Exam 6: Estimating the Costs of Products and Inventory

When there are multiple support departments within an organisation,it is common to use journal entries to transfer-in costs from one department to another.What are some of the points to remember about these costs? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Answer the following questions using the information below: The Rest-a-Lot chair company manufactures a standard recliner.During February,the firm's Assembly Department started production of 75 000 chairs.During the month,the firm completed 80 000 chairs,and transferred them to the Finishing Department.The firm ended the month with 10 000 chairs in ending inventory.There were 15 000 chairs in beginning inventory.All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process.The FIFO method of process costing is used by Rest-a-Lot.Beginning work in process was 30% complete as to conversion costs,while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials \ 24000 Conversion costs \ 35000 Manufacturing costs added during the ocounting period: Direct materials \ 168000 Conversion costs \ 278000 -What is the cost of the goods transferred out during February?

Answer the following questions using the information below: Wagga Wagga Textiles is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year.The following estimates are provided for the coming year for the company and for the Tumut Brass Band band jacket job. Company Tumut Brass Band Job Direct materials \ 40000 \ 1000 Direct labour \ 10000 \ 200 Manufacturing overhead costs \ 30000 Machine-hours 100000 900 -For Wagga Wagga Textiles,what is the annual manufacturing overhead cost-allocation rate?

At the end of the year,the direct costs traced to jobs using the budgeted rates will equal actual direct costs.

During an accounting period,job costs are computed on an ongoing basis by the use of:

Process costing:

What is the difference between an actual cost system and a normal cost system? _____________________________________________________________________________________________ _____________________________________________________________________________________________

What source document is used to keep track of raw materials for a job? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Answer the following questions using the information below: The Sleepyhead Chair Company manufactures a standard recliner.During February,the firm's Assembly Department started production of 75 000 chairs.During the month,the firm completed 85 000 chairs and transferred them to the Finishing Department.The firm ended the month with 10 000 chairs in ending inventory.All direct materials costs are added at the beginning of the production cycle.Weighted-average costing is used by Sleepyhead. -How many chairs were in inventory at the beginning of the month? Conversion costs are incurred uniformly over the production cycle.

Answer the following questions using the information below: Healesville Animates produces and sells a luxury animal pillow for $40.00 per unit.In the first month of operation,3000 units were produced and 2250 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes: Variable manufacturing costs \ 19 per unit Variable marketing costs \ 1 per unit Fixed manufacturing costs \ 30000 per month Administrative expenses, all fixed \ 6000 per month Ending inventories: Direct materials -0- WIP -0- Finished goods 750 units -Lindwall Corporation has reported operating profit of $30 000 and a fixed overhead cost rate is $20 per unit for the current accounting period.Under variable costing,if this company produces 100 more units of inventory,then operating profit:

Under variable costing,fixed manufacturing costs are treated as an expense of the period.

Microlight Enterprises Company,a producer of microlight aircraft,would use a ________ costing system.

Process-costing journal entries and job-costing journal entries are similar with respect to direct materials and conversion costs.

Answer the following questions using the information below: Sunny Company makes gas pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labour-hour.The following data are obtained from the accounting records for June 2018: Direct materials \ 280000 Direct labour (7000 hours @ \ 11/ hour) \ 77000 Ind irect labour \ 20000 Plant facility rent \ 60000 Deprecia tion on plant machinery and equipment \ 30000 Sales commissions \ 40000 Administrative expenses \ 50000 -When actual indirect costs exceed allocated indirect costs,indirect costs have been overapplied.

Answer the following questions using the information below: Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes: The budgeted denominator level is 800 units. Units produced total 1000 units. Units sold total 950 units. Beginning inventory was zero. The fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold. -Which method is NOT a way to discourage producing for inventory?

All of the following items are debited to Work-in-Process EXCEPT:

Process-costing systems separate costs into cost categories according to the timing of when costs are introduced into the process.

In a process-costing system,the calculation of equivalent units is used for calculating:

Answer the following questions using the information below: Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes: The budgeted denominator level is 800 units. Units produced total 1000 units. Units sold total 950 units. Beginning inventory was zero. The fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold. -The contribution-margin format of the income statement is used with absorption costing.

Costs that are subject to short-run fluctuations for given jobs are: