Practice_Exam_01_312S04 (1)

Acc 312 - Spring 2005Sample Exam I

1. When underapplied or overapplied manufacturing overhead is prorated, amounts can be assigned to which of the following accounts?A. Raw-Material Inventory, Manufacturing Overhead, and Direct Labor.B. Cost of Goods Sold, Work-in-Process Inventory, and Finished-Goods Inventory.C. Work-in-Process Inventory, Raw-Material Inventory, and Cost of Goods Sold.D. Raw-Material Inventory, Finished-Goods Inventory, and Cost of Goods Sold.E. Raw-Material Inventory, Work-in-Process Inventory, and Finished-Goods Inventory

2. Corruption, Inc., uses a process-costing system. They overstated the percentage of work completed with respect to conversion cost on the ending work-in-process inventory. What is the effect of this overstatement on conversion-cost equivalent units and physical units manufactured, respectively?A. Overstated, overstated.B. Overstated, understated.C. Overstated, none.D. None, overstated.E. None, none.

3. The total production cost of a job is composed of:A. direct material and direct labor.B. direct material, direct labor, manufacturing overhead, and outlays for selling costs.C. direct material, direct labor, manufacturing overhead, and outlays for both selling and administrative

costs.D. direct material, direct labor, and applied manufacturing overhead.E. direct material, direct labor, and actual manufacturing overhead.

4. Excelsior Corporation recently used $90,000 of direct materials and $1,500 of indirect materials in production activities. The journal entries reflecting these transactions would include:A. a debit to Raw-Material Inventory for $90,000.B. a debit to Manufacturing Overhead for $1,500.C. a credit to Manufacturing Overhead for $1,500.D. a debit to Work-in-Process Inventory for $91,500.E. a debit to Manufacturing Overhead for $91,500.

5. Gary, Inc., applies manufacturing overhead at the rate of $40 per machine hour. Budgeted machine hours for the current period were anticipated to be 70,000; however, a lengthy strike resulted in actual machine hours being worked of only 55,000. Budgeted and actual manufacturing overhead figures for the year were $2,800,000 and $2,150,000, respectively. On the basis of this information, the company's year-end overhead was:A. overapplied by $50,000.B. underapplied by $50,000.C. overapplied by $600,000.D. underapplied by $600,000.E. overapplied by $650,000.

Acc 312 - Spring 2005Sample Exam I -

6. XYZ Co., had 3,000 units of work in process on April 1 that were 60% complete. During April, 10,000 units were completed and as of April 30, 4,000 units that were 40% complete remained in production. How many units were started during April?A. 8,600.B. 9,800.C. 11,000.D. 12,200.E. None of the above.

7. Which of the following is the proper sequence of events in an activity-based costing system?A. Identification of cost drivers, identification of cost pools, calculation of cost application rates,

assignment of cost to products.B. Identification of cost pools, identification of cost drivers, calculation of cost application rates,

assignment of cost to products.C. Assignment of cost to products, identification of cost pools, identification of cost drivers, calculation

of cost application rates.D. Calculation of cost application rates, identification of cost drivers, identification of cost pools,

assignment of cost to products.E. Some other sequence of the four activities listed above.

8. Michael, Inc., uses a process-costing system. A newly hired accountant has identified the following procedures that must be performed by the close of business on Friday:

1 – Calculation of equivalent units2 – Analysis of physical flows of units3 – Assignment of costs to completed units and units still in process4 – Calculation of unit costs

Which of the following choices correctly expresses the proper order of the preceding tasks?A. 1, 2, 3, 4.B. 1, 2, 4, 3.C. 1, 4, 3, 2.D. 2, 1, 4, 3.E. 2, 1, 3, 4.

9. When calculating unit costs under the weighted-average process-costing method, the unit cost is based on:A. only the current period's manufacturing costs.B. only costs in the period's beginning work-in-process inventory.C. a summation of the costs in the beginning work-in-process inventory plus costs incurred in the

current period.D. only costs incurred in previous accounting periods.E. a summation of the costs in the beginning work-in-process inventory plus costs to be incurred in the

upcoming period.


10. Which of the following is an appropriate way to analyze customer profitability?A. The cost of servicing a customer computed as a percentage of the customer's gross margin.B. The cost of servicing a customer computed as a percentage of the customer's gross margin, compared

against company or industry norms.C. The cost of servicing a customer computed as a percentage of the customer's gross margin, examined

over several years.D. “A” and “B.”E. “A,” “B,” and “C.”

11. The comparison of a company's practices and performance levels against those of other organizations is most commonly known as:A. benchmarking.B. continuous improvement.C. re-engineering.D. comparative analysis.E. kaizen business analysis (KBA).

12. In comparison with a system that uses a single, volume-based cost driver, an activity-based costing system is preferred when a company has:A. a large proportion of nonunit-level activities.B. product diversity or a large proportion of nonunit-level activities.C. minimal product diversity and a small proportion of nonunit-level activities.D. existing variances from budgeted amounts.E. a situation other than those noted above.

13. In the pull method of coordinating a production process:A. departments early in the production process continually make components in order to ensure that later

departments do not run out.B. nothing is manufactured at a work center until a need is signaled from a subsequent process.C. work-in-process inventories are increased throughout the plant.D. production employees never have idle time, thus increasing efficiency.E. defective products are "pulled" off the line and sent to a special department for rework.

14. Which of the following is not an objective of managerial accounting?A. Providing information for decision making and planning.B. Assisting in directing and controlling operations.C. Maximizing profits and minimizing costs.D. Measuring the performance of managers and subunits.E. Motivating managers toward the organization's goals.


15. Alden Company currently uses traditional costing procedures, applying $200,000 of overhead to products A and B on the basis of direct labor hours. The firm is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.

Pool 1 Pool 2 Pool 3

Product (Driver: DLH) (Driver: SU) (Driver: PC) A 400 25 1,900 B 600 75 1,100

Pool Cost $40,000 $70,000 $90,000

The overhead cost allocated to product A by using activity-based costing procedures would be:A. $80,000.B. $90,500.C. $109,500.D. $120,000.E. an amount other than those listed above.

16. Total variable costs are those costs that:A. vary inversely with changes in activity.B. vary directly with changes in activity.C. remain constant as activity changes.D. decrease on a per-unit basis as activity increases.E. increase on a per-unit basis as activity increases.

17. If the total cost of alternative A is $50,000 and the total cost of alternative B is $34,000, then $16,000 is termed the:A. opportunity cost.B. average cost.C. sunk cost.D. out-of-pocket cost.E. differential cost.

18. Which of the following statements represents a similarity between financial and managerial accounting?A. Both are useful in providing information for external users.B. Both are governed by GAAP.C. Both draw upon data from an organization's accounting system.D. Both rely heavily on published financial statements.E. Both are solely concerned with historical transactions.


19. Much of managerial accounting information is based on:A. a cost-benefit theme.B. profit maximization.C. cost minimization.D. the generation of external information.E. effectiveness but not efficiency.

20. Which of the following statements is (are) correct?A. Overtime premiums should be treated as a component of manufacturing overhead.B. Overtime premiums should be treated as a component of direct labor.C. Idle time should be treated as a component of direct labor.D. Idle time should be accounted for as a special type of loss.E. Both “B” and “C” are correct.


Problem 1 (10 points)

The Morton Company recorded the following transactions for February 20x1:

Materials Work in Process Finished GoodsPurchases $100,000Beginning inventory $ 18,000 $ 8,000 $ EEnding inventory A $ 20,000 $30,000Direct materials used $ 90,000Direct labor BManufacturing overhead (includes indirect materials used of $10,000)

$115,000

Transferred to finished goods CCost of goods sold D

Sales were $560,000, with sales prices determined by adding a 40% markup to the firm’s manufacturing cost. The total cost of direct materials used, direct labor, and manufacturing overhead during the month was $285,000.

Required:Calculate the missing values.



On May 1, the Dandy Company had a work-in-process inventory of 10,000 units. The units were 100% complete for material and 30% complete for conversion, with respective costs of $30,000 and $1,850.

During the month, 150,000 units were completed and transferred to finished goods. The ending work-in-process inventory on May 31 consisted of 10,000 units. These latter units were 100% complete with respect to materials and 80% complete with respect to conversion.Costs added during the month were $330,000 for materials and $503,750 for conversion.

Required:Using the weighted-average method, calculate:A. the cost per equivalent unit for material and conversion.

B. the cost transferred to finished goods.

C. the cost of ending work in process.



Pitney Corporation manufactures two types of space-age transponders—No. 156 and No. 157—and applies manufacturing overhead to all units at the rate of $76.50 per machine hour. Production information follows.

No. 156 No. 157Anticipated volume (units) 6,000 14,000Direct material cost $40 $65Direct labor cost 25 25

The controller, who is studying the use of activity-based costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours worked, and outgoing shipments, the activities' three respective cost drivers, follow.

No. 156 No. 157 TotalSetups 60 40 100Machine hours worked 15,000 25,000 40,000Outgoing shipments 120 80 200

The firm's total overhead of $3,060,000 is subdivided as follows: manufacturing setups, $260,000; machine processing, $2,400,000; and product shipping, $400,000.

Required:A. Compute the application rates that would be used for manufacturing setups, machine processing, and

product shipping in an activity-based costing system.B. Assuming use of activity-based costing, compute the total manufacturing costs of No. 156 and No.

157 if the expected manufacturing volume is attained.C. If the company's selling price is based heavily on cost, would a switch to activity-based costing from

the current traditional system result in a price increase or decrease for model No. 156? Show computations.


Problem 4 (10 Points)

Selected data concerning the past year’s operations of the Patterson Manufacturing Company are as follows:

Inventories

Beginning Ending

Raw Material $71,000 $81,000Work in process $80,000 $30,000Finished goods $90,000 $110,000Other data:

Direct materials used $326,000Total manufacturing costs charged toproduction during the year (includes directmaterial, direct labor, and manufacturingoverhead applied at a rate of 60% of direct-laborcost). $686,000

Cost of goods available for sale $826,000Selling and administrative expenses $31,500

A. What was the cost of raw materials purchased during the year?B. What was the direct-labor cost charged to production during the year?C. What was the cost of goods manufactured during the year?D. What was the cost of goods sold during the year?


Question # Answer1 B2 C3 D4 B5 A6 C7 B8 D9 C10 E11 A12 B13 B14 C15 B16 B17 E18 C19 A20 A

Problem 1 (2 points each)

Item A:Beginning materials $18,000 Add: Purchases 100,000Less: Direct materials used -90,000Less: Indirect materials used -10,000Ending materials $18,000

Item B:Total product costs $285,000 Less: Direct materials used -90,000Less: Manufacturing overhead -115,000Direct labor $80,000

Item C:Beginning work in process $8,000 Add: Total product costs 285,000Less: Ending work in process -20,000Transferred to finished goods $273,000

Item D:Sales $560,000 Divided by rate 140%Cost of goods sold $400,000


Item E:Ending finished goods $30,000 Add: Cost of goods sold 400,000Less: Transferred to finished goods -273,000Beginning finished goods $157,000

Problem 2

A. Cost per equivalent unit (4 pts)Direct

Material ConversionWork in process, May 31 $30,000 $1,850 Costs added during May 330,000 503,750Total costs $360,000 $505,600 Equivalent units 160,000 158,000 Cost per equivalent unit $2.25 $3.20

B. Cost transferred to finished goods (2points)

Material (150,000 x $2.25) $337,500 Conversion (150,000 x $3.20) 480,000Total $817,500

C. Cost of work in process at May 31 (2 pts)

Material (10,000 x $2.25) $22,500 Conversion (8,000 x $3.20) 25,600Total $48,100

Problem 3

A. ( 3 points)

Manufacturing setups: $260,000 ÷ 100 setups (SU) = $2,600 per SUMachine processing: $2,400,000 ÷ 40,000 machine hours (MH) = $60 per MHProduct shipping: $400,000 ÷ 200 outgoing shipments (OS) = $2,000 per OS

B. Setup, machine processing, and product shipping costs of No. 156 and No. 157: (6 points)

Activity No. 156 No. 157 Direct Material$40 x 6,000 $240,000$65 x 14,000 $910,000Direct Labor$25 x 6,000 150,000$25x 14,000 350,000Manufacturing setup:60 SU x $2,600 156,000 40 SU x $2,600 104,000 Machine processing:15,000 MH x $60 900,00025,000 MH x $60 1,500,000Product shipping:120 OS x $2,000 240,00080 OS x $2,000 160,000Total $1,686,000 $3,024,000


C. (3 points)

Traditional systemMachine hours (15,000) ÷ units produced (6,000) = 2.5 hours per unit;2.5 hours x $76.50 = $191.25 overhead appliedDirect material ($40.00) + direct labor ($25.00) + overhead ($191.25) = $256.25/unit

ABC Costing$1,686,000 (from above) / 6,000 = $281/unit

No. 156 is currently undercosted ($256.25 vs. $281.00), so a switch to activity-based costing will likely result in a price hike.

Problem 4

A. Raw material (2 points)

Beginning inventory $71,000Add: Purchases 336,000Deduct: Raw material used 326,000Ending inventory $81,000

B Direct labor (4 points)

Total manufacturing cost $686,000 Deduct: Direct material 326,000Direct labor and manufacturing overhead $360,000

Direct labor + manufacturing overhead = $360,000 Direct labor + (60%) (direct labor) = $360,000 (160%) (direct labor) = $360,000

Direct labor = $360,000/1.6 Direct labor = $225,000

C. Cost of goods manufactured (2 points)

Work in process, beginning inventory $80,000 Add: Total manufacturing costs 686,000Deduct: Cost of goods manufactured 736,000Work in process, ending inventory $30,000

D. Cost of goods sold (2 points)

Finished goods, beginning inventory $90,000 Add: Cost of goods manufactured 736,000Deduct: Cost of goods sold 716,000Finished goods, ending inventory $110,000


Practice_Exam_01_312S04 (1)

Documents

Transcript of Practice_Exam_01_312S04 (1)