Exam 6: Fundamentals of Product and Service Costing

Assume that the following T-accounts represent data from the Morgensen Corporation's accounting records. Required: (a) Find the missing amounts represented by the letters a, b, c, d and e. (b) Determine the company's predetermined overhead rate, based on labor cost. BB = Beginning Balance; EB = Ending Balance TO = Transferred Out (1) Denotes materials purchased

The following information has been gathered for the Harrell Manufacturing Company for its fiscal year ending December 31: Actual manufacturing overhead costs \ 212,500 Actual direct labor hours 54,900 Actual direct labor costs \ 445,000 Estimated manufacturing overhead costs \ 210,000 Estimated direct labor \ 434,000 Estimated direct labor hours 56,000 - What is the predetermined manufacturing overhead rate per direct labor hour?

Flare Co. manufactures textiles. Among Flare's 2020 manufacturing costs were the following salaries and wages: Loom operators \ 120,000 Factory foremen 45,000 Machine mechanics 30,000 - What was the amount of Flare's 2020 direct labor? (CPA adapted)

Refresh produces soft drinks and sodas. Production of 100,000 liters was started in February, 85,000 liters were completed. Material costs were $38,220 for the month while conversion costs were $16,380. There was no beginning work-in-process; the ending work-in-process was 40% complete. - What is the cost of the product that was completed and transferred to finished goods?

Briefly discuss the issue of choosing an activity measure for setting overhead rates.

The following information has been gathered for Catalyst Legal Services for its fiscal year ending December 31: Actual office overhead costs \ 1,275,500 Actual billable labor hours 44,600 Actual billable labor costs \ 3,960,000 Estimated office overhead costs \ 1,080,000 Estimated billable labor hours 48,000 Estrmated billable labor costs \ 4,320,000 - What is the predetermined office overhead rate per billable labor dollar?

Carter Furniture manufactures three models of tables: oak, cherry, and walnut. All models are assembled in the same plant and require the same assembling operations. The difference is in the cost of the wood. The following data are available for July. Oak Cherry Walnut Total Number of units 1,200 700 900 2,800 Wood costs per unit \8 0 \1 20 \1 05 Other costs: Direct labor \1 65,000 Indirect materials 26,000 Other overhead 61,000 Total \2 52,000 Carter uses operations costing and assigns conversion costs on the number of tables built. Required: Compute the cost of the each of the three models for July.

In general, indirect costs are allocated, while direct costs are assigned.

Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves?

Spring Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: The predetermined overhead rate for the recently completed year was closest to:

The Crater Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and machine-hours in Dept. B. At the beginning of the year, the company made the following estimates: Dept A Dept B Direct labor cost \ 65,000 \ 42,000 Manufacturing overhead \ 91,000 \ 48,000 Direct labor-hours 8,000 10,000 Machine-hours 3,000 12,000 What predetermined overhead rates would be used in Dept A and Dept B, respectively?

Refresh produces soft drinks and sodas. Production of 100,000 liters was started in February, 85,000 liters were completed. Material costs were $38,220 for the month while conversion costs were $16,380. There was no beginning work-in-process; the ending work-in-process was 40% complete. - What is the cost of the product that remains in work-in-process?

Moore Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below: The predetermined overhead rate for the recently completed year was closest to:

Case (A) Case (B) Case (C) Beginning Balance (BB) ? \ 23,000 \ 7,900 Ending Balance (EB) \ 67,000 19,200 8,300 Transferred In (TI) 149,600 97,700 Transferred Out (TO) 164,600 ? ? - For Case (C) above, what is the amount Transferred In (TI)?

A system that mass-produces a single, homogeneous output in a continuous process is a(n):

The basic cost flow model is:

The following direct labor information pertains to the manufacture of product Glaze: Time required to make one unit 3direct labor hours Number of direct workers 25 Number of productive hours per week, per worker 36 Weekly wages per worker Workers' benefits treated as direct labor costs 30\% of wages What is the standard direct labor cost per unit of product Glaze? (CPA adapted)

EZ Set produces a quick setting concrete powder. Production of 15,000 tons was started in September, 14,000 tons were completed. Material costs were $394,670 for the month while conversion costs were $201,730. There was no beginning work-in-process; the ending work-in-process was 20% complete. Required: (a) What is the total cost of the product that was completed and transferred to finished goods? (b) What is the value of the ending work-in-process?

A company is considering the use of a single-stage cost allocation process. Under what conditions would this choice be justified?

Cost management systems should be designed to report the same costs to each decision-maker.