Quiz 2-157 1. O'Reilly Enterprises manufactures digital video

```Quiz 2-157
1. O'Reilly Enterprises manufactures digital video equipment. For each unit \$2,950 of
direct material is used and there is \$2,000 of direct manufacturing labor at \$20 per
hour. Manufacturing overhead is applied at \$35 per direct manufacturing labor hour.
Calculate the cost of each unit.
A) \$4,950
B) \$9,950
C) \$8,450
D) \$11,950
Explanation: C) 2,950+2,000+((2,000/20)*35)
Answer the following questions(2-4) using the information below:
Gibson Manufacturing is a small textile manufacturer using machine-hours as the
single indirect-cost rate to allocate manufacturing overhead costs to the various jobs
contracted during the year. The following estimates are provided for the coming year
for the company and for the Winfield High School band jacket job.
Company Winfield High School Job
Direct materials
\$40,000
\$1,000
Direct labor
\$10,000
\$200
Manufacturing overhead costs \$30,000
Machine-hours
100,000 mh
900 mh
2. For Gibson Manufacturing, what is the annual manufacturing overhead costallocation rate?
A) \$0.50
B) \$0.80
C) \$0.30
D) \$33.33
Explanation: C) \$30,000/100,000 mh = \$0.30 per mh
3. What amount of manufacturing overhead costs will be allocated to this job?
A) \$270
B) \$720
C) \$450
D) \$30,000
Explanation: A) 900 mh &times; \$30,000 / 100,000 mh = \$270
4. What is the bid price for the Winfield High School job if the company uses a 40%
markup of total manufacturing costs?
A) \$2,310
B) \$588
C) \$1,680
D) \$2,058
Explanation: D) (DM \$1,000 + DML \$200 + MOH \$270) &times; 1.40 = \$2,058
5. Manufacturing overhead costs incurred for the month are:
Utilities
\$30,000
Depreciation on equipment \$25,000
Repairs
\$20,000
Which is the correct journal entry assuming utilities and repairs were on account?
A) Manufacturing Overhead Control
75,000
Accounts Payable Control
50,000
Accumulated Depreciation Control
25,000
B) Manufacturing Overhead Control
75,000
Accounts Payable Control
75,000
C) Manufacturing Overhead Control
75,000
Accumulated Depreciation Control
75,000
D) Accumulated Depreciation Control 25,000
Accounts Payable Control
50,000
75,000
Answer the following questions(6-7) using the information below:
Roosevelt Cabinetry, Inc., manufactures standard sized modular cabinet units for
kitchens and other applications within the home. Its costing system utilizes two cost
categories, direct materials and conversion costs. Each product must pass through the
rough cut department and the finish department. Direct materials are added at the
beginning of production. Conversion costs are allocated evenly throughout
production.
Data for Finish Department for March 2012 are:
Work in process, beginning inventory, 25% converted 1,000 units
Units started during February
1,400 units
Work in process, ending inventory
300 units
Costs for Finish department for March 2012 are:
Work in process, beginning inventory:
Direct materials
\$300,000
Conversion costs
\$200,000
Direct materials costs added during February
\$420,000
Conversion costs added during February
\$1,600,000
6. What is the unit cost per equivalent unit of the beginning inventory in the
Finishing Department?
A) \$800.00
B) \$300.00
C) \$1,100.00
D) \$500.00
Explanation: C) Direct materials per unit (\$300,000/1,000 units) \$ 300
Conversion costs per unit (\$200,000/(1,000 &times; 0.25) units)
800
Total costs per unit
\$ 1,100
7. How many units were completed and transferred out of the Finishing Department
during March?
A) 1,000 units
B) 1,400 units
C) 2,100 units
D) Unknown
Answer the following questions(8-10) using the information below:
Triboro Computer Systems, Inc., manufactures printer circuit cards. All direct
materials are added at the inception of the production process. During January, the
accounting department noted that there was no beginning inventory. Direct materials
purchases totaled \$200,000 during the month. Work-in-process records revealed that
8,000 card units were started in January, 4,000 card units were complete, and 3,000
card units were spoiled as expected. Ending work-in-process card units are complete
in respect to direct materials costs. Spoilage is not detected until the process is
complete.
8. What are the respective direct material costs per equivalent unit, assuming spoiled
units are recognized or ignored?
A) \$20.00; \$35.00
B) \$25.00; \$40.00
C) \$30.00; \$45.00
D) \$35.00; \$50.00
Explanation:
B)
Calculation for
Recognized
Problem #
Ignored
Cost to account for:
\$200,000
\$200,000
Divided by equivalent units
8,000
5,000
Cost per equivalent unit
\$ 25.00
(8)
\$ 40.00
Assigned to:
Good units completed
(4,000 &times; \$25; \$40)
\$ 100,000
\$ 160,000
Normal spoilage
(3,000&times; \$25)
75,000
0
Costs transferred out
175,000
WIP ending inventory (1,000 &times; \$25; \$40) 25,000
Cost accounted for:
\$200,000
(9)
(10)
160,000
40,000
\$200,000
9. What is the cost transferred out assuming spoilage units are ignored?
A) \$175,000
B) \$160,000
C) \$100,000
D) \$155,000