Exam 3: Product Costing and Cost Accumulation in a Batch Production Environment

Discuss the reason for (1) allocating overhead to the cost of production jobs, and (2) applying overhead using a predetermined rate instead of an actual overhead rate.

Bennington Company applies manufacturing overhead by using a predetermined rate of 150% of direct labor cost.The data that follow pertain to job no.831: If Bennington adds a 30% markup on total cost to generate a profit, which of the following choices depicts a portion of the accounting needed to record the credit sale of job no.831?

Xtreme Sports makes baseball bats.The company buys wood as a direct material.The company's Shaping Department processes the bats, which are transferred to the Coating Department where a sealant is applied.The Shaping Department began manufacturing 20,000 Babe Ruth sluggers during the month of October.There was no beginning inventory. Costs in the Shaping Department for the month of October were: A total of 16,000 bats were completed and transferred to the Coating Department; the remaining 4,000 bats were still in the Shaping Process at the end of the month.All of the Shaping Department's direct materials were placed in process, but on average, only 25% of the conversion cost was applied to the ending work-in-process inventory. What is the cost of the work-in-process inventory in Xtreme Sports' Shaping Department at the end of October?

The two-stage cost allocation actually has three types of allocation involved.

Terrence Industries charges manufacturing overhead to products by using a predetermined application rate, computed on the basis of labor hours.The following data pertain to the current year: Which of the following choices is the correct status of manufacturing overhead at year-end?

Barnacle Industries incurred and applied the following manufacturing costs: During 20x2, Barnacle finished products costing $78,000.Products costing $32,500 were sold for $41,600.What is the balance of Finished Goods on Barnacle's balance sheet as of December 31, 20x2?

Barnacle Industries incurred and applied the following manufacturing costs: During 20x2, Barnacle finished products costing $78,000.Products costing $32,500 were sold for $41,600.What is the balance of Work-in-Process on Barnacle's balance sheet as of December 31, 20x2?

Electricity costs that were incurred by a company's production processes should be debited to Utilities Expense.

Which of the following statements about manufacturing cost flows is false?

Flagler, Inc.disposes of under- or overapplied overhead at year-end as an adjustment to cost of goods sold.Prior to disposal, the firm reported cost of goods sold of $590,000 in a year when manufacturing overhead was underapplied by $15,000.If sales revenue totaled $1,400,000, determine (1) Flagler's adjusted cost of goods sold and (2) gross margin

Briefly describe the stages used in the two-stage allocation process for assigning overhead costs.

Douglas, Inc., employs a normal costing system.The following information pertains to the year just ended. Total manufacturing costs were $2,500,000. Cost of goods manufactured was $2,425,000. Applied manufacturing overhead was 30 percent of total manufacturing costs. Manufacturing overhead was applied to production at a rate of 80 percent of direct-labor cost. Work-in-process inventory on January 1 was 75 percent of work-in-process inventory on December 31. Based on this information, what is the total direct-labor cost for the year?

Foxmoor Company applies manufacturing overhead by using a predetermined rate of 50% of direct labor cost.The data that follow pertain to job no.764: If Foxmoor adds a 40% markup on total cost to generate a profit, which of the following choices depicts a portion of the accounting needed to record the sale of job no.764?

Throughout the accounting period, the credit side of the Manufacturing Overhead account is used to accumulate:

If a company sells goods that cost $80,000 for $92,000, the firm will:

Throughput time includes the time required for all of these except:

The controller for Jack's Rabbits, Inc., estimates that the company's fixed overhead is $150,000 per year.He also has determined that the variable overhead is approximately $0.20 per rabbit raised and sold.Since the company has a single product, overhead is applied on the basis of output units, or in other words, rabbits raised and sold. What is the predetermined overhead rate per rabbit if the output estimate or prediction is 150,000 rabbits?

Which of the following statements about material requisitions is false?

When underapplied or overapplied manufacturing overhead is prorated, amounts can be assigned to which of the following accounts?

Electricity costs that were incurred by a company's production processes should be debited to: