Fred Adams is employed by the Cedar Manufacturing Company on their assembly line.Fred is paid $15 per hour for regular time,and time-and-a-half for all work in excess of 40 hours per week.During the two weeks of the pay period just completed,Fred reported the following: $\begin{array}{|l|c|} \hline \text { Week 1: } & \\ \hline \text { Idle time due to machine breakdowns } & 3 \text { hours } \\ \hline \text { Idle time due to material shortages } & 2 \text { hours } \\ \hline \text { Overtime } & \text { None } \\\hline\\\hline \text { Week 2: } & \\ \hline \text { Idle time } & \text { None } \\ \hline \text { Overtime } & 9 \text { hours } \\ \hline \end{array}$ Required: Compute Fred's wages for each week and allocate Fred's wages for each week between direct labour cost and manufacturing overhead.

Week 1: Fred's wages equal 40 hours * $1

You are given the following data for January: $\begin{array}{|l|l|} \hline \text { Direct materials } & \$ 38,000 \\ \hline \text { Direct labour } & \$ 24,000 \\ \hline \text { Manufacturing overhead } & \$ 17,000 \\ \hline \text { Beginning work in process inventory } & \$ 10,000 \\ \hline \text { Ending work in process inventory } & \$ 11,000 \\ \hline \end{array}$ Which of the following is the cost of goods manufactured?

A) $89,000. B) $78,000. C) $79,000. D) $80,000. A) $89,000. B) $78,000. C) $79,000. D) $80,000.

The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the year just ended. $\begin{array}{|l|r|} \hline \text { Sales } & \$ 990 \\ \hline \text { Raw materials inventory, beginning } & \$ 40 \\ \hline \text { Raw materials inventory, ending } & \$ 70 \\ \hline \text { Purchases of raw materials } & \$ 120 \\ \hline \text { Direct labour } & \$ 200 \\ \hline \text { Manufacturing overhead } & \$ 230 \\ \hline \text { Administrative expenses } & \$ 150 \\ \hline \text { Selling expenses } & \$ 140 \\ \hline \text { Work-in-process inventory, beginning } & \$ 70 \\ \hline \text { Work-in-process inventory, ending } & \$ 50 \\ \hline \text { Finished goods inventory, beginning } & \$ 120 \\ \hline \text { Finished goods inventory, ending } & \$ 160 \\ \hline \end{array}$ -What was the net income (in thousands of dollars)for the year?

A) $150. B) $200. C) $490. D) $250. A) $150. B) $200. C) $490. D) $250.

The following data pertain to Harriman Company's operations during July: $\begin{array}{l} \begin{array} { | l | r | r | } \hline & \text { July 1 } & \text { July 31 } \\ \hline \text { Raw materials } & 0 & \$ 5,000 \\ \hline \text { Work-in-process inventory } & ? & \$ 4,000 \\ \hline \text { Finished goods inventory } & \$ 12,000 & ? \\ \hline \end{array}\\\\ \begin{array} { | l | r | } \hline \text { Other data: } & \\ \hline \text { Cost of goods manufactured } & \$ 105,000 \\ \hline \text { Raw materials used } & \$ 40,000 \\ \hline \text { Manufacturing overhead costs } & \$ 20,000 \\ \hline \text { Direct labour costs } & \$ 39,000 \\ \hline \text { Gross Margin } & \$ 100,000 \\ \hline \text { Sales } & \$ 210,000 \\ \hline \end{array} \end{array}$ -What was the ending finished goods inventory?

A) $17,000. B) $12,000. C) $7,000. D) $2,000. A) $17,000. B) $12,000. C) $7,000. D) $2,000.

The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the year just ended. $\begin{array}{|l|r|} \hline \text { Sales } & \$ 990 \\ \hline \text { Raw materials inventory, beginning } & \$ 40 \\ \hline \text { Raw materials inventory, ending } & \$ 70 \\ \hline \text { Purchases of raw materials } & \$ 120 \\ \hline \text { Direct labour } & \$ 200 \\ \hline \text { Manufacturing overhead } & \$ 230 \\ \hline \text { Administrative expenses } & \$ 150 \\ \hline \text { Selling expenses } & \$ 140 \\ \hline \text { Work-in-process inventory, beginning } & \$ 70 \\ \hline \text { Work-in-process inventory, ending } & \$ 50 \\ \hline \text { Finished goods inventory, beginning } & \$ 120 \\ \hline \text { Finished goods inventory, ending } & \$ 160 \\ \hline \end{array}$ -What was the cost of goods sold (in thousands of dollars)for the year?

A) $700. B) $500. C) $660. D) $580. A) $700. B) $500. C) $660. D) $580.

The following data pertain to Harriman Company's operations during July: $\begin{array}{l} \begin{array} { | l | r | r | } \hline & \text { July 1 } & \text { July 31 } \\ \hline \text { Raw materials } & 0 & \$ 5,000 \\ \hline \text { Work-in-process inventory } & ? & \$ 4,000 \\ \hline \text { Finished goods inventory } & \$ 12,000 & ? \\ \hline \end{array}\\\\ \begin{array} { | l | r | } \hline \text { Other data: } & \\ \hline \text { Cost of goods manufactured } & \$ 105,000 \\ \hline \text { Raw materials used } & \$ 40,000 \\ \hline \text { Manufacturing overhead costs } & \$ 20,000 \\ \hline \text { Direct labour costs } & \$ 39,000 \\ \hline \text { Gross Margin } & \$ 100,000 \\ \hline \text { Sales } & \$ 210,000 \\ \hline \end{array} \end{array}$ -What was the beginning work-in-process inventory?

A) $10,000. B) $14,000. C) $1,000. D) $4,000. A) $10,000. B) $14,000. C) $1,000. D) $4,000.

Exam 2: Cost Terms,concepts,and Classifications

Brooke Foster is employed by Wong Laboratories,Inc.,and is directly involved in preparing and packaging the company's leading sleep aid,RestWell.Brooke's basic wage rate is $15 per hour,and she is paid time-and-a-half for any work in excess of 40 hours per week.Additionally,Wong Laboratories provides a fringe benefit package that costs the company $5 for each hour of employee time (regular or overtime).During a recent week,Brooke worked 49 hours but was idle for 3 hours due to materials shortages. Required: (a.)Assume that Wong Laboratories treats all fringe benefits as part of manufacturing overhead.Compute Brooke's total wages and fringe benefits for the week and indicate how much of her wages and fringe benefits for the week would be allocated to direct labour and how much would be allocated to manufacturing overhead. (b.)Assume that Wong Laboratories treats the part of fringe benefits related to direct labour as a component of direct labour cost.Compute Brooke's total wages and fringe benefits for the week and indicate how much of her wages and fringe benefits would be allocated to direct labour and how much would be allocated to manufacturing overhead.

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Question 1

Correct Answer:

Verified

(a.)
$\begin{array}{|l|r|}\hline \text { Regular time: } 40 \text { hours } \times \$ 15 & \$ 600.00 \\\hline \text { Overtime: } 9 \text { hours } \times \$ 22.50 & 202.50 \\\hline \text { Fringe benefits: } 49 \text { hours } \times \$ 5 & 245.00 \\\hline \text { Total wages and fringe benefits } & \$ 1,047.50 \\\hline \text { Allocation of wages and fringe benefits: } &\\\hline \text { Direct labour: } 46 \mathrm{hrs} \times \$ 15 & \$ 690.00 \\\hline \text { Manufacturing overhead: } & \\\hline \text { Idle time: } 3 \mathrm{hrs} \times \$ 15 & 45.00 \\\hline \text { Overtime premium: } 9 \mathrm{hrs} \times \$ 7.50 & 67.50 \\\hline \text { Fringe benefit: } 49 \text { hrs } \times \$ 5 & \underline{245.00} \\\hline \text { Total wages and fringe benefits } & \$ 1,047.50 \\\hline\end{array}$ (b.)Total wages and fringe benefits would be $1,047.50 as shown in (a.)above.
Allocation of wages and fringe benefits:
$\begin{array}{|l|r|}\hline \text { Direct labour: } & \\\hline \text { Wage cost: } 46 \mathrm{hrs} \times \$ 15 & \$ 690.00 \\\hline \text { Fringe benefits: } 46 \text { hrs } \times \$ 5 & 230.00 \\\hline \text { Total direct labour } & \$ 920.00 \\\hline \text { Manufacturing overhead: } & \\\hline \text { Ille time: } 3 \mathrm{hrs} \times \$ 15 & 45.00 \\\hline \text { Overtime premium: } 9 \mathrm{hrs} \times \$ 7.50 & 67.50 \\\hline \text { Fringe benefit: } 3 \mathrm{hrs} \times \$ 5 & 15.00 \\\hline \text { Total manufacturing overhead } & \$ 127.50 \\\hline \text { Total wages and fringe benefits } & \$ 1,047.50 \\\hline\end{array}$

Which of the following would NOT be treated as a product cost for external financial reporting purposes?

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Question 2

Correct Answer:

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D

Robert Smith earns $16 per hour assembling products.For each hour over 40 he works in a week he is paid time-and-a-half.During a given week,he worked 40 hours for which 3 hours were idle time.How much of his weekly wages would be charged to direct labour?

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Question 3

Correct Answer:

Verified

B

Fred Adams is employed by the Cedar Manufacturing Company on their assembly line.Fred is paid $15 per hour for regular time,and time-and-a-half for all work in excess of 40 hours per week.During the two weeks of the pay period just completed,Fred reported the following: Week 1: Idle time due to machine breakdowns 3 hours Idle time due to material shortages 2 hours Overtime None Week 2: Idle time None Overtime 9 hours Required: Compute Fred's wages for each week and allocate Fred's wages for each week between direct labour cost and manufacturing overhead.

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Question 4

You are given the following data for January: Direct materials \ 38,000 Direct labour \ 24,000 Manufacturing overhead \ 17,000 Beginning work in process inventory \ 10,000 Ending work in process inventory \ 11,000 Which of the following is the cost of goods manufactured?

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Question 5

During the month of May,Bennett Manufacturing Company purchases $43,000 of raw materials.The manufacturing overhead totals $27,000 and the total manufacturing costs are $106,000.Assuming a beginning inventory of raw materials of $8,000 and an ending inventory of raw materials of $6,000,what must be the total for direct labour?

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Question 6

Manufacturing overhead combined with direct materials is known as conversion cost.

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Question 7

To what does the term differential cost refer?

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Question 8

In a manufacturing company,goods available for sale equals the sum of the cost of goods manufactured and the beginning finished goods inventory.

(True/False)

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Question 9

Sally Smith is employed in the production of various electronic products,and she earns $8 per hour.She is paid time-and-a-half for work in excess of 40 hours per week.During a given week,she worked 45 hours and had no idle time.How much of her week's wages would be charged to manufacturing overhead?

(Multiple Choice)

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Question 10

The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the year just ended. Sales \ 990 Raw materials inventory, beginning \ 40 Raw materials inventory, ending \ 70 Purchases of raw materials \ 120 Direct labour \ 200 Manufacturing overhead \ 230 Administrative expenses \ 150 Selling expenses \ 140 Work-in-process inventory, beginning \ 70 Work-in-process inventory, ending \ 50 Finished goods inventory, beginning \ 120 Finished goods inventory, ending \ 160 -What was the net income (in thousands of dollars)for the year?

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Question 11

When raw materials are used in production,their costs are transferred to the work in process inventory account as direct materials.

(True/False)

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Question 12

The following data pertain to Harriman Company's operations during July: July 1 July 31 Raw materials 0 \ 5,000 Work-in-process inventory ? \ 4,000 Finished goods inventory \ 12,000 ? Other data: Cost of goods manufactured \ 105,000 Raw materials used \ 40,000 Manufacturing overhead costs \ 20,000 Direct labour costs \ 39,000 Gross Margin \ 100,000 Sales \ 210,000 -What was the ending finished goods inventory?

(Multiple Choice)

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Question 13

For the majority of manufacturing companies,the distinction between period costs and product costs is essential because of its effect on net income for a period.Failure to make the distinction can affect the cost of goods manufactured and cost of goods sold. Required: Would the need to make the distinction between product costs and period costs still be essential if a manufacturing company were to adopt the just-in-time technique in the lean thinking model? Explain.

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Question 14

When a decision is made among a number of alternatives,the benefit that is lost by choosing one alternative over another is called what?

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Question 15

The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the year just ended. Sales \ 990 Raw materials inventory, beginning \ 40 Raw materials inventory, ending \ 70 Purchases of raw materials \ 120 Direct labour \ 200 Manufacturing overhead \ 230 Administrative expenses \ 150 Selling expenses \ 140 Work-in-process inventory, beginning \ 70 Work-in-process inventory, ending \ 50 Finished goods inventory, beginning \ 120 Finished goods inventory, ending \ 160 -What was the cost of goods sold (in thousands of dollars)for the year?

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Question 16

Prime cost consists of direct materials and what?

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Question 17

The following data pertain to Harriman Company's operations during July: July 1 July 31 Raw materials 0 \ 5,000 Work-in-process inventory ? \ 4,000 Finished goods inventory \ 12,000 ? Other data: Cost of goods manufactured \ 105,000 Raw materials used \ 40,000 Manufacturing overhead costs \ 20,000 Direct labour costs \ 39,000 Gross Margin \ 100,000 Sales \ 210,000 -What was the beginning work-in-process inventory?

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Question 18

How would the cost of rent for a manufacturing plant generally be classified?

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Question 19

Which one of the following costs should NOT be considered an indirect cost of serving a particular customer at a Dairy Queen fast food outlet?

(Multiple Choice)

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Question 20

Which of the following would NOT be treated as a product cost for external financial reporting purposes?

Robert Smith earns $16 per hour assembling products.For each hour over 40 he works in a week he is paid time-and-a-half.During a given week,he worked 40 hours for which 3 hours were idle time.How much of his weekly wages would be charged to direct labour?

You are given the following data for January: Direct materials \ 38,000 Direct labour \ 24,000 Manufacturing overhead \ 17,000 Beginning work in process inventory \ 10,000 Ending work in process inventory \ 11,000 Which of the following is the cost of goods manufactured?

Manufacturing overhead combined with direct materials is known as conversion cost.

To what does the term differential cost refer?

In a manufacturing company,goods available for sale equals the sum of the cost of goods manufactured and the beginning finished goods inventory.

Sally Smith is employed in the production of various electronic products,and she earns $8 per hour.She is paid time-and-a-half for work in excess of 40 hours per week.During a given week,she worked 45 hours and had no idle time.How much of her week's wages would be charged to manufacturing overhead?

When raw materials are used in production,their costs are transferred to the work in process inventory account as direct materials.

When a decision is made among a number of alternatives,the benefit that is lost by choosing one alternative over another is called what?

Prime cost consists of direct materials and what?

How would the cost of rent for a manufacturing plant generally be classified?

Which one of the following costs should NOT be considered an indirect cost of serving a particular customer at a Dairy Queen fast food outlet?

Managerial Accounting and the Business Environment

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Variable Costing: A Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

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