:

Direct Material Direct Labor Overhead
Job #456 $3,400 $510 $255
Job #461 1,100 289 ?

Chapman pays its workers $8.50 per hour and applies overhead on a direct labor hour basis.
Refer to Chapman Company. What is the overhead application rate per direct labor hour?

4.25

25

A decision that must be made at split-off is to sell a product or process it further.

T

26

Fox Corporation. has the following information for August:

Beginning Work in Process Inventory
(70% complete as to conversion) 6,000 units
Started 24,000 units
Ending Work in Process Inventory
(10% complete as to conversion) 8,500 units
Beginning WIP Inventory Costs:
Material $23,400
Conversion 50,607
Current Period Costs:
Material $31,500
Conversion 76,956

All material is added at the start of the process and all finished products are transferred out.
Refer to Fox Corporation. How many units were transferred out in August?

21,500

27

The following information is available for Jenkins Manufacturing Company for the month of June when the company produced 2,100 units:

Standard:
Material 2 pounds per unit @ $5.80 per pound
Labor 3 direct labor hours per unit @ $10.00 per hour

Actual:
Material 4,250 pounds purchased and used @ $5.65 per pound
Labor 6,300 direct labor hours at $9.75 per hour

Refer to Jenkins Manufacturing Company. What is the labor rate variance?

1,575 F

28

Industrial Solutions Company produces three products from the same process that has joint processing costs of $4,100. Products R, S, and T are produced in the following quantities: 250 gallons, 400 gallons, and 750 gallons. Industrial Solutions Company also incurred advertising costs of $60,000. The ad was used to run sales for all three products. The three products occupy floor space in the following ratio: 5:4:9. (Round all answers to the nearest dollar.)
Refer to Industrial Solutions Company. Using gallons as the physical measurement, what amount of joint processing cost is allocated to Product R?

732

29

Williams Company has a job-order costing system and an overhead application rate of 120 percent of direct labor cost. Job #63 is charged with direct material of $12,000 and overhead of $7,200. Job #64 has direct material of $2,000 and direct labor of $9,000.
Refer to Williams Company. What amount of direct labor cost has been charged to Job #63?

6,000

30

The following information is for Patterson Company's July production:

Standards:
Material 3.0 feet per unit @ $4.20 per foot
Labor 2.5 hours per unit @ $7.50 per hour
Actual:
Production 2,750 units produced during the month
Material 8,700 feet used; 9,000 feet purchased @ $4.50 per foot
Labor 7,000 direct labor hours @ $7.90 per hour

(Round all answers to the nearest dollar.)

Refer to Patterson Company. What is the labor efficiency variance?

938 U

31

Ryan Company manufactures products X and Y from a joint process that also yields a by-product, Z. Revenue from sales of Z is treated as a reduction of joint costs. Additional information is as follows:

Product
X Y Z Total
Units produced 20,000 20,000 10,000 50,000
Joint costs ? ? ? $262,000
Sales value at
split-off $300,000 $150,000 $10,000 $460,000

Joint costs were allocated using the sales value at split-off approach.
Refer to Ryan Company. The joint costs allocated to product X were

168,000

32

The point at which individual products are first identifiable in a joint process is referred to as the split-off point.

T

33

Houston National Bank had the following activities, traceable costs, and physical flow of driver units:

Traceable Physical flow of
Activities Costs Driver Units

Open new accounts $50,000 1,000 accounts
Process deposits 36,000 400,000 deposits
Process withdrawals 15,000 200,000 withdrawals
Process loan applications 27,000 900 applications

The above activities are used by the Memorial branch and the University branch:

Memorial University
New accounts 200 400
Deposits 40,000 20,000
Withdrawals 15,000 18,000
Loan applications 100 160

Refer to Houston National Bank. What is the cost per driver unit for new account activity?

50.00

34

Traditional overhead allocations result in which of the following situations?

High-volume products are assigned too much overhead, and low-volume products are assigned too little overhead.

35

Wyman Company is a graphic design shop that produces jobs to customer specifications. During January, Job #3051 was worked on and the following information is available:

Direct material used $2,500
Direct labor hours worked 15
Machine time used 6
Direct labor rate per hour $7
Overhead application rate per hour of machine time $18

What was the total cost of Job #3051 for January?

2,713

36

Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for September when Commodore produced 5,000 units:

Standard:
DLH per unit 3.00
Variable overhead per DLH $1.80
Fixed overhead per DLH $3.25
Budgeted variable overhead $27,250
Budgeted fixed overhead $49,500

Actual:
Direct labor hours 16,000
Variable overhead $31,325
Fixed overhead $49,750

Refer to Commodore Company. Using the four-variance approach, what is the fixed overhead spending variance?

250 U

37

Reed Company produces 50,000 units of Product Q and 6,000 units of Product Z during a period. In that period, four set-ups were required for color changes. All units of Product Q are black, which is the color in the process at the beginning of the period. A set-up was made for 1,000 blue units of Product Z; a set-up was made for 4,500 red units of Product Z; a set-up was made for 500 green units of Product Z. A set-up was then made to return the process to its standard black coloration and the units of Product Q were run. Each set-up costs $500.

Refer to Reed Company. If set-up cost is assigned on a volume basis for the department, what is the approximate per-unit set-up cost for Product Z?

.036

38

Mayflower Corporation manufactures products on a job-order basis. The job cost sheet for Job #656 shows the following for September:

Direct material $5,000
Direct labor (100 hours @ $7.25) $725
Machine hours incurred 40
Predetermined overhead rate per machine hour $26

At the end of September, what total cost appears on the job cost sheet for Job #656?

6,765

39

A company that manufactures large quantities of homogenous goods will use a job-order costing system.

F

40

The following information is for Brennan Company's September production:

Standards:
Material 4.0 feet per unit @ $3.75 per foot
Labor 3.0 hours per unit @ $8.25 per hour

Actual:
Production 3,500 units produced during the month
Material 14,200 feet used; 14,700 feet purchased @ $3.70 per foot
Labor 10,400 direct labor hours @ $8.35 per hour

(Round all answers to the nearest dollar.)
Refer to Brennan Company. What is the material price variance (calculated at point of purchase)?

735 F

41

The FIFO method combines beginning inventory and current production to compute cost per unit of production.

F

42

Chambers Company produces two products from a joint process: X and Z. Joint processing costs for this production cycle are $8,000.

Yards Sales price
per yard at
split-off Disposal
cost per
yard at
split-off Further
processing
per yard Final sale
price per
yard
X 1,500 $6.00 $3.50 $1.00 $ 7.50
Z 2,200 9.00 5.00 3.00 11.25

If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the buyer.
Refer to Chambers Company. Using approximated net realizable value at split-off, what amount of joint processing cost is allocated to Product Z (round to the nearest dollar)?

4,910

43

Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used $130,000
Direct labor per hour $9.50
Overhead applied based on direct labor cost 125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. What is the total amount of overhead applied to Job #12?

39,188

44

The formula for price/rate variance is (AP - SP) * AQ.

T

45

Bartling Company transferred 5,500 units to Finished Goods Inventory during October. On October 1, the company had 300 units on hand (40 percent complete as to both material and conversion costs). On October 31, the company had 800 units (10 percent complete as to material and 20 percent complete as to conversion costs). The number of units started and completed during October was:

5,200

46

Hogan Company uses a weighted average process costing system and started 30,000 units this month. Hogan had 12,000 units that were 20 percent complete as to conversion costs in beginning Work in Process Inventory and 3,000 units that were 40 percent complete as to conversion costs in ending Work in Process Inventory. What are equivalent units for conversion costs?

40,200

47

Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used $120,000
Direct labor per hour $8.50
Overhead applied based on direct labor cost 120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. How much overhead is applied to Work in Process?

99,960

48

Riley Company produces two products from a joint process: A and C. Joint processing costs for this production cycle are $9,000.

Yards Sales price
per yard at
split-off Disposal
cost per
yard at
split-off Further
processing
per yard Final sale
price per
yard
A 1,800 $7.00 $4.50 $1.50 $ 8.00
C 2,600 10.00 6.00 3.50 12.25

If A and C are processed further, no disposal costs will be incurred or such costs will be borne by the buyer.
Refer to Riley Company. Using net realizable value at split-off, what amount of joint processing cost is allocated to Product A (round to the nearest dollar)?

2,718

49

In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is a:

debit Finished Goods Inventory, credit Work in Process Inventory #2.

50

Mansfield Company uses a weighted average process costing system. Material is added at the start of production. Mansfield Company started 14,000 units into production and had 5,000 units in process at the start of the period that were 75 percent complete as to conversion costs. If Mansfield Company transferred out 12,250 units, how many units were in ending Work in Process Inventory?

6,750