Exercise 1 TRUE OR FALSE? a) If the cost of materials is NOT a significant porti
ID: 2524440 • Letter: E
Question
Exercise 1
TRUE OR FALSE?
a) If the cost of materials is NOT a significant portion of the total product cost, the materials may be classified as part of factory overhead cost. (2)
True or False?
b) Factory overhead is an example of a product cost. (3)
True or False?
c) Job order cost systems can be used to compare unit costs of similar jobs to determine if costs are staying within expected ranges. (13)
True or False?
d) Inventories of finished products are reported as long-lived assets on the manufacturer's balance sheet.
Select one:
True or False?
Exercise 2
Hebert Winery accumulates the costs incurred in the labeling process in an activity cost pool. Costs for the labeling process are estimated to be $320,000 for the coming year and the winery expects to generate 640,000 labels. Production for their top-selling wine is estimated at 160,000 bottles. How much overhead from the labeling process will be allocated to this particular variety of wine?
Select one:
a. $40,000
b. $80,000
c. $160,000
d. $320,000
Exercise 3
The recording of the jobs completed would increase:
Select one:
a. Factory Overhead
b. Finished Goods
c. Work in Process
d. Cost of Goods Sold
Exercise 4
Putnam Manufacturers Inc. has estimated total factory overhead costs of $50,000 and 10,000 direct labor hours for the current fiscal year. If job number 117 incurred 2,000 direct labor hours, the work in process account will be increased and factory overhead will be decreased for:
Select one:
a. $10,000
b. $0; WIP is decreased
c. $50,000
d. $250,000
Exercise 5
When Job 711 was completed, direct materials totaled $3,000; direct labor, $3,500; and factory overhead, $1,500, respectively. Units produced totaled 1,000. Unit costs are:
Select one:
a. $8,000
b. $800
c. $80
d. $8
Exercise 6
Compute conversion costs given the following data: Direct Materials, $247,800; Direct Labor, $183,400; Factory Overhead, $121,300.
Select one:
a. $431,200
b. $552,500
c. $304,700
d. $369,100
Exercise 7
Albany, Inc. has estimated total factory overhead costs of $400,000 and 20,000 direct labor hours for the current fiscal year. If direct labor hours for Job N41 total 1,000, calculate applied factory overhead applied to this job.
Select one:
a. $40,000
b. $20,000
c. $2,000
d. cannot be determined
Exercise 8
Compute factory overhead cost from the following costs:
Depreciation on factory buildings
$ 15,000
Depreciation on office equipment
20,000
Direct materials used
70,000
Indirect labor
3,000
Select one:
a. $3,000
b. $35,000
c. $18,000
d. $108,000
Exercise 9
The following information is available for the first month of operations for Atlantis, Inc.:
Sales
$570,000
Gross Profit
200,000
Indirect Labor
20,000
Indirect Materials
9,000
Other factory overhead
7,500
Materials purchased
250,000
Total manufacturing costs
420,000
Materials inventory, end of period
10,000
a. Calculate cost of goods sold:
Select one:
a. $420,000
b. $370,000
c. $286,500
d. $277,500
b. Calculate direct materials cost used in production:
Select one:
a. $231,000
b. $240,000
c. $250,000
d. $259,000
Exercise 10
In a job order cost accounting system the effect of receiving materials and the invoice is to
Select one:
a. increase Work in Process, decrease Materials Inventory
b. increase Materials Inventory, increase Accounts Payable
c. increase Materials Inventory, decrease Accounts Payable
d. decrease Work in Process, decrease Materials Inventory
Exercise 11
Which of the following would probably NOT be found in the accounting system of a service provider?
Select one:
a. Cost ledger
b. Finished goods ledger
c. Cost of services account
d. Job cost sheets
Exercise 12
A DISADVANTAGE of maintaining high inventory levels includes:
Select one:
a. providing a ‘buffer’ to protect against process problems
b. hiding underlying production problems such as unexpected scrap and rework
c. maintaining inventory is wasteful and unnecessary
d. both (b) and (c) are disadvantages of maintaining inventory
Exercise 13
The amount of time spent by an employee in the factory is usually recorded on:
Select one:
a. time tickets
b. job order cost sheets
c. employees' earnings records
d. clock cards
Depreciation on factory buildings
$ 15,000
Depreciation on office equipment
20,000
Direct materials used
70,000
Indirect labor
3,000
Explanation / Answer
1.
a) True
(Indirect materials which are not significant are part of factory overheads)
b) True
(Direct material, direct labour and allocated factory overheads are part of product cost)
c) False
(Job order cost systems are used when products made are unique. If the jobs are comparable then process costing is used)
d) False
(Inventory of finished goods are current assets and not long lived assets)
Exercise 2
Overhead rate= $320000/ 640000 labels= $0.5 per label
Allocation For 160000 bottles= 160000×$0.5= $80000
B. Is correct.
Exercise 3
B. Finished goods
(When jobs are completed goods are transfered from job process to finished goods account resulting in increase in finished goods)
Exercise 4
A. $10000
(Overhead rate =$50000/10000labour hrs= $5 per direct labour hour
For job 117, 2000 direct labour hrs applied
THus work in process will increase by 2000×$5 per hr=$10000)
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