Exam 6: Estimating the Costs of Products and Inventory

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 gross margin when using absorption costing?

In job costing,only direct costs are used to determine the cost of 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. -What were the equivalent units for materials for February?

Air conditioning costs incurred during the summer months will distort indirect-cost rates that are computed monthly.

Explain how a budgeted indirect-cost rate is determined. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Under the weighted-average method,the stage of completion of beginning work in process:

Answer the following questions using the information below: Hunter Valley Corporation uses a job cost system and has two production departments,A and B.Budgeted manufacturing costs for the year are: Department A Department B Direct materials \ 700000 \ 100000 Direct manufacturing labour \ 200000 \ 800000 Manufacturing overhead \ 600000 \ 400000 The actual material and labour costs charged to Job \#432 were as follows: Total Direct materials: \ 25000 Direct labour: Department A \ 8000 Department B \ 12000 \ 20000 Hunter Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labour cost using departmental rates determined at the beginning of the year. -For Department A,the manufacturing overhead allocation rate is:

Jordana Woolens is a manufacturer of wool cloth.The information for March is as follows: Beginning work in process 10000 units Units started 20000 units Units completed 25000 units Beginning work-in-process direct materials \ 6000 Beginning work-in-process conversion \ 2600 Direct materials added during month \ 30000 Direct manufacturing labour during month \ 12000 Factory overhead \ 5000 Beginning work in process was half converted as to labour and overhead.Direct materials are added at the beginning of the process.All conversion costs are incurred evenly throughout the process.Ending work in process was 60% complete. Required: Prepare a production cost worksheet using the weighted-average method.Include any necessary supporting schedules. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs: A.identify indirect costs B.compute the total cost of the job C.select cost-allocation bases D.compute the indirect cost rate

A job-cost record uses information from:

Answer the following question using the information below: Cronulla Products uses a normal cost system and had the following data available for 2018: Direct materials purchased on account \ 74000 Direct materials requisitioned 41000 Direct labour cost incurred 65000 Factory overhead incurred 73000 Cost of goods completed 146000 Cost of goods sold 128000 Be ginning direct materials inventory 13000 Beginning WIP inventory 32000 Beginning firished goods inventory 29000 Overhead application rate, as a percent of direct-labour costs 125 percent -The journal entry to record the materials placed into production would include a:

The cost of units completed can differ materially between the weighted-average and the FIFO (first-in,first-out)methods of process costing.

The two most common methods of costing inventories in manufacturing companies are variable costing and fixed costing.

Operating profit can differ materially between the results for the weighted-average and FIFO methods when:

Answer the following questions using the information below: Wangaratta Corporation incurred fixed manufacturing costs of $6000 during 2018.Other information for 2018 includes: The budgeted denominator level is 1000 units. Units produced total 750 units. Units sold total 600 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold. -The production-volume variance is:

Problems with accurate costing occur when:

In a process-costing system,there is always a separate Work-in-Process account for each different process.

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 total amount debited to the Work-in-Process account during the month of April?

What does the ending balance in the Finished Goods Control account represent with respect to the costs of all jobs?

The Work-in-Process Control account tracks job costs from the time jobs are started until they are completed.