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Exam 061681RR - THE COSTING OF PRODUCTS

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Question;Abis Corporation uses the weighted-average method in its process-costing;system. This month, the beginning inventory in the first processing department;consisted of 800 units. The costs and percentage completion of these units in;beginning inventory were;Cost;Percent Complete;Material costs $6,000;50%;Conversion costs $9,900;30%;A total of 9,200 units were started, and 8,200 units were transferred;to the second processing department during the month. The following costs were;incurred in the first processing department during the month;Cost;Material costs $113,900;Conversion costs $322,500;The ending inventory was 80% complete with respect to materials and 20%;complete with respect to conversion costs.;Note: Your answers may differ from those offered below due to rounding;error. In all cases, select the answer that's the closest to the answer you;computed. To reduce rounding error, carry out all computations to at least;three decimal places.;Answer Question 1 and 2 from;above details;1. The cost per equivalent unit for materials for the month in the;first processing department is closest to;A. $11.82.;B. $12.44.;C. $11.99.;D. $11.39.;2. What are the equivalent units for conversion costs for the month in;the first processing department?;A. 8,560;B. 10,000;C. 8,200;D. 360;3. Becky works on the assembly line of a manufacturing company where;she installs a component part for one of the company's products. She's paid $16;per hour for regular time, and time and a half for all work in excess of 40;hours per week. Becky's employer offers fringe benefits that cost the company;$3 for each hour of employee time (both regular and overtime). During a given;week, Becky works 42 hours but is idle for 3 hours due to material shortages.;The company treats all fringe benefits relating to direct labor as added direct;labor cost and the remainder as part of manufacturing overhead. The allocation;of Becky's wages and fringe benefits for the week between direct labor cost and;manufacturing overhead would be which of the following?;A. Direct Labor: $672 / Manufacturing Overhead: $142;B. Direct Labor: $624 / Manufacturing Overhead: $190;C. Direct Labor: $741 / Manufacturing Overhead: $73;D. Direct Labor: $688 / Manufacturing Overhead: $126;4. The Sarbanes-Oxley Act of 2002 contains all of the following;provisions except which one?;A. Severe penalties are established for altering or destroying;documents that may eventually be used in an official proceeding.;B. Both the CEO and CFO must certify in writing that their company's;financial statements and accompanying disclosures fairly represent the results;of operations.;C. A CFO must be a CPA or CMA.;D. The audit committee of the board of directors of a company must;hire, compensate, and terminate the public accounting firm that audits the;company's financial reports.;5. Cost of goods manufactured will usually include;A. only costs incurred during the current period.;B. some costs incurred during the prior period as well as costs;incurred during the current period.;C. some period costs as well as some product costs.;D. only direct labor and direct materials costs.;6. When would the direct method and the step-down method of service;department cost allocation result in identical allocations being made to the;operating departments?;A. That can happen only if there's an equal amount of service;departments and operating departments.;B. The only time is when there is just one service department.;C. The only time is when all costs in the service departments are fixed;costs.;D. That can happen if there is only one service department or, if the;company has more than one service department, if all the costs in those;departments are fixed costs.;7. Assume there's no beginning work-in-process inventory and that the;ending work-in-process inventory is 100% complete with respect to materials;costs. The number of equivalent units with respect to materials costs under the;weighted-average method is;A. less than the number of units put into production.;B. the same as the number of units completed.;C. the same as the number of units put into production.;D. less than the number of units completed.;8. In September, one of the processing departments at Shenkel;Corporation has a beginning work ? in_Process inventory of $25,000 and an;ending work-in-process inventory of $18,000. During the month the cost of units;transferred out from the department was $304,000. In the department?s cost;reconciliation report for September, the total cost accounted for would be;a.;$43,000;b. $322,000;c. $619,000;d.;$644,000;9. Which person would occupy a line position in a department store?;I. Sales manager;II. Manager, furniture;department;III. Manager, advertising;department;IV. Manager, personnel;department;A. Only I;B. Only I, II, III;C. I, II, III, IV;D. Only I and II;Use the following information;to answer question No. 10 & 11.;The following data (in thousands;of dollars) have been taken from the accounting records of Karlana;Corporation for the just-completed year.;Sales $910;Raw materials, inventory, beginning $80;Raw materials, inventory, ending $20;Purchases of raw materials $100;Direct labor $130;Manufacturing overhead $200;Administrative expenses;$160;Selling expenses $140;Work in process inventory, beginning $40;Work in process inventory, ending $10;Finished goods inventory, beginning $130;Finished goods inventory, ending $150;10. The cost of goods sold for the year (in thousands of dollars) was;A. $500.;B. $650.;C. $540.;D. $670;11. The net operating income for the year (in thousands of dollars) was;A. $110.;B. $180.;C. $40.;D. $410.;Abis Corporation uses the weighted-average method in its process-costing;system. This month, the beginning inventory in the first processing department;consisted of 800 units. The costs and percentage completion of these units in;beginning inventory were;Cost;Percent Complete;Material costs $6,000;50%;Conversion costs $9,900;30%;A total of 9,200 units were started, and 8,200 units were transferred;to the second processing department during the month. The following costs were;incurred in the first processing department during the month;Cost;Material costs $113,900;Conversion costs $322,500;The ending inventory was 80% complete with respect to materials and 20%;complete with respect to conversion costs.;Note: Your answers may differ from those offered below due to rounding;error. In all cases, select the answer that's the closest to the answer you;computed. To reduce rounding error, carry out all computations to at least;three decimal places.;12. The total cost transferred;from the first processing department to the next processing department during;the month is closest to;A. $420,414.;B. $452,300.;C. $436,400.;D. $512,700;Use the following information to answer this question.;The Lee Company uses a job-order costing system. The following data;were recorded for June;Added During;June-;June;1;Work;in;Job Process Direct Direct;Number Inventory Materials Labor;235 $2,500;$600 $400;236 $1,500;$800 $1,000;237 $1,000;$1,200 $1,750;238 $800;$1,500;$2,250;Overhead is charged to production at 80% of direct materials cost. Jobs;235, 237, and 238 were completed during June and transferred to finished goods.;Jobs 235 and 238 have been delivered to customers.;13. Lee Company's cost of goods sold for June was;A. $9,730.;B. $15,520.;C. $10,170.;D. $14,640;14. Dewey Company uses the weighted-average method in its process-costing;system. The first processing department, the Welding Department, started the;month with 15,000 units in its beginning work-in-process inventory that were;20% complete with respect to conversion costs. The conversion cost in this;beginning work-in-process inventory was $19,200. An additional 86,000 units;were started into production during the month. There were 13,000 units in the;ending work-in-process inventory of the Welding Department that were 60%;complete with respect to conversion costs. A total of $575,360 in conversion;costs were incurred in the department during the month.;The cost per equivalent unit for conversion costs is closest to;A. $6.400.;B. $6.690.;C. $5.812.;D. $6.206.;Use the following information to answer this question.;The following cost data pertain to the operations of Brentwood Stores.;for the month of December.;Corporate legal office salaries $74,000;Shoe Department cost of sales;Brentwood Store $35,000;Corporate headquarters building lease $78,000;Store manager's salary;Brentwood Store $14,000;Shoe Department sales commissions;Brentwood Store $5,000;Store utilities;Brentwood Store $14,000;Shoe Department manager's salary;Brentwood Store $3,000;Central warehouse lease cost $10,000;Janitorial costs, Brentwood Store $8,000;The Brentwood Store is just one of many stores owned and operated by;the company. The Shoe Department is one of many departments at the Brentwood;Store. The central warehouse serves all of the company's stores.;15. What is the total amount of the costs listed above that are not;direct costs of the Brentwood Store?;A. $162,000;B. $78,000;C. $43,000;D. $36,000;16. Melillo Corporation has provided data concerning the company's manufacturing;overhead account for the month of October. Prior to the closing of the;overapplied or underapplied balance to cost of goods sold, the total of the;debits to the manufacturing overhead account was $67,000, and the total of the;credits to the account was $57,000.;Which statement is true?;A. Manufacturing overhead applied to work in process for the month was;$67,000.;B. Actual manufacturing overhead for the month was $67,000.;C. Manufacturing overhead transferred from finished goods to cost of;goods sold during the month was $57,000.;D. Manufacturing overhead for the month was overapplied by $10,000.;17. The management of Baggerly Corporation would like to investigate;the possibility of basing its predetermined overhead rate on activity at;capacity. The company's controller has provided an example to illustrate how;this new system would work. In this example, the allocation base is machine;hours, and the estimated amount of the allocation base for the upcoming year is;81,000 machine hours. In addition, capacity is 95,000 machine hours, and the;actual level of activity for the year is 84,900 machine hours.;All of the manufacturing overhead is fixed and is $6,617,700 per year.;For simplicity, it's assumed that this is the estimated manufacturing overhead;for the year as well as the manufacturing overhead at capacity. It's further;assumed that this is also the actual amount of manufacturing overhead for the;year.;If the company bases its predetermined overhead rate on capacity, by;how much was manufacturing;overhead underapplied or overapplied?;A. $703,566 overapplied;B. $318,630 underapplied;C. $703,566 underapplied;D. $318,630 overapplied;Use the following information to answer this question.;The following data (in thousands;of dollars) have been taken from the accounting records of Karlana;Corporation for the just-completed year.;Sales $910;Raw materials, inventory, beginning $80;Raw materials, inventory, ending $20;Purchases of raw materials $100;Direct labor $130;Manufacturing overhead $200;Administrative expenses $160;Selling expenses $140;Work in process inventory, beginning $40;Work in process inventory, ending $10;Finished goods inventory, beginning $130;Finished goods inventory, ending $150;18. The cost of the raw materials used in production during the year;(in thousands of dollars) was;A. $160;B. $40.;C. $120.;D. $180;19. Which of the following is not one of the five steps in the;lean-thinking model discussed in the text?;A. Automate the business process.;B. Create a pull system that responds to customer orders.;C. Identify the business process that delivers value.;D. Organize work arrangements around the flow of the business process.;Use the following information to answer this question.;Sanker Inc. has provided the following data for the month of August.;There were no beginning inventories, consequently, the direct materials, direct;labor, and manufacturing overhead applied listed below are all for the current;month.;Work In Finished Cost;of;Process Goods Goods Sold Total;Direct materials;$2,790 $7,680 $18,240 $28,710;Direct labor 9,700 19,200 45,600 74,500;Manufacturing overhead applied 5,440;8,000 18,560 32,000;Total $17,930 $34,880 $82,400;$135,210;Manufacturing overhead for the month was overapplied by $5,000. The;company allocates any underapplied or overapplied overhead among work in;process, finished goods, and cost of goods sold at the end of the month on the;basis of the overhead applied during the month in those accounts.;20. The work-in-process inventory at the end of August after allocation;of any underapplied or;overapplied overhead for the month is closest to;A. $17,267.;B. $18,593.;C. $18,780.;D. $17,080

 

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