Exam 6: Estimating the Costs of Products and Inventory

Answer the following questions using the information below: The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line.Its costing system uses two cost categories,direct materials and conversion costs.Each tractor must pass through the Assembly Department and the Testing Department.Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.Townsend Tractor uses weighted-average costing. Data for the Assembly Department for April 2018 are: -What is the conversion cost per equivalent unit in April?

Which of the following statements regarding manufacturing overhead allocation is FALSE?

In a job-costing system,a manufacturing firm typically uses an indirect-cost rate to estimate the ________ allocated to a job.

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 -For June 2018,manufacturing overhead was:

When identical or similar units of products or services are mass produced,job-costing is used to calculate an average production cost for all units produced.

A job that shows low profitability may be the result of:

________ is the process of distributing indirect costs to products.

Isabelle Pty Ltd uses a budgeted factory overhead rate to apply overhead to production.The following data are available for the year ended 31 December 2018. Budgeted Actual Factory overhead \ 675000 \ 716000 Direct labour costs \ 450000 \ 432000 Direct labour-hours 12500 13325 Required: a.Determine the budgeted factory overhead rate based on direct labour-hours. b.What is the applied overhead based on direct labour-hours? c.Is overhead overapplied or underapplied? Explain. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Job-costing and process-costing systems share the same objective of estimating product costs.

Answer the following questions using the information below: For 20X5,Irwin's Animal Supply Manufacturing uses machine-hours as the only overhead cost-allocation base.The accounting records contain the following information: Estimated Actual Manufacturing overhead costs \ 150000 \ 180000 Machine-hours 30000 35000 -Using actual costing,the amount of manufacturing overhead costs allocated to jobs during 20X5 is:

Overhead costs allocated each month are expected to equal actual overhead costs incurred each month.

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. -Under absorption costing,the production-volume variance is:

Copley Enterprises manufactures digital video equipment.Each unit requires $1475 of direct material and $1500 of direct manufacturing labour at $30 per hour.Manufacturing overhead is applied at $35 per direct manufacturing labour hour.Calculate the cost of each unit.

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 -What is cost of goods sold per unit when using absorption costing?

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 -How many of the units that were started during February were completed during February?

One reason for using longer time periods to calculate indirect-cost rates is seasonal cost fluctuations.

For external reporting purposes,it is acceptable to allocate marketing costs to individual jobs.

In a job-costing system,what does a manufacturing firm typically allocate to a job?

In order for a process-costing system to work,all units must be measured in the same denominations in all of the departments within the organisation.

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 -_________________is a derived amount of output.