Bryant Manufacturing produces its product in two sequential processing departments

ACCT 212 Quiz 2 Cost Accounting and Analysis solutions complete answers

 The high-low method uses just two points to estimate the cost equation.

 A cost-volume-profit (CVP) chart is a graph that plots number of units produced and sold on the horizontal axis and dollars of costs and sales on the vertical axis.

 Cost-volume-profit analysis identifies and measures costs using their fixed and variable components.

 The difference between selling price per unit and variable costs per unit is the:

 Unit-level costs tend to change with the number of units produced.

 The weighted-average method of process costing excludes the beginning work in process inventory costs in computing the cost per equivalent unit for the current period.

 If a production department has 100 equivalent units of production with respect to direct materials in a given reporting period, the equivalent units of production with respect to conversion must also be 100.

 In a process costing system, companies use predetermined overhead rates to apply overhead.

 Cost accounting systems accumulate production costs and then assign them to products and services.

 The costs of direct materials, direct labor, and overhead of completed products ready for sale are known as:

 Calculate the equivalent units of production for direct materials.

 Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of overhead applied to jobs during the year.

 Variable costing does not apply to service companies.

 Feedback from the control function helps managers compare actual results with planned results and take corrective actions.

 Use the cost information below for Laurels Company to determine the cost of goods manufactured during the current year:

 Direct materials used
$ 5,000
Direct labor
7,000
Total factory overhead
5,100
Work in process inventory, beginning
3,000
Work in process inventory, ending
4,000

 Oxford Company uses a job order costing system. In the last month, the system accumulated labor time tickets totaling $24,600 for direct labor and $4,300 for indirect labor. The journal entry to record indirect labor consists of a:

 Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the predetermined overhead rate.

 Which of the following is not one of the four steps in accounting for production activity and assigning costs during a period under a process cost system?

 A company incurred $85,000 of direct labor in its Roasting Department. The journal entry to record this production activity includes a debit to Work in Process Inventory—Roasting for $85,000.

 Process costing systems are used only by companies that manufacture physical products; companies that provide services do not use process costing.

 Dazzle, Incorporated produces beads for jewelry making use. The following information summarizes production operations and sales activities for June. The journal entry to record June sales is:

 Direct materials used
$ 87,000
Direct labor used
160,000
Predetermined overhead rate (based on direct labor)
155%
Goods transferred to finished goods
432,000
Cost of goods sold
444,000
Credit sales

  Dazzle, Incorporated produces beads for jewelry making use. The following information summarizes production operations for June. The journal entry to record June production activities for goods transferred from production to finished goods is:

 Direct materials used
$ 87,000
Direct labor used
160,000
Predetermined overhead rate (based on direct labor)
155%
Goods transferred to finished goods
432,000
Cost of goods sold
444,000
Credit sales
810,000

 Bryant Manufacturing produces its product in two sequential departments. During October, the first process finished and transferred 300,000 units of its product to the second process. Of these units, 60,000 were in process at the beginning of the month and 240,000 were started and completed during the month. At month end, 40,000 units were in process. Using the FIFO method, compute the number of equivalent units of production for direct materials for the first process for October assuming that all direct materials are added to products when processing begins.

 Williams Company computed its cost per equivalent unit for direct materials to be $2.60 and its cost per equivalent unit for conversion to be $3.75. A total of 250,000 units of product were completed and transferred out as finished goods during the month, and 36,000 of equivalent units remained unfinished at the end of the month. The amount that should be reported in Finished Goods Inventory is:

 A production cost report is a managerial accounting report that describes all but which of the following:

 Beginning work in process

  Direct materials
$ 43,000

 Conversion
48,850
$ 91,850
Costs added this period

  Direct materials
$ 287,000

 Conversion
599,150
$ 886,150

Calculate the cost per equivalent unit of conversion.

 The cost of units transferred from the final production process to Finished Goods Inventory is called cost of goods manufactured.

  Units
Direct materials Percent Complete
Conversion Percent Complete
Beginning work in process inventory
25,000
100%
55%
Units started and completed
110,000

  Units completed and transferred out
135,000

  Ending work in process inventory
30,000
100%
30%

 Production cost information for the Molding department follows.

  A company uses the weighted-average method for inventory costing. At the end of the period, 29,000 units were in the ending Work in Process inventory and are 100% complete for materials and 82% complete for conversion. The equivalent costs per unit are materials, $2.72, and conversion $2.20. Compute the cost that would be assigned to the ending Work in Process inventory for the period.

 Sparky Corporation uses the FIFO method of process costing. The following information is available for February in its Molding department:

 Facility-level costs vary with the number of units, batches, or product lines produced.

 A manufacturer completed the production of goods costing $350,000 and transferred them to finished goods. The journal entry to record the transfer of units from the Shaping department to Finished Goods Inventory includes a:

 Which of the following companies would be best served by a plantwide overhead rate?

 GSP Manufacturing uses machine hours to allocate overhead costs to products. Budgeted information for the current year follows:

 Budgeted overhead cost
$ 217,600

 Budgeted machine hours
2,560
machine hours
Budgeted direct labor hours
13,600
direct labor hours

The plantwide overhead rate based on machine hours is:

Wall Nuts' total expected overhead costs and related overhead data are shown below.

  Department A
Department B
Direct labor hours
67,000
DLH
170,000
DLH
Machine hours
100,000
MH
80,000
MH
Budgeted overhead costs
$ 450,000

 $ 600,000

 Use the data for Wall Nuts, Incorporated to compute the dollar amount of overhead applied to each unit of oak paneling, assuming the company uses departmental overhead rates based on machine hours in Department A and machine hours in Department B.

 Direct materials
$ 380,000

 Direct labor

  Department A (6,000 DLH × $25 per DLH)
$ 150,000

 Department B (35,125 DLH × $16 per DLH)
$ 562,000

 Machine Hours

  Department A
24,000
MH
Department B
32,000
MH

   Meltin Metals manufactures patio furniture. The company budgets overhead cost of $1,600,000 for the year. It also budgets 80,000 machine hours and 20,000 direct labor hours. Compute the plantwide overhead rate assuming the company allocates overhead based on machine hours.

 Wall Nuts, Incorporated produces paneling that requires two processes, A and B, to complete. Oak is the best-selling type of paneling produced. Information related to the 40,000 units of oak paneling produced annually is shown in the following table:

  Zoe Company reports the following for its overhead cost for the year.

 Activity
Budgeted Cost
Budgeted Activity Usage
Engineering support
$ 98,000
70
design changes
Electricity
136,000
3,400
machine hours
Setup
210,000
350
setups

Compute the activity rate for engineering support using activity-based costing.

 Compared to the plantwide overhead rate method, the departmental overhead rate method arguably results in more accurate overhead allocations.

 Henry Company allocates overhead cost using a single plantwide rate of $80 per direct labor hour. Each product unit uses three direct labor hours and 2 machine hours. The overhead cost per unit is:

 GSP Manufacturing uses machine hours to allocate overhead costs to products. Budgeted information for the current year follows:

 Budgeted overhead cost
$ 217,600

 Budgeted machine hours
2,560
machine hours
Budgeted direct labor hours
13,600
direct labor hours

The overhead cost allocated to a job that uses 4 machine hours is:

 The proportion of sales volume for each product sold by a company is called the:

 The contribution margin per unit expressed as a percentage of the product's selling price is the:

 While the total amount of variable cost changes with the level of production, variable cost per unit stays the same as volume changes.

 Raven Company has a target income of $70,000. The contribution margin ratio is 30%. What amount of dollar sales must be achieved to reach the goal if fixed costs are $35,900?

 Use the following information to determine the break-even point in sales dollars:

 Unit sales
50,000
Units
Dollar sales
$ 500,000

 Fixed costs
$ 204,000

 Variable costs
$ 187,500

   Assume that sales are predicted to be $3,750, the expected contribution margin is $1,500, and a net loss of $250 is anticipated. The break-even point in sales dollars is:

 A product sells for $30 per unit and has variable costs of $18 per unit. The fixed costs are $720,000. If the variable costs per unit were to decrease to $15 per unit, fixed costs increase to $900,000, and the selling price does not change, break-even point in units would:

 In cost-volume-profit analysis, the contribution margin per unit is:

 Managers can use variable costing information for internal decision making, but they must use absorption costing for external reporting purposes.

The company produced 25,000 units, and sold 20,000 units, leaving 5,000 units in inventory at year-end. Income calculated under variable costing is determined to be $315,000. How much income is reported under absorption costing?

  Given the following data, total product cost per unit under absorption costing is $9.14.

 Direct labor
$ 0.72
per unit
Direct materials
$ 0.80
per unit
Variable overhead
$ 4.50
per unit
Fixed overhead
$ 140,400

 Units produced per year
45,000
units

 Which of the following statements is true?

 During its first year of operations, the McCormick Company incurred the following manufacturing costs:

 Direct materials
$ 5
per unit
Direct labor
$ 3
per unit
Variable overhead
$ 4
per unit
Fixed overhead
$ 250,000
per year

 Galaxy, Incorporated, a manufacturer of telescopes, began operations on June 1 of the current year. During this time, the company produced 60,000 units and sold 40,000 units at a sales price of $600 per unit. Cost information for this year is shown in the following table:

 Direct materials
$ 90
per unit
Direct labor
$ 75
per unit
Variable overhead
$ 4
per unit
Fixed overhead
$ 420,000
in total
Variable selling and administrative
$ 80,000
in total
Fixed selling and administrative
$ 520,000
in total

Given the Galaxy, Incorporated data, what is income using absorption costing?

 A manufacturing firm's cost of goods manufactured is equivalent to a merchandising firm's:

 Costs are important to managers because they impact both the financial position and profitability of a business.

 A type of production that yields customized products or services for each customer is called:

 In nearly all job order cost systems, materials ledger cards are perpetual records that are updated each time materials are purchased or issued for use in production.

 During March, the production department of a process operations system completed and transferred to finished goods 18,000 units that were in process at the beginning of March and 160,000 units that were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 60% complete with respect to conversion. At the end of March, 35,000 additional units were in process in the production department and were 100% complete with respect to materials and 23% complete with respect to conversion. Compute the number of physical units transferred to finished goods.

 A company uses the weighted-average method for inventory costing. At the end of the period, 28,000 units were in the ending Work in Process inventory and are 100% complete for materials and 81% complete for conversion. The equivalent costs per unit are materials, $2.71, and conversion $2.35. Compute the cost that would be assigned to the ending Work in Process inventory for the period.

 Process and job order manufacturing operations both combine materials, labor, and overhead items in the process of producing products.

 Hybrid systems contain features of both process and job order operations.

 Which of the following products is most likely to be produced in a process operations system?

 A company uses a process costing system. Its Welding Department completed and transferred out 100,000 units during the current period. The ending inventory in the Welding Department consists of 30,000 units (75% complete with respect to direct materials and 40% complete with respect to conversion costs).

Determine the equivalent units of production for the Welding Department for direct materials and conversion costs assuming the weighted average method.

 If a department that applies process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to direct labor, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

 During January, the production department of a process operations system completed and transferred to finished goods a total of 78,000 units. At the end of January, 9,000 additional units were in process in the production department and were 65% complete with respect to labor. The beginning inventory included labor cost of $37,100 and the production department incurred direct labor cost of $294,300 during January. Compute the direct labor cost per equivalent unit for the department using the weighted-average method.

 In a process costing system, the entry to record cost of materials assigned to a production department requires a debit to the Raw Materials Inventory account and a credit to the Work in Process Inventory account for that department.

 Wilturner Company incurs $97,000 of labor related directly to the product in the Assembly Department, and $10,000 of labor for services that help production in both the Assembly and Finishing departments. The amount of direct labor and factory overhead respectively are:

 After posting all actual factory overhead and applying factory overhead to production departments in a process costing system,

 Luker Corporation uses a process costing system. The company had $160,500 of beginning Finished Goods Inventory on October 1.  It transferred in $837,000 of units completed during the period.  The ending Finished Goods Inventory balance on October 31 was $158,200. The entry to account for the cost of goods sold in October is:

 K Company estimates that overhead costs for the next year will be $3,648,000 for indirect labor and $960,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 96,000 direct labor hours are planned for this next year, how much overhead would be assigned to a product requiring 5 direct labor hours?

 Which of the following are advantages of using the plantwide overhead rate method?

 ABC is significantly less costly to implement and maintain than more traditional overhead costing systems.

 Over recent decades, overhead costs have steadily decreased while direct labor costs have increased as a percentage of total manufacturing costs.

 Put the following ABC implementation steps in order ________.

 Distorted product cost information can result in poor decisions.

 Data concerning volume-related measures are readily available in most manufacturing settings.

 The departmental overhead rate method uses a different overhead rate for each production department.

 Activity-based costing involves four steps: (1) identify activities and the costs they cause, (2) group similar activities into cost pools, (3) determine an activity rate for each activity cost pool, and (4) allocate overhead costs to products using those activity rates.

 A firm expects to sell 25,300 units of its product at $11.30 per unit and to incur variable costs per unit of $6.30. Total fixed costs are $73,000. The total contribution margin is:

 A company manufactures and sells a product for $130 per unit. The company's fixed costs are $78,760, and its variable costs are $100 per unit. The company's break-even point in units is:

 Use the following information to determine the contribution margin ratio:

 Total contribution margin in dollars divided by pretax income is the:

 Cost-volume-profit analysis requires management to classify all costs as either fixed or variable with respect to production or sales volume within the relevant range of operations.

 During its most recent fiscal year, Raphael Enterprises sold 200,000 electric screwdrivers at a price of $15 each. Fixed costs amounted to $400,000 and pretax income was $600,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

 The following information is available for a company's cost of sales over the last five months.

 To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price.

 Absorption costing is useful because it reflects the full costs that sales must exceed for the company to be profitable.

 The ratio (proportion) of the sales volumes for the various products sold by a company is called the:

 Variable costing is required by Generally Accepted Accounting Principles (GAAP) for financial statement purposes.

 If a company has excess capacity, increases in production level will increase variable production costs but not fixed production costs.

 Which of the following is not included in the product cost under variable costing?

 The data needed for cost-volume-profit analysis is readily available if the income statement is prepared under absorption costing.

 When setting long-term sales prices for products, the sales price must cover all costs, including fixed costs.

 Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and allocates $18 of overhead for each employee hour worked. Materials are assigned to each job according to actual cost. If Job M-47 used $350 of materials and took 20 hours of labor to complete, what is the total cost that should be assigned to the job?

 Clarksen Company uses a process costing system. The company requisitioned $93,000 of materials for Department A and $67,000 of materials for Department D. The entry to record the use of the direct materials by these two departments is:

 Peterson Company estimates that overhead costs for the next year will be $2,400,000 for indirect labor and $900,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 110,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round your answer to two decimal places.)

 A firm expects to sell 25,400 units of its product at $11.40 per unit and to incur variable costs per unit of $6.40. Total fixed costs are $74,000. The pretax net income is:

 A product sells for $180 per unit, and its variable costs are 55% of sales. The fixed costs are $495,000. What is the break-even point in sales dollars? (Do not round intermediate calculations.)

 Carver Packing Company reports total contribution margin of $72,000 and pretax net income of $24,000 for the current month. In the next month, the company expects sales volume to increase by 8%. The degree of operating leverage and the expected percent change in income, respectively, are:

 Calculate the cost of goods sold using the following information:

 A production department's output for the most recent month consisted of 19,500 units completed and transferred to the next stage of production and 19,500 units in ending Work in Process inventory. The units in ending Work in Process inventory were 60% complete with respect to both direct materials and conversion costs. There were 2,900 units in beginning Work in Process inventory, and they were 80% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.

 If indirect materials costing $37,500 that were not clearly linked with any specific production process or department were used during a reporting period, the following journal entry would be recorded in the process costing system:

 Wyman Corporation uses a process costing system. The company manufactured certain goods at a cost of $800 and sold them on credit to Percy Corporation for $1,075. The complete journal entry to be made by Wyman at the time of this sale is:

 The Goldfarb Company manufactures and sells toasters. Each toaster sells for $24.75 and the variable cost per unit is $16.80. Goldfarb's total fixed costs are $26,000, and budgeted sales are 9,000 units. What is the contribution margin per unit?

 Watson Company has monthly fixed costs of $83,000 and a 40% contribution margin ratio. If the company has set a target monthly income of $15,000, what dollar amount of sales must be made to produce the target income?

 The following information is available for a company's cost of sales over the last five months.

Using the high-low method, the estimated total fixed cost is:

 A company's product sells at $12 per unit and has a $5 per unit variable cost. The company's total fixed costs are $98,000. The break-even point in units is:

 CWN Company uses a job order costing system and last period incurred $80,000 of actual overhead and $100,000 of direct labor. CWN estimates that its overhead next period will be $75,000. It also expects to incur $100,000 of direct labor cost. If CWN bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be:

 Gladstone Co. has expected sales of $328,000 for the upcoming month and its monthly break even sales are $302,500. What is the margin of safety as a percent of sales, rounded to the nearest whole percent?

 If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:

 Which of the following is not a direct cost for a scooter manufacturer?

 The following information relates to the manufacturing operations of the Abbra Publishing Company for the year:

The raw materials used in manufacturing during the year totaled $1,018,000. Raw materials purchased during the year amount to:

 In process costing, indirect materials are clearly linked with a specific production process or department.

 All of the following are true about using a predetermined overhead rate to apply overhead except,

 Cost-volume-profit analysis is used to determine the number of units that must be sold to break even..

 A company has fixed costs of $270,000, a unit contribution margin of $14, and a contribution margin ratio of 55%. If the company wants to earn a target $60,000 pretax income, what amount of sales must it make (rounded to the nearest whole dollar)?

 West Company estimates that overhead costs for the next year will be $5,240,000 for indirect labor and $550,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 150,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?

 The following information is available for the year ended December 31:

The amount of raw materials used in production for the year is:

 Metaline Corp. uses the weighted average method for inventory costs and had the following information available for the year. The number of units transferred to finished goods during the year is:

 Following is a partial process cost summary for Mitchell Manufacturing's Canning Department.

The total conversion costs transferred out of the Canning Department equals:

 If Department R uses $60,000 of direct materials and Department S uses $15,000 of direct materials, the following journal entry would be recorded by the process costing system:

 A company estimates that overhead costs for the next year will be $8,480,000 for indirect labor and $163,500 for factory utilities. The company uses machine hours as its overhead allocation base. If 480,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round your answer to two decimal places.)

 During March, a firm expects its total sales to be $160,000, its total variable costs to be $95,000, and its total fixed costs to be $25,000. The contribution margin for March is:

 The following information is available for a company's utility cost for operating its machines over the last four months.

Using the high-low method, the estimated variable cost per machine hour for utilities is:

 Fuschia Company's contribution margin per unit is $12. Total fixed costs are $84,000. What is Fuschia's break-even point in units?

 Geneva Company manufactures dolls that are sold to various customers. The company works at full capacity for half the year to meet peak demand, and operates at 80% capacity for the other half of the year. The following information is provided:

Geneva receives a purchase order to make 5,000 dolls as a one-time event. The good news is that this order is during a period when Geneva does have sufficient excess capacity. What is the lowest selling price Geneva should accept for this purchase order?

 Which of the following best describes costs assigned to the product under the variable costing method?

 Use the following information to compute the cost of goods manufactured. Assume all raw materials used were direct materials.

 Compute the conversion cost per equivalent unit for the Production department using the weighted-average method.

Production cost information for the Production department follows.

 A process manufacturer that uses the weighted-average method reports the following. Compute the total equivalent units of production for conversion.

 An ice cream manufacturer makes ice cream in two processes, Mixing and Packaging. During April, its first month of business, the Packaging department transferred 200,000 units and $700,000 of production costs to finished goods. The company completed and sold 192,000 units at a price of $5 per unit in April. What is the total gross profit on ice cream sales for April.

 Peterson Company budgets overhead cost of $7,070,000 for the next year. The company uses machine hours as its overhead allocation base. If 140,000 machine hours are planned for the next year, what is the company’s plantwide overhead rate? (Round your answer to two decimal places.)

 Turtle Company produces t-shirts that go through two operations, Cutting and Sewing. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for the Cutting department based on direct labor hours is $2.69 per direct labor hour (rounded to two decimals).

 A company sells headphones for $45 per unit. If fixed costs total $162,000, and variable costs are $18 per unit, the company’s break-even point in units equals 3,600 units.

 During a recent fiscal year, Creek Company reported income of $125,000, a contribution margin ratio of 25% and total contribution margin of $400,000. Total variable costs must have been:

 Blue Sky Company reports the following for its first year of operations. The company produced 88,000 units and sold 72,000 units at a price of $280 per unit.

The total product cost per unit under absorption costing is $180 per unit.

 Which of the following best describes costs assigned to the product under the absorption costing method?

 Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating department:

Production cost information for the Fabricating department follows.

Calculate the cost per equivalent unit for direct materials.

Calculate the cost per equivalent unit for conversion.

Calculate the equivalent units of production for conversion.

Calculate the equivalent units of production for direct materials.

 A company has two manufacturing departments, Forming and Painting. The company uses the weighted-average method and it reports the following data. Units completed in the Forming department are transferred to the Painting department.

Determine the equivalent units of production for the Forming department for direct materials and conversion costs assuming the weighted average method.

 Aztec Industries produces bread which goes through two operations, Mixing and Baking, before it is ready to be packaged. Next year’s expected costs and activities are shown below.

Compute Aztec's departmental overhead rate for the Baking department based on machine hours.

 A manufacturer has the following budgeted data for its two production departments:

Compute the company’s single plantwide overhead rate based on direct labor hours.

 Kamper Company sells two products Big Z and Little Z. Current direct material and direct labor costs are detailed below. Next year, the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is budgeted to be $493,000. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $25 per hour and the company expects to manufacture 50,000 units of Big Z and 27,000 units of Little Z next year.

What are total budgeted direct labor hours for this next year?