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 -Absorption costing is required for all of the following EXCEPT:

What is the advantage of using normal costing instead of actual costing? Variant question

Lillee-Walker Company was concerned that increased sales did not result in increased profits for 2018.Both variable unit and total fixed manufacturing costs for 2017 and 2018 remained constant at $20 and $2 000 000,respectively. In 2017,the company produced 100 000 units and sold 80 000 units at a price of $50 per unit.There was no beginning inventory in 2017.In 2018,the company made 70 000 units and sold 90 000 units at a price of $50.Selling and administrative expenses were all fixed at $100 000 each year. Required: a.Prepare income statements for each year using absorption costing. b.Prepare income statements for each year using variable costing. c.Explain why the income was different each year using the two methods.Show computations. _____________________________________________________________________________________________ _____________________________________________________________________________________________

What is the appropriate journal entry if direct materials of $50 000 and indirect materials of $3000 are sent to the manufacturing plant floor? Work-in-Process Control 50000 Materials Control 50000 B) Work-in-Process Control 53000 Materials Control 53000 C) Work-in-Process Control 50000 Manufacturing Overhead Control 3000 Materials Control 53000 D) Manufacturing Overhead Control 3000 Materials Control 50000 Work-in-Process Control 53000

Manufacturing overhead costs incurred for the month are: Utilities \ 15000 Depreciation on equipment \ 25000 Repairs \ 10000 Which is the correct journal entry assuming utilities and repairs were on account? A) Manufacturing Overhead Control 50000 Accounts Payable Control 25000 Accumulated Depreciation Control 25000 B) Manufacturing Overhead Control 50000 Accumulated Depreciation Control 50000 C) Accumulated Depreciation Control 25000 Accounts Payable Control 25000 Manufacturing Overhead Control 50000 D) Manufacturing Overhead Control 50000 Accounts Payable Control 50000

Work-in-Process Control will be decreased (credited)for the amount of direct-labour costs incurred.

Which of the following is the simplest approach to deal with underallocated or overallocated overhead? Variant question

The Morgan Models company manufactures replica plastic airplane and motorised vehicle models.During October,the firm's Assembly Department started production of 60 000 models.During the month,the firm completed 66 000 models,and transferred them to the Finishing Department.The firm ended the month with 22 000 models in ending inventory.There were 28 000 models 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 Morgan.Beginning work in process was 25% complete as to conversion costs,while ending work in process was 50% complete as to conversion costs. Beginning inventory: Direct materials costs \ 39200 Conversion costs \ 30800 Manufacturing costs added during the acounting period: Direct materials costs \ 90000 Conversion costs \ 280000 -What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of October?

Which of the following is an example of a business which would have no beginning or ending inventory but which could use process costing to compute unit costs? Variant question

Answer the following questions 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 13000 Be ginning direct materials inventory 32000 Beginning WIP inventory 29000 Beginning firished goods inventory Overhead application rate, 125 percent -The ending balance of work-in-process inventory is:

Answer the following questions using the information below: Botany Bay Boatbuilders uses departmental cost driver rates to allocate manufacturing overhead costs to products.Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labour-hours in the Assembly Department.At the beginning of 2010,the following estimates were provided for the coming year: Machining Assembly Direct labour-hours 30000 60000 Machine-hours 80000 20000 Direct labour cost \ 500000 \ 900000 Manufacturing overhead costs \ 420000 \ 240000 The accounting records of the company show the following data for Job \#316: Machining Assembly Direct labour-hours 120 70 Machine-hours 60 5 Direct material cost \ 300 \ 200 Direct labour cost \ 100 \ 400 -For Botany Bay Boatbuilders,what is the annual manufacturing overhead cost-allocation rate for the Machining Department?

There are basically two distinct methods of calculating product costs. Required: Compare and contrast the two methods. _____________________________________________________________________________________________ _____________________________________________________________________________________________

In a job-costing system the cost object is an individual unit,batch,or lot of a distinct product or service.

The purpose of the equivalent-unit computation is to:

Fixed costs remain constant at $200 000 per month.During high-output months variable costs are $160 000,and during low-output months variable costs are $40 000.What are the respective high and low indirect-cost rates if budgeted professional labour-hours are 8000 for high-output months and 2000 for low-output months?

Ford Motor Company is said to use a hybrid-costing system.What is a hybrid-costing system,and what would be the advantage to Ford of such a system? _____________________________________________________________________________________________ _____________________________________________________________________________________________

A reason(s)why 'pure' FIFO is rarely encountered in process costing is that:

As companies move towards long-run procurement contracts that reduce differences in unit costs from period to period and reduce inventory levels,the difference in cost of units completed under the weighted-average and FIFO methods will increase.

Answer the following questions using the information below: Botany Bay Boatbuilders uses departmental cost driver rates to allocate manufacturing overhead costs to products.Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labour-hours in the Assembly Department.At the beginning of 2010,the following estimates were provided for the coming year: Machining Assembly Direct labour-hours 30000 60000 Machine-hours 80000 20000 Direct labour cost \ 500000 \ 900000 Manufacturing overhead costs \ 420000 \ 240000 The accounting records of the company show the following data for Job \#316: Machining Assembly Direct labour-hours 120 70 Machine-hours 60 5 Direct material cost \ 300 \ 200 Direct labour cost \ 100 \ 400 -What are the total manufacturing costs of Job #316?

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 job costing,the 20X5 actual indirect-cost rate is: