1)
During the month of September, direct labor cost totaled $18,000 and direct labor cost was 40% of prime cost. If
total manufacturing costs during September were $94,000, the manufacturing overhead was:
rev: 11_12_2013_QC_40369
$27,000
$45,000
$49,000
$76,000
2.
Iadanza Corporation is a wholesaler that sells a single product. Management has provided the following cost data
for two levels of monthly sales volume. The company sells the product for $220.70 per unit.
Sales volume (units)
Cost of goods sold
Selling and administrative costs
23,000
$ 478,200
$ 648,200
24,000
$ 557,900
$ 661,200
The best estimate of the total contribution margin when 8,000 units are sold is (Do not round your intermediate
calculations. Round your final answer to nearest whole dollar.):
$1,024,000
$184,000
$1,128,000
$86,400
3.
Supply costs at Lattea Corporation's chain of gyms are listed below:
March
April
May
June
July
Client - Visits
12,147
11,993
12,775
13,500
12,707
Supply Cost
$ 29,961
$ 30,227
$ 30,781
$ 31,092
$ 30,222
August
September
October
November
11,893
12,877
12,228
12,376
$ 29,270
$ 30,220
$ 29,278
$ 29,803
Management believes that supply cost is a mixed cost that depends on client-visits. Using the high-low method to
estimate the variable and fixed components of this cost, those estimates would be closest to (Round your
intermediate calculations to 2 decimal places.):
$1.31 per client-visit; $14,046 per month
$0.83 per client-visit; $5,137 per month
$1.13 per client-visit; $15,837 per month
$2.38 per client-visit; $30,222 per month
4.
A partial listing of costs incurred during December at Gagnier Corporation appears below:
Factory supplies
Administrative wages and salaries
Direct materials
Sales staff salaries
Factory depreciation
Corporate headquarters building rent
Indirect labor
Marketing
Direct labor
$ 10,500
$ 147,000
$ 210,000
$ 105,000
$ 84,000
$ 42,000
$ 42,000
$ 147,000
$ 113,400
The total of the period costs listed above for December is:
$136,500
$554,500
$441,000
$459,900
0
5.
Nikkel Corporation, a merchandising company, reported the following results for July:
Sales
Cost of goods sold (all variable)
Total variable selling expense
Total fixed selling expense
Total variable administrative expense
Total fixed administrative expense
$ 438,800
$ 175,520
$ 18,600
$ 15,360
$ 8,340
$ 32,470
The gross margin for July is:
$390,970
$236,340
$263,280
$188,510
6.
Salvadore Inc., a local retailer, has provided the following data for the month of September:
Merchandise inventory, beginning balance
Merchandise inventory, ending balance
Sales
Purchase of merchandise inventory
Selling expense
Administrative expense
The cost of goods sold for September was:
$194,220
$195,780
$195,000
$296,400
7.
$ 63,180
$ 62,400
$ 390,000
$ 195,000
$ 23,400
$ 78,000
Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing
$442,000 or a new model 240 machine costing $388,000 to replace a machine that was purchased 7 years ago for
$430,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old
machine cannot be repaired.
Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine,
but its capacity is sufficient to continue making product M25A.
Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done,
instead of investing $388,000 in the new machine, the money could be invested in a project that would return a total
of $431,000.
In making the decision to buy the model 240 machine rather than the model 370 machine, the sunk cost was:
$431,000
$430,000
$388,000
$442,000
8) The following costs were incurred in September:
Direct materials
Direct labor
Manufacturing overhead
Selling expenses
Administrative expenses
$ 46,000
$ 33,000
$ 23,000
$ 21,000
$ 35,000
Prime costs during the month totaled:
$102,000
$158,000
$79,000
$56,000
9.
The following data have been recorded for recently completed Job 674 on its job cost sheet. Direct materials cost
was $1,339. A total of 25 direct labor-hours and 168 machine-hours were worked on the job. The direct labor wage
rate is $13 per labor-hour. The company applies manufacturing overhead on the basis of machine-hours. The
predetermined overhead rate is $14 per machine-hour. The total cost for the job on its job cost sheet would be:
$2,014
$1,664
$4,016
$1,366
10.
Pinnini Co. uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to
jobs. Last year, Pinnini Company incurred $190,000 in actual manufacturing overhead cost. The Manufacturing
Overhead account showed that overhead was overapplied $12,960 for the year. If the predetermined overhead rate
was $4.30 per direct labor-hour, how many hours did the company work during the year?
41,172 hours
43,186 hours
47,200 hours
44,186 hours
11.
Desrevisseau Inc., a manufacturing company, has provided the following data for the month of August. The balance
in the Work in Process inventory account was $13,500 at the beginning of the month and $25,500 at the end of the
month. During the month, the company incurred direct materials cost of $70,000 and direct labor cost of $46,000.
The actual manufacturing overhead cost incurred was $47,000. The manufacturing overhead cost applied to Work
in Process was $50,000. The cost of goods manufactured for August was:
$151,000
$154,000
$166,000
$163,000
12.
Under Lamprey Company's job-order costing system, manufacturing overhead is applied to Work in Process
inventory using a predetermined overhead rate. During January, Lamprey's transactions included the following:
Direct materials issued to production
Indirect Materials issued to production
Manufacturing overhead cost incurred
Manufacturing overhead cost applied
Direct labor cost incurred
$
$
$
$
$
89,000
7,800
123,000
111,000
106,000
Lamprey Company had no beginning or ending inventories. What was the cost of goods manufactured for January?
$298,200
$325,800
$306,000
$318,000
13.
Bakker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most
recent year, the company based its predetermined overhead rate on total estimated overhead of $108,120 and 3,400
estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $109,870 and actual direct
labor-hours were 3,300.
The applied manufacturing overhead for the year was closest to:
$109,870
$104,940
$108,230
$106,639
14.
Acitelli Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the
following data for its most recent year of operations.
Estimated manufacturing overhead
Estimated machine-hours
Actual manufacturing overhead
Actual machine-hours
$ 387,660
9,100
$ 388,660
9,160
The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the
purpose of computing the company's predetermined overhead rate for the year.
The applied manufacturing overhead for the year is closest to:
$390,216
$392,964
$388,659
$391,224
15.
Lund Company applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor
cost. Any underapplied or overapplied manufacturing overhead cost is closed out to Cost of Goods Sold at the end
of the month. During March, the following transactions were recorded by the company:
Raw materials (all direct materials):
Purchased during the month
Used in production
Labor:
Direct labor hours worked during the month
Direct labor cost incurred
Indirect labour cost incurred
Manufacturing overhead costs incurred (total)
Inventories:
Raw materials (all direct), March 31
Work in process, March 1
Work in process, March 31
*contains $5,300 in direct labor cost.
$ 28,500
$ 29,500
2,400
$ 19,200
$ 6,100
$ 17,300
$ 7,800
$ 10,800
$ 14,600*
The balance on March 1 in the Raw Materials inventory account was:
$6,800
$9,800
$7,800
$8,800
16.
Daane Company had only one job in process on May 1. The job had been charged with $1,200 of direct materials,
$1,872 of direct labor, and $3,152 of manufacturing overhead cost. The company assigns overhead cost to jobs
using the predetermined overhead rate of $19.70 per direct labor-hour.
During May, the following activity was recorded:
Raw materials (all direct materials):
Beginning balance
Purchased during the month
Used in production
Labor:
Direct labor-hours worked during the month
Direct labor cost incurred
Actual manufacturing overhead costs incurred
Inventories:
Raw materials, May 30
Work in process, May 30
$
$
$
7,500
17,500
23,600
$
$
1,000
11,700
18,450
$
$
?
12,362
Work in process inventory on May 30 contains $3,276 of direct labor cost. Raw materials consist solely of items
that are classified as direct materials.
The cost of goods manufactured for May was:
$70,310
$45,914
$55,000
$48,862
17.
Leija Manufacturing Company uses a job-order costing system and started the month of March with one job in
process (Job #359). This job had $470 of cost assigned to it at this time. During March, Leija assigned production
costs as follows to the jobs worked on during the month:
Total cost assigned to jobs during March
Job # 359
$5,700
Job # 360
$7,800
Job # 361
$2,100
During March, Leija completed and sold Job #359. Job #360 was also completed but was not sold by month end.
Job #361 was not completed by the end of March. What is Leija's work in process inventory balance at the end of
March?
rev: 07_10_2012
12,400
4,400
3,000
2,100
18.
Drewniak Corporation has provided the following data from its activity-based costing system:
Activities
Assembly
Processing orders
Inspection
Estimated
Overhead Cost
$972,180
$91,530
$133,406
Expected Activity
66,000
machine-hours
1,800
orders
1,820
inspection-hours
The company makes 430 units of product O37W a year, requiring a total of 690 machine-hours, 40 orders, and 10
inspection-hours per year. The product's direct materials cost is $36.35 per unit and its direct labor cost is $30.09
per unit.
According to the activity-based costing system, the unit product cost of product O37W is closest to:
$96.51 per unit
$88.03 per unit
$66.44 per unit
$94.89 per unit
19.
Addy Company has two products: A and B. The annual production and sales of Product A is 2,450 units and of
Product B is 1,850 units. The company has traditionally used direct labor-hours as the basis for applying all
manufacturing overhead to products. Product A requires 0.3 direct labor-hours per unit and Product B requires 0.6
direct labor-hours per unit. The total estimated overhead for next period is $107,100.
The company is considering switching to an activity-based costing system for the purpose of computing unit
product costs for external reports. The new activity-based costing system would have three overhead activity cost
pools--Activity 1, Activity 2, and General Factory--with estimated overhead costs and expected activity as follows:
Expected Activity
Activities
Activity 1
Activity 2
General Factory
Estimated
Overhead
Costs
$33,094
18,850
55,156
Product A
1,750
2,450
1,335
Product B
1,350
950
1,560
Total
3,100
3,400
2,895
Total
$107,100
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor-hours.)
The predetermined overhead rate (i.e., activity rate) for Activity 2 under the activity-based costing system is closest
to:
$5.54
$31.50
$38.10
$7.69
20.
Accola Company uses activity-based costing. The company has two products: A and B. The annual production and
sales of Product A is 2,900 units and of Product B is 1,600 units. There are three activity cost pools, with estimated
costs and expected activity as follows:
Activities
Activity 1
Activity 2
Activity 3
Estimated Overhead Cost
$103,447
$128,645
$138,690
Expected Activity
Product A
Product B
2,400
2,300
3,400
2,100
1,160
1,140
Total
4,700
5,500
2,300
The activity rate for Activity 3 is closest to:
$161.21
$61.26
$40.82
$60.30
21.
Mannarelli Corporation uses the FIFO method in its process costing system. Operating data for the Casting
Department for the month of September appear below:
Units
Percent Complete
with Respect to
Beginning work in process inventory
Transferred in from the prior department during September
Ending work in process inventory
27,000
115,000
37,000
Conversion
20%
90%
According to the company's records, the conversion cost in beginning work in process inventory was $16,960 at the
beginning of September. Additional conversion costs of $539,574 were incurred in the department during the
month.
The cost per equivalent unit for conversion costs for September is closest to (Round off to three decimal places.):
$4.692
$4.060
$3.877
$3.919
22.
Cargin Company uses the FIFO method in its process costing system. The Assembly Department started the month
with 31,000 units in its beginning work in process inventory that were 50% complete with respect to conversion
costs. An additional 103,000 units were transferred in from the prior department during the month to begin
processing in the Assembly Department. There were 25,000 units in the ending work in process inventory of the
Assembly Department that were 30% complete with respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for the month?
116,500
109,000
97,000
101,000
23.
Severn Company uses the FIFO method in its process costing system. The following data were taken from the
accounting records of the company for last month:
Beginning Work in Process inventory
($52,000; materials 100% complete; labor and overhead 50% complete)
Units started during the period
Units completed during the period
25,000 units
90,000 units
100,000 units
Ending work in process inventory
(materials 100% complete; labor and overhead 60% complete)
Cost per equivalent unit:
Materials
Labor and overhead
? units
$ 4.00
$ 2.25
The cost of the units in the ending Work in Process inventory is:
$30,000
$80,250
$40,500
$20,100
24.
Wilson Company has a process costing system. The Assembly Department had the following costs for May:
Work in process inventory, May 1
Costs added during May
Materials
$ 50,000
$ 165,000
Labor & Overhead
$ 33,000
$ 231,000
Assume that Wilson uses the weighted-average method and that for May the company computed 22,000 equivalent
units for labor and overhead. The cost per equivalent unit for labor and overhead for the month would have been:
$1.50
$12.00
$10.50
$18.00
25) The activity in Nolan Company's Blending Department for the month of April is given below:
Work in process inventory, April 1
Started into process during the month
Work in process inventory, April 30
Number of
units
22,000
78,000
24,000
Labor and overhead
percent complete
50%
60%
All materials are added at the beginning of processing in the Blending Department.
The equivalent units for material for the month, using the FIFO method, are:
78,000 units
100,000 units
89,000 units
102,000 units
26.
Dimitrov Corporation, a company that produces and sells a single product, has provided its contribution format
income statement for July.
Sales (7,400 units)
Variable expenses
Contribution margin
Fixed expenses
Net operating income
$ 355,200
196,100
159,100
109,500
$ 49,600
If the company sells 7,200 units, its net operating income should be closest to:
$49,600
$48,259
$45,300
$40,000
27.
Rothe Company manufactures and sells a single product that it sells for $90 per unit and has a contribution margin
ratio of 35%. The company's fixed expenses are $62,100. If Rothe desires a monthly target net operating income
equal to 15% of sales, the amount of sales in units will have to be (rounded):
1,971 units
4,600 units
1,380 units
3,450 units
28.
Pool Company's variable expenses are 36% of sales. Pool is contemplating an advertising campaign that will cost
$33,500. If sales increase by $116,000, the company's net operating income should increase by (Round your
intermediate calculations to two decimal places.):
$41,760
$95,680
$40,740
$8,260
29.
Smith Company sells a single product at a selling price of $30 per unit. Variable expenses are $12 per unit and
fixed expenses are $78,660. Smith's break-even point is:
2,622 units
4,370 units
6,555 units
13,110 units
30.
Sperberg Corporation's operating leverage is 5.2. If the company's sales increase by 14.50%, its net operating
income should increase by about:
66.10%
14.50%
5.20%
75.40%
31.
A cement manufacturer has supplied the following data:
Tons of cement produced and sold
Sales revenue
Variable manufacturing expense
Fixed manufacturing expense
Variable selling and administrative expense
Fixed selling and administrative expense
Net operating income
260,000
$ 1,175,200
$ 466,310
$ 289,100
$ 82,290
$ 228,800
$ 108,700
What is the company's unit contribution margin? (Do not round your intermediate calculations.)
rev: 03_11_2013_QC_28054
$2.41
$2.11
$4.52
$.32
32.
Wright Corporation's contribution format income statement for last month appears below.
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
$ 93,000
36,600
56,400
16,800
$ 39,600
There were no beginning or ending inventories. The company produced and sold 3,000 units during the month.
The company has an opportunity to secure a special order of 880 units if it is willing to drop the selling price on
these units to $29. Costs of securing the special order would be $1,160. The special order would not affect the
company's regular sales. If the special order is accepted, the company's overall net operating income will: (Do not
round intermediate calculations.)
increase by $14,784
increase by $13,624
increase by $3,880
remain the same
33.
Prestwich Company has budgeted production for next year as follows:
Quarter
Production in units
First
84,000
Second
104,000
Third
114,000
Fourth
94,000
Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A
on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 42,000 pounds of
material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be:
265,000 pounds
213,000 pounds
260,000 pounds
203,000 pounds
34.
Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 9,600
direct labor-hours will be required in May. The variable overhead rate is $4.50 per direct labor-hour. The company's budgeted
fixed manufacturing overhead is $128,600 per month, which includes depreciation of $12,450. All other fixed manufacturing
overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing
overhead budget should be:
$159,350
$43,200
$171,800
$116,150
35.
Lunderville Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 4,600 units
are planned to be sold in December. The variable selling and administrative expense is $5.40 per unit. The budgeted fixed selling
and administrative expense is $76,200 per month, which includes depreciation of $7,560 per month. The remainder of the fixed
selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses
on the December selling and administrative expense budget should be:
$24,840
$93,480
$68,640
$101,040
36.
Avril Company makes collections on sales according to the following schedule:
24% in the month of sale
60% in the month following sale
13% in the second month following sale
The following sales are expected:
January
February
March
Expected Sales
$170,000
$180,000
$215,000
Cash collections in March should be budgeted to be:
$181,700
$192,500
$208,550
$215,000
37.
Deschambault Inc. is working on its cash budget for December. The budgeted beginning cash balance is $21,000. Budgeted cash
receipts total $163,000 and budgeted cash disbursements total $160,000. The desired ending cash balance is $40,000. To attain
its desired ending cash balance for December, the company needs to borrow:
$16,000
$0
$64,000
$40,000
38.
Sartain Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are
planned for the year.
Finished goods (units)
Raw material (grams)
Beginning Inventory
28,000
58,000
Ending Inventory
78,000
48,000
Each unit of finished goods requires 4 grams of raw material.
If the company plans to sell 710,000 units during the year, how much of the raw material should the company purchase during
the year?
3,088,000 grams
3,050,000 grams
3,040,000 grams
3,030,000 grams
39.
Young Enterprises has budgeted sales in units for the next five months as follows:
June
July
August
September
October
5,000 units
7,600 units
5,800 units
7,200 units
4,200 units
Past experience has shown that the ending inventory for each month should be equal to 15% of the next month's sales in units.
The inventory on May 31 fell short of this goal since it contained only 700 units. The company needs to prepare a Production
Budget for the next five months.
The total number of units to be produced in July is:
8,470 units
7,600 units
7,330 units
7,870 units
40.
The Yost Company makes and sells a single product, Product A. Each unit of Product A requires 1.4 hours of labor at a labor rate
of $6.20 per hour. Yost Company needs to prepare a Direct Labor Budget for the second quarter.
If the budgeted direct labor cost for May is $147,560, then the budgeted production of Product A for May is: (Do not round
intermediate calculations.)
20,400 units
17,000 units
23,800 units
33,320 units
41.
Oscarson Midwifery's cost formula for its wages and salaries is $1,640 per month plus $360 per birth. For the month of
September, the company planned for activity of 160 births, but the actual level of activity was 147 births. The actual wages and
salaries for the month was $54,060. The wages and salaries in the planning budget for September would be closest to:
$59,240
$54,560
$56,900
$54,060
42.
Fussner Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,740
patient-visits and the actual level of activity was 1,840 patient-visits. The cost formula for administrative expenses is $3.30 per
patient-visit plus $19,200 per month. The actual administrative expense was $25,725. Last month, the spending variance for
administrative expenses was:
$330 U
$453 U
$618 U
$783 U
43.
The following materials standards have been established for a particular product:
Standard quantity per unit of output
Standard price
7.5 Pounds
$14.30 per pound
The following data pertain to operations concerning the product for the last month:
Actual materials purchased
Actual cost of materials purchased
Actual materials used in production
Actual output
6,680 Pounds
$92,300
5,980 Pounds
1,100 Units
What is the materials quantity variance for the month?
$25,675 F
$22,451 U
$5,250 U
$32,461 F
44.
Kibodeaux Corporation makes a product with the following standard costs:
Standard Quantity
Standard Cost
Standard Price or Rate
or Hours
Per Unit
Inputs
Direct materials
Direct labor
Variable overhead
9.4 liters
0.5 hours
0.5 hours
$7.00 per liter
$18.00 per hour
$3.00 per hour
$65.80
$9.00
$1.50
The company budgeted for production of 2,800 units in June, but actual production was 2,900 units. The company used
26,970 liters of direct material and 1,370 direct labor-hours to produce this output. The company purchased 28,970 liters
of the direct material at $6.90 per liter. The actual direct labor rate was $18.70 per hour and the actual variable overhead
rate was $2.70 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is
computed when the materials are purchased.
The materials quantity variance for June is:
$2,030 F
$940 U
$940 F
$2,030 U
45.
Kibodeaux Corporation makes a product with the following standard costs:
Standard Quality
Standard Cost
Standard Price or Rate
or Hours
Per Unit
Inputs
Direct materials
Direct labor
Variable overhead
9.8 liters
0.1 hours
0.1 hours
$13.50 per liter
$30.50 per hour
$11.50 per hour
$132.30
$3.05
$1.15
The company budgeted for production of 3,300 units in June, but actual production was 4,250 units. The company used
41,225 liters of direct material and 404 direct labor-hours to produce this output. The company purchased 35,640 liters of
the direct material at $4.90 per liter. The actual direct labor rate was $31.20 per hour and the actual variable overhead rate
was $11.20 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is
computed when the materials are purchased.
The labor rate variance for June is:
$283 U
$283 F
$298 U
$298 F