arver Corporation uses the weighted-average method in its process costing system. Operating data for the Lubricating Department for the month of October appear below:
1. Narver Corporation uses the weighted-average method in its process costing system. Operating data for the Lubricating Department for the month of October appear below:
What are the equivalent units for conversion costs in the Lubricating Department for October?
a. 37,100
b. 44,780
c. 43,100
d. 47,780
2. Gabat Inc. is a merchandising company. Last month the company’s merchandise purchases totaled $67,000. The company’s beginning merchandise inventory was $19,000 and its ending merchandise inventory was $22,000. What was the company’s cost of goods sold for the month?
a. $67,000
b. $108,000 67,000+19,000-22,000= 64,000
c. $64,000
d. $70,000
3. Given the cost formula, Y = $7,000 + $1.80X, what would be the total cost for an activity level of 4,000 units?
a. $7,000
b. $200
c. $14,200 Y = $7,000 + (1.80X4000)
d. $7,200
4. Adams Corporation makes two products: Product A and Product B. Annual production and sales are 500 units of Product A and 900 of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.5 direct labor-hours per unit. The total estimated overhead for next period is $67,522. Activity 1, Activity 2, and General Factory—with estimated overhead costs and expected activity as follows:
(Note: The General Factory activity cost pool’s costs are allocated on the basis of direct labor-hours.)
The predetermined overhead rate under the traditional costing system is closest to which value?
a. $54.86
b. $13.83
c. $103.88
d. $8.91
5. Pujol Children’s Clinic allocates service department costs to operating departments using the step-down method. The clinic has two service departments, Adminstration and Information Technology (IT), and two operating departments,Prenatal and Pediatric. Data concering those departments are presented in the chart below.
Administration costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. The total Pediatric Department cost after allocations is closes to which value?
a. $361,823
b. $370,790
c. $328,202
d. $370,659— (298130+(169/326*82152)+(168/288*51552)=370,788.51552=45000+26/326*82152.
6. Tarten Corporation uses the FIFO method in its process costing system. Operating data for the Curing Department for the month of March appear below:
Units Percent Complete with Respect to Conversion
Beginning work in process inventory 9,000 10%
Transferred in from the prior department during March 57,000
Completed and transferred in the next department during March 65,000
Ending work in process inventory 1,000 70%
According to the company’s records, the conversion cost in beginning work in process inventory was $7,470 at the beginning of March. The cost per equivalent unit for conversion cost for March was $8.20. how much conversion cost would be assigned to the units completed and transferred out of the department during March?
a. $592,040
b. $525,530
c. $533,090
d. $533,000
7. During October, Dorner Corporation incurred $60,000 of direct labor costs and $5,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a
a. Debit to work in process of $60,000
b. Debit to work in process of $65,000
c. Credit to work in process of $60,000
d. Credit to work in process of $65,000
8. A sunk cost is a cost that
a. May be saved by not adopting an alternative
b. Doesn’t entail any dollar outlay but is relevant to the decision-making process
c. May be shifted to the future with little or no effect on current operations
d. Can’t be avoided because its already been incurred.
9. There are two acceptable methods for closing out any balance of underapplied or overapplied manufacturing overhead. One method involves allocation of the balance among several accounts, whereas the other closes any balance directly to
a. Finished goods inventory
b. Cost of goods manufactured
c. Work in process inventory
d. Cost of goods sold.
10. In November, one of the processing departments at Goodsell Corporation had beginning work in process inventory of $36,000 and ending work in process inventory of $35,000. During the month, $427,000 of costs was added to production and the cost of units transferred out from the department was $428,000. The company uses the FIFO method in its process costing system. In the department’s cost reconciliation report for November, what would be the total cost to be accounted for?
a. $463,000
b. $926,000
c. $890,000
d. $71,000
11. Which of the following is/are classified as a direct materials cost?
a. Both product cost and period cost
b. Neither product cost nor period cost
c. Product cost
d. Period cost
12. Job 593 was recently completed. The following data have been recorded on its job cost sheet:
Direct material $3,190
Direct labor-hours 71
Direct labor wage rate (per labor-hour) $15
Machine hours 175
The corporation applies manufacturing overhead on the basis of machine-ours. The predetermined overhead rate is $14 per machine-hour. What amount would be the total cost recorded on the job cost sheet for Job 593?
a. $6,705
b. $4,255
c. $3,219
d. $5,249
13. What does overapplied manufacturing overhead mean?
a. The applied manufacturing overhead cost was greater than the actual manufacturing overhead cost
b. The estimated manufacturing overhead cost was less than the actual manufacturing overhead cost
c. The estimated manufacturing overhead cost was less than the applied manufacturing overhead cost
d. The applied manufacturing overhead cost was less than the actual manufacturing overhead cost
14. Clear Colors Corporation uses a predetermined overhead rate based on direct labor costs to apply manufacturing overhead to jobs. At the beginning of the year, the corporation estimated its total manufacturing overhead cost at $350,000 and its direct labor costs at $200,000. The actual overhead cost incurred during the year was $362,000 and the actual direct labor costs incurred on jobs during the year was $208,000, how much would the manufacturing overhead for the year be?
a. $2,000 underapplied
b. $2,000 overapplied
c. $12,000 underapplied
d. $12,000 overapplied
15. In October, one of the processing departments at riddling corporation had ending work in process inventory of $39,000. During the month, $252,000 of costs was added to production and the cost of units transferred out from the department was $235,000. The company uses the FIFO method in its process costing system. In the department’s cost reconciliation report for October, what would be the total cost to be accounted for?
a. $274,000—beg inv +252,000-235,000=39,000
b. $61,000
c. $548,000
d. $526,000
16. The management of Chaloux Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The corporations controller has provided an example to illustrate how this new system would work. In this example, the allocations base is machine-hours.
Estimated at the beginning of the Year Capacity Actual
Machine hours 17,000 21,000 17,400
Manufacturing overhead $57,120 $57,120 $57,120
If the corporation bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied?
a. $9,792 overapplied
b. $1,344 overapplied
c. $1,344 underapplied
d. $9,792 underapplied
17. Garson corporation uses the FIFO method in its process costing system. The grinding department started the month with 18,000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. An additional 98,000 units were transferred in from the prior department during the month to begin processing in the grinding department. During the month 115,000 units were completed in the grinding department and transferred to the next processing department. There were 1,000 units in the ending work in process inventory of the grinding department that were 20% complete with respect to conversion costs. What are the equivalent units for conversion costs in the grinding department for the month?
a. 115,200
b. 113,400
c. 81,000
d. 115,000
18. Prophit clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, personnel and information technology (IT), and tow operating departments, family medicine and pediatrics. Data concerning those departments are presented in the chart below:
Service department Operating department
Personal It Family medicine Pediatrics
Departmental costs $85,728 $21,598 $490,480 $162,640
Employees 14 23 106 175
PCs 16 25 66 172
Personnel costs are allocated first on the basis of the employees and IT costs are allocated second on the basis of PCs. The total pediatrics department cost after allocations is closest to which value?
a. $223,132
b. $182,936
c. $231,638
d. $232,286
19. Under the FIFO method, unit costs would
a. Contain some element of cost from the prior period
b. Not include costs incurred to complete beginning inventory.
c. Not contain some elements of cost from the prior period
d. Result from costs in the beginning inventory being added in with current period costs.
20. In a job-order costing system, the use of indirect materials that have been previously purchased is recorded as a credit to
a. Raw materials inventory
b. Finished goods inventory
c. Manufacturing overhead
d. Work in process inventory
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