Exam 6: Fundamentals of Product and Service Costing

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Airborne Industries uses a two-stage allocation method to assign costs to its products.The following information has been provided for the month: Required: (a)Allocate the manufacturing overhead to two cost pools: machine-related and labor-related.(b)Compute the predetermined overhead rate for the two pools,using machine hours and direct labor cost as the bases.(c)Compute the unit cost of production for each of the three products.

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The following direct labor information pertains to the manufacture of product Glaze: What is the standard direct labor cost per unit of product Glaze? (CPA adapted) Time required to make one unit 3 direct labor hours Number of direct workers 25 Number of productive hours per week, 36 per worker \ 700 Weekly wages per worker 30\% of wages Workers' benefits treated as direct labor costs

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Airborne Industries uses a two-stage allocation method to assign costs to its products.The following information has been provided for the month: Required: (a)Allocate the manufacturing overhead to two cost pools: machine-related and labor-related.(b)Compute the predetermined overhead rate for the two pools,using machine hours and direct labor hours as the bases.(c)Compute the total costs of production for each of the three products.

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Hospitals are more likely to use a process costing system than a job order costing system.

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Morton Inc.has provided the following data for the month of November.The balance in the Finished Goods inventory account at the beginning of the month was $49,000 and at the end of the month was $45,000.The cost of goods manufactured for the month was $226,000.The actual manufacturing overhead cost incurred was $74,000 and the manufacturing overhead cost applied to Work in Process was $70,000.The adjusted cost of goods sold that would appear on the income statement for November is:

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Hindsville produces a cleaning solvent.Production of 200,000 gallons was started in February,170,000 gallons were completed.Material costs were $138,220 for the month while conversion costs were $116,380.There was no beginning work-in-process;the ending work-in-process was 60% complete.Required: (a)What is the total cost of the product that was completed and transferred to finished goods? (b)What is the value of the ending work-in-process?

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When a manufacturing company has a highly automated manufacturing plant producing many different products,what is probably the most appropriate basis of applying overhead costs to work-in-process?

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Assume that the following events occurred at a division of Advanced Enterprises for the current year.(1)Purchased $450,000 in direct materials.(2)Incurred direct labor costs of $260,000.(3)Determined that manufacturing overhead was $410,000.(4)Transferred 70% of the materials purchased to Work-in-Process Inventory.(5)Completed work on 65% of the work in process.Costs assigned equally across all work-in-process.(6)The inventory accounts have no beginning balances.Required: Compute the following amounts in the Work-in-Process Inventory account: (a)Transfers-in (TI).(b)Transfers-out (TO).(c)Ending balance (EB).

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Ashland Corporation estimates its manufacturing overhead costs to be $160,000 and its direct labor costs to be $320,000 for 2016.The actual manufacturing labor costs were $80,000 for job 1,$120,000 for job 2 and $160,000 for job 3 during 2016.Manufacturing overhead is applied to jobs on the basis of direct labor costs using a predetermined overhead rate.The actual manufacturing overhead cost for the year was $172,000.The amount of overhead assigned to Job 3 during 2016 was:

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Arbor,Inc.has estimated overhead to be $300,000 and labor hours to be 30,000.Actual overhead turned out to be $310,000 when 30,500 labor hours were worked.The predetermined overhead rate would be:

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The predetermined manufacturing overhead rate for 2016 was $4.00 per direct labor hour;employees were paid $5.00 per hour.If the estimated direct labor cost was $75,000,what was the estimated manufacturing overhead?

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In computing its predetermined overhead rate,Stiles Company inadvertently left its indirect labor costs out of the computation.This oversight will cause:

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When designing a cost system,what points should you consider before starting the design?

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Linger Products uses a two-stage allocation method to assign costs to its products.The following information has been provided for March: Required: (a)Allocate the manufacturing overhead to two cost pools: machine-related and labor-related.(b)Compute the predetermined overhead rate for the two pools,using machine hours and direct labor hours as the bases.(c)Compute the total costs of production for each of the two products.

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Operation costing is a hybrid system used in manufacturing goods that have some common characteristics and some individual characteristics.

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The following information has been gathered for Foxmoor Industries for its fiscal year ending December 31: What is the predetermined factory overhead rate per labor dollar? Estimated factory ouerhead costs \ 1,500,000 Actual factory overhead costs \ 1,776,400 Estimated labor hours 48,000 Actual labor hours 51,700 Estimated labor costs \ 756,000 Actual labor costs \ 840,125 Estimated machine hours 96,000 Actual machine hours 102,600

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Ryan & Marks,Design Consultants has the following budget for the year: The firm uses direct labor as the cost driver to apply overhead to clients.During January,the firm worked for many clients;data for two of them follow: Direct labor (for protessional hours charged to clients) \ 202,000 Overhead Indirect materials 10,000 Indirect labor 150,000 Depreciation - Building 50,000 Depreciation - Furniture 5,000 Utilities 12,000 Insurance 4,800 Property taxes 5,200 Other expenses 3,380 Total \ 240,380 The firm uses direct labor as the cost driver to apply overhead to clients. During January, the firm worked for many clients; data for two of them follow:  Ryan & Marks,Design Consultants has the following budget for the year: The firm uses direct labor as the cost driver to apply overhead to clients.During January,the firm worked for many clients;data for two of them follow:   \begin{array} { | l | r | }  \hline \begin{array} { l }  \text { Direct labor (for protessional hours charged to } \\ \text { clients) } \end{array} & \$ 202,000 \\ \hline \text { Overhead } & \\ \hline \text { Indirect materials } & 10,000 \\ \hline \text { Indirect labor } & 150,000 \\ \hline \text { Depreciation - Building } & 50,000 \\ \hline \text { Depreciation - Furniture } & 5,000 \\ \hline \text { Utilities } & 12,000 \\ \hline \text { Insurance } & 4,800 \\ \hline \text { Property taxes } & 5,200 \\ \hline \text { Other expenses } & 3,380 \\ \hline \text { Total } & \$ 240,380 \\ \hline \end{array}  The firm uses direct labor as the cost driver to apply overhead to clients. During January, the firm worked for many clients; data for two of them follow:    Required: (1)Compute the Ryan & Marks budgeted overhead rate.Explain how this is used.(2)Compute the amount of overhead to be charged to the Henderson and Fisher accounts using the predetermined overhead rate calculated in requirement (1).(3)Compute the separate job cost for the Henderson and Fisher accounts. Required: (1)Compute the Ryan & Marks budgeted overhead rate.Explain how this is used.(2)Compute the amount of overhead to be charged to the Henderson and Fisher accounts using the predetermined overhead rate calculated in requirement (1).(3)Compute the separate job cost for the Henderson and Fisher accounts.

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Assume that the following T-accounts represent data from the Morgensen Corporation's accounting records.Required: (a)Find the missing amounts represented by the letters a,b,c,d and e.(b)Determine the company's predetermined overhead rate,based on labor cost.BB = Beginning Balance;EB = Ending Balance TO = Transferred Out (1)Denotes materials purchased Assume that the following T-accounts represent data from the Morgensen Corporation's accounting records.Required: (a)Find the missing amounts represented by the letters a,b,c,d and e.(b)Determine the company's predetermined overhead rate,based on labor cost.BB = Beginning Balance;EB = Ending Balance TO = Transferred Out (1)Denotes materials purchased

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The following information has been gathered for Catalyst Legal Services for its fiscal year ending December 31: What is the predetermined office overhead rate per billable labor hour? Actual office overhead costs \ 1,275,500 Actual billable labor hours 44,600 Actual billable labor costs \ 3,960,000 Estimated office overhead costs \ 1,080,000 Estimated billable labor hours 48,000 Estimated billable labor costs \ 4,320,000

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The Cost Flow Diagram for product costing includes all of the following costs except:

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