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ACCT 390 Test 2 Fall 2014




Question;ACCT 390 Test 2 Fall;2014;Student;1.(20 pts.);The Smith Inc.produces a;special kind of clay that is widely used by professional sports trainers. The;clay is produced in three processes: Refining, Blending, and Mixing. Raw materials;are introduced at the beginning of the refining process. A "mountain-air;scent" material is added in the blending process when processing is 50%;completed.;The following Work-in-Process account for the Refining;Department is available for the month of July. The July 1 Work-in-Process;Inventory contains $1,500 in material costs.;The following Work-in-Process account for the Blending;Department is available for the month of July. The July 1 Work-in-Process;inventory contains $5,920 in material costs, and $1.56/unit in costs;transferred in from the Refining Department.;Smith Inc. uses first-in, first-out (FIFO) costing for the;Refining Department and weighted-average costing for the Blending Department.Required (use 4 decimal places for computations):Part 1: Refining Department;(a) Compute the equivalent units of production for July.;(b) Compute the material cost per unit and the conversion;cost per unit for July.;(c) Compute the costs transferred to the Blending Department;for July.;(d) Compute the July 31 Work-in-Process Inventory balance.;Part 2: Blending Department;(e) Compute the equivalent units of production.;(f) Compute the unit costs in the Blending Department for;the month of July. (HINT: There are three!!);(g) Compute the costs transferred out for July.;(h) Compute the July 31 Work-in-Process Inventory;balance.;2. (10 pts.);William Corporation uses process costing. The following data;pertain to its Assembly Department for February.Required:Determine the equivalent units of;production for the Assembly Department for February using the weighted-average;method.;3. (20 pts.);Max;Inc. is a manufacturer of boots. It produces all of its products in one;department. The information for the current month is as follows;Beginning work in process 22,000;units;Units started 44,000;units;Units completed 55,000 units;Ending work in process 10,000;units;Spoilage 1,000;units;Beginning work-in-process direct materials $15,000;Beginning work-in-process conversion $ 6,000;Direct materials added during month $70,800;Direct manufacturing labor during month $37,400;Beginning;work in process was half complete as to conversion. Direct materials are added;at the beginning of the process. Factory overhead is applied at a rate equal to;50% of direct manufacturing labor. Ending work in process was 60% complete. All;spoilage is normal and is detected at end of the process.;Required;Prepare a;production cost worksheet if spoilage is recognized and the weighted-average;method is used.;4. (10 pts.);Johnston Incorporated manufactures and distributes small robotic tools.;Because most of its orders are via telephone or fax, numerous orders have to be;reworked. The average cost of the reworked orders is $12.45: $5 for labor;$5.15 for more materials, and $2.30 for overhead. This ratio of costs holds for;the average original order. On a recent day, the shop reworked 80 orders out of;800. The original cost of the 80 orders totaled $2,000. The average cost of all;orders is $26.245, including rework, with an average selling price of $35.;Required;Prepare;the necessary journal entry to record the rework for the day if the shop charges;such activities to Johnston Department;Overhead Control. Prepare journal entries to record all relevant rework charges;as well as to transfer the reworked items finished goods to Finished Goods;Inventory.;5. (15 pts.);Adams Inc. has identified the following overhead costs and cost;drivers for the coming year;Budgeted direct labor cost was $400,000 and budgeted direct;material cost was $600,000. The following information was collected on three;jobs that were completed during the month:Required;a. If the company uses traditional costing and allocates;overhead using direct labor cost, how much overhead cost should be assigned to;Jobs 1, 2, and 3?;b. If the company uses activity-based costing (ABC), how;much overhead cost should be assigned to Jobs 1, 2, and 3?;6. (15 pts.);Jason Company manufactures;two models of machinery, a standard and a deluxe model. The following activity;and cost information has been compiled;Assume a traditional costing system applies the overhead;costs based on direct labor hours.Required:a. What is the total amount of overhead;costs assigned to the standard model?;b. What is the total amount of overhead costs assigned to;the deluxe model?;Assume an activity-based costing system is used and that the;number of setups and the number of components are identified as the;activity-cost drivers for overhead.;c. What is the total amount of overhead costs assigned to;the standard model?;d. What is the total amount of overhead costs assigned to;the deluxe model?;7.(20 pts.);Jones plans to sell 90,000;units of a certain product line at a price of $16. There are 7,500 units of the;product in the inventory at January 1 and the inventory is to be increased 15%;during the year.;Two types of materials are used to make the product. Three;units of Material A, each costing 40 cents, are required for each unit of;product, and two units of Material B, each costing 36 cents, are required for;each unit of product. On January 1, there are 10,000 units of Material A in;inventory and 5,000 units of Material B. Plans for the year indicate both;Material A and B inventories will increase 10%.;Each unit of product can be produced in 20 minutes of direct;labor time. Direct labor is paid at the rate of $12.00 an hour. The variable;manufacturing overhead varies at the rate of $2.60 per direct labor hour and;the fixed manufacturing overhead for the year is estimated at $175,000.Required;a. Prepare a production budget for the year.;b. Prepare a materials purchases budget for the year.;c. Prepare a labor cost budget for the year.;d. Prepare a budget for manufacturing overhead for the;year.;8. (10 pts.) Fran is working on its direct labor budget for;the next two months. Each unit of output requires 0.07 direct labor-hours. The;direct labor rate is $8.50 per direct labor-hour. The production budget calls;for producing 4,800 units in June and 5,300 units in July.Required;Construct the direct labor budget for the next two months;assuming that the direct labor work force is fully adjusted to the total direct;labor-hours needed each month.


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