Exam 6: Fundamentals of Product and Service Costing

Refresh produces soft drinks and sodas.Production of 100,000 liters was started in February,85,000 liters were completed.Material costs were $38,220 for the month while conversion costs were $16,380.There was no beginning work-in-process;the ending work-in-process was 40% complete.What is the cost of the product that was completed and transferred to finished goods?

Which of the following statements is true?

The following information has been gathered for the Harrell Manufacturing Company for its fiscal year ending December 31: What is the predetermined manufacturing overhead rate per direct labor hour? Actual manufacturing overhead costs \ 212,500 Actual direct labor hours 54,900 Actual direct labor costs \ 445,000 Estimated manufacturing overhead costs \ 210,000 Estimated direct labor \ 434,000 Estimated direct labor hours 56,000

Misner Office Products produces three models of commercial shelving,the Basic,the Advanced and the Superior.Data on operations and costs for the month are: Required: Compute the unit cost for each model,assuming Misner Office Products uses: (a)Direct labor hours to allocate overhead costs.(b)Direct labor costs to allocate overhead costs.(c)Machine hours to allocate overhead costs.

Why is operations costing often called a "hybrid" system?

A hybrid costing system that is often used when manufacturing goods that have some common characteristics plus some individual characteristics is called:

The basic cost flow model is:

The basic cost flow model applies only to physical units and not to costs.

Flynn and Morgan Refiners began business on July 1.The following operations data are available for July and the one product the company produces: All production at Flynn and Morgan is sold as it is produced (i.e. ,there are no finished goods inventories).Required: (a)Compute cost of goods sold for July.(b)What is the value of the work-in-process inventory on July 31? Gallons Beginning inventory -0 Started in Juby 310,000 Ending work-in-process imuentory (80\% complete) 30,000 Cost incurred in July were: \ 250,000 Materials 52,000 Labor 154,000 Manufacturing overhead

For Case (B)above,what is the amount Transferred Out (TO)? Case (A) Case (B) Case (C) Beginning Balance (BB) ? \ 23,000 \ 7,900 Ending Balance (EB) \ 67,000 19,200 8,300 Transterred In (T) 149,600 97,700 ? Transterred Out (TO) 164,600 ? 21,100

Technical Measurement Company manufactures precision-measuring devices used by industrial companies in various capacities.The devices are produced in two stages: Assembly and Testing.The company has no beginning inventories because all units produced last year were sold by the end of the year.At the beginning of the year,the company has an order of 8,000 units.The company's predetermined overhead rate is based on materials used in assembly and direct labor hours in testing.Information concerning the predetermined overhead rates appears below: Direct labor is paid $20 per hour. Assembly Testing Budgeted Overhead: \ 1,000,000 \ 500,000 Budgeted material use 2,000,000 50,000 Budgeted direct labor hours 200,000 100,000 Budgeted direct labor cost 3,000,000 1,500,000 Other information regarding the production process: Assembly Testing Materials requisitioned \ 2,200,000 \ 48,000 Direct labor cost 3,100,100 1,575,000 Actual overhead cost 1,200,000 475,000 Required: (a)Compute the predetermined overhead rate for each department.(b)Calculate the total and per unit cost of producing 8,000 units.

Adolphus Instruments manufactures two models of calculators.The research model is the RES-1 and the student model is the AS-2.Both models are assembled in the same plant and require the same assembling operations.The difference is in the cost of the internal components.The following data are available for February.Adolphus uses operations costing and assigns conversion costs on the number of units assembled.Required: Compute the cost of the RES-1 and AS-2 models for February.

Fill in the missing items for the following inventories: () () () () () Beginning Bal. \ 85,000 \ 3,550 \ 780,000 \ 36,000 ? Ending Balance ? 3,210 640,000 \ 36,000 32,000 Transterred in 80,000 10,550 ? 75,000 64,000 Transterred out 76,000 ? 1,400,000 ? 42,000

Arbor,Inc.had overhead of $310,000 during the year when $260,000 in labor costs were incurred.Estimates at the start of the year for overhead and labor costs were $300,000 for overhead and $250,000 for labor costs.The predetermined overhead rate would be:

The Work in Process inventory account of a manufacturing firm shows a balance of $3,000 at the end of an accounting period.The job cost sheets of two uncompleted jobs show charges of $500 and $300 for materials,and charges of $400 and $600 for direct labor.From this information,it appears that the company is using a predetermined overhead rate,as a percentage of direct labor costs,of:

Overestimating a period's allocation base will understate the predetermined overhead rate.

Nash Company manufactured two products,A and B,during April.For purposes of product costing,an overhead rate of $2.50 per direct-labor hour was used,based on budgeted annual factory overhead of $500,000 and 200,000 budgeted annual direct-labor hours,as follows: Budgeted Qverhead Buogeted Houss Department 1 \ 300,000 100,000 Department 2 200,000 100,000 Total The number of labor hours required to manufacture each of these products was: Product A ProductB In Department 1 3 1 In Department 2 Total 4 4 During April,production units for products A and B were 1,000 and 3,000. Required: (1)Using a plant-wide overhead rate,what are total overhead costs assigned to products A and B,respectively? (2)Using departmental overhead rates,what are total overhead costs assigned to products A and B,respectively? (3)Assume that materials and labor costs per unit of Product A are $10 and that the selling price is established by adding 40% of absorption costs to cover profit and selling and administrative expenses.What difference in selling price would result from the use of departmental overhead rates?

In general,indirect costs are allocated,while direct costs are assigned.

Hyu Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year.At the beginning of the most recently completed year,the company estimated the labor-hours for the upcoming year at 52,000 labor-hours.The estimated variable manufacturing overhead was $2.78 per labor-hour and the estimated total fixed manufacturing overhead was $1,192,360.The actual labor-hours for the year turned out to be 52,600 labor-hours.The predetermined overhead rate for the recently completed year was closest to:

MegaRock produces quick setting concrete mix.Production of 200,000 tons was started in April,190,000 tons were completed.Material costs were $3,152,000 for the month while conversion costs were $591,000.There was no beginning work-in-process;the ending work-in-process was 70% complete.What is the cost of the product that was completed and transferred to finished goods?