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

A manufacturing firm produces goods in accordance with customer specifications,commencing production upon receipt of a purchase order.To accumulate the cost of each order,the company would use a:

Taffy Corporation sells a number of products to groups that provide educational workshops and seminars.One of the products involves a combination leather case and note pad.The company purchases the case and pad combination from a supplier and encloses a $3 pen that contains the educational groups' name and logo. Taffy began to carry this product at the start of 20x3,acquiring 12,500 cases from Executive Supply for $87,500 along with an identical number of pens from Accent Goods.During 20x3,9,500 of the cases and pens were issued to Taffy's assembly operation where the pen is added.Eighty percent of these cases were completed as of December 31,and a review of the December 31 finished-goods inventory found 2,600 completed cases in the warehouse.Conversations with salespeople revealed that 70 finished sets were used in various company marketing activities throughout the year. Required: A.Cost per case and pad: $87,500 / 12,500 units = $7 per unit Cost per pen: $3 (given) Cost per case,pad,and pen: $7 + $3 = $10 Raw materials: (12,500 units - 9,500 units issued to assembly)* $10 = $30,000 Work in process: (9,500 units - (9,500 * 80%)= 1,900 units;1,900 units * $10 = $19,000 Finished goods: 2,600 units * $10 = $26,000 A.Determine the cost of the cases and pens that would appear in Taffy's raw materials,work in process,and finished-goods inventory as of December 31. B.Determine the cost of the cases and pens that would appear in the company's cost of goods sold for 20x3. B.Taffy completed 7,600 units (9,500 units * 80%)during 20x3.Since 2,600 units were found in finished-goods inventory,the company disposed of 5,000 completed sets (7,600 - 2,600)throughout the year.Seventy of these sets were used in marketing activities;thus,4,930 (5,000 - 70)were sold,resulting in a cost of goods sold of $49,300 (4,930 units *$10).

Dixie Company,which applies overhead at the rate of 190% of direct material cost,began work on job no.101 during June.The job was completed in July and sold during August,having accumulated direct material and labor charges of $27,000 and $15,000,respectively.On the basis of this information,the total overhead applied to job no.101 amounted to:

Fogg Company,which uses labor hours to apply overhead to manufacturing,may have increased amounts of underapplied overhead at month-end if:

A custom-home builder would likely utilize:

Which of the following would not likely be used by service providers to accumulate job costs?

Simone uses a predetermined overhead application rate of $8 per direct labor hour.A review of the company's accounting records for the year just ended discovered the following: Underapplied manufacturing overhead: $7,200 Actual manufacturing overhead: $392,000 Budgeted labor hours: 50,000 Simone's actual labor hours worked totaled:

Under- or overapplied manufacturing overhead at year-end is most commonly charged or credited to Work-in-Process Inventory.

Metro Corporation uses a predetermined overhead rate of $20 per machine hour.In deriving this figure,the company's accountant used:

The final step in recognizing the completion of production requires a company to:

Which of the following statements about materials is false?

Manufacturing overhead is applied to production. A.Describe several situations that may give rise to underapplied overhead. A.Overhead will be underapplied when total actual overhead costs exceed applied overhead.This can occur for a variety of reasons including underestimation of some overhead costs,incorrect estimation of the application base and/or production,selection of an inappropriate cost driver,or changes in the mix of products that affect the level of overhead costs incurred. B.Assume that underapplied manufacturing overhead is treated as an adjustment to Cost of Goods Sold.Explain why an underapplication of overhead increases Cost of Goods Sold. B.In most manufacturing environments,many products made during the period are also sold and ending work in process is modest relative to the amount of goods manufactureD.Therefore the vast majority of the overhead applied to the Work-in-Process Inventory account will flow through Finished-Goods Inventory and on to Cost of Goods SolD.However,if overhead is underapplied,Cost of Goods Sold has been increased by an insufficient amount.Consequently,the underapplied overhead should be added to Cost of Goods SolD.

A review of a company's Work-in-Process Inventory account found a debit for materials of $67,000.If all procedures were performed in the correct manner,this means that the firm:

Trenton worked on four jobs during its first year of operation: nos.401,402,403,and 404.A review of job no.403's cost record revealed direct material charges of $40,000 and total manufacturing costs of $50,000.If Trenton applies overhead at 150% of direct labor cost,the overhead applied to job no.403 must have been:

The assignment of direct labor cost to individual jobs is based on:

A typical job-cost record would provide information about all of the following items related to an order except:

Manufacturing overhead:

Sting Corporation debited Cost of Goods Sold and credited Manufacturing Overhead at year-end.On the basis of this information,one can conclude that:

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

The term "normal costing" refers to the use of: