ACCTG 322 Final Exam | Complete Solutions (Verified)

ACCTG 322 Final Exam | Complete Solutions (Verified) Williams Company's direct labour cost is 25% of its conversion cost. If the manufacturing overhead cost for the last period is $45,000 and the direct materials cost ...

ACCTG 322 Final Exam | Complete Solutions (Verified) Williams Company's direct labour cost is 25% of its conversion cost. If the manufacturing overhead cost for the last period is $45,000 and the direct materials cost is $25,000, what is the direct labour cost? A) $15,000 B) $33,333 C) $20,000 D) $60,000 Green Company's costs for the month of August are as follows: Direct materials used $27,000 Direct labour $34,000 Sales salaries $14,000 Indirect labour $10,000 Indirect materials $15,000 General corporate administrative costs $12,000 Property taxes on manufacturing facility $2,000 Rent on factory $17,000 The beginning work-in-process inventory is $16,000 and the ending work-in-process inventory is $9,000. What is the cost of goods manufactured for the month? A) $105,000 B) $132,000 C) $112,000 D) $138,000 For a lamp manufacturing company, the cost of the insurance on its vehicles that deliver lamps to customers is best described as a: A) Manufacturing Overhead Cost B) Prime Cost C) Differential Cost of a Lamp D) Period Cost Is costs that are not tied to or related to the production of goods The salaries of the production supervisors would be an example of A) Indirect labour B) Direct labour C) Indirect Materials D) Period Costs Salaries are not materials and period costs refer to anything not related to the production of goods. Direct Labour is only costs associated directly with producing goods. Costs that are expensed as incurred are A) Period (non-manufacturing) Costs B) Indirect Costs C) Product (manufacturing) Costs D) Direct Costs Period Costs are directly defined as costs that are expensed as they are incurred; they are costs not related to the production of goods What would be the classification of the transportation costs incurred by a manufacturing company to ship its product to its customers? A) Manufacturing Overhead. B) None of the answers provided C) Period Cost D) Product Cost Period Costs are costs not related to production of goods Prime Costs consist of: A) Direct Material and Direct Labour B) Direct Material, Direct Labour and Manufacturing Overhead C) Direct Material and Manufacturing Overhead D) Direct Labour and Manufacturing Overhead Indirect costs are usually allocated rather than traced to cost objects because A) No causal relationship exists between indirect costs and the cost object B) Allocation is more convenient than tracing C) Allocation is required by external reporting requirements D) Overall accuracy is improved by allocation The salary of the vice-president of finance would be classified as A) Direct Labour B) Direct Materials C) Selling and Administrative Costs D) Manufacturing Overhead How would the cost of rent for a manufacturing plant generally be classified? A) A product cost but not a prime cost B) A prime cost but not a product cost C) Neither a product cost nor a prime cost D) Both a prime cost and a product cost Prime Cost includes Direct Materials and Direct Labour. Rent for a manufacturing plant isn't classified as either but is still related to production of goods, hence it is a product cost. Shipping expense is $9,000 for 8,000 kilograms shipped and $11,250 for 11,000 kilograms shipped. Assuming that this activity is within the relevant range, if the company ships 9,000 kilograms, its expected shipping expense would be closest to which of the following? A) $8,583 B) $10,125 C) $9,750 D) $9,972 The following is Addison Corporation's contribution format income statement for last month: Sales $1,000,000 Less: variable expenses $700,000 Contribution Margin $300,000 Less: fixed expenses$180,000 Operating Income $120,000 The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month. What is the company's margin of safety in dollars? A) $120,000 B) $880,000 C) $400,000 D) $600,000 The following is Addison Corporation's contribution format income statement for last month: Sales$1,000,000 Less: variable expenses $700,000 Contribution Margin $300,000 Less: Fixed Expenses $180,000 Operating Income $120,000 The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month. What is the company's degree of operating leverage? A) 2.5 B) 0.4 C) 0.12 D) 3.3 In 2008 Josephine Company broke even. The company sells one product with a selling price of $100 and a variable cost per unit of $75. In 2009, the company would like to earn a before-tax profit of $60,000. How many more units must the company sell in 2009 than it sold in 2008? A) 600 B) 2,640 C) 800 D) 2,400 The following is Addison Corporation's contribution format income statement for last month: Sales $1,000,000 Less: variable expenses $700,000 Contribution margin $300,000 Less: fixed expenses $180,000 Operating income $120,000 The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month. What is the company's break-even in units? A) 20,000 units B) 18,000 units C) 12,000 units D) 0 units Company A has 3 products it produces. The information on these 3 products is as follows: A: Selling Price = $150, Variable Cost = $100, Sales Volume = 2,000 B: Selling Price = $60, Variable Cost = $30, Sales Volume = 6,000 C: Selling Price = $30, Variable Cost = $20, Sales Volume = 10,000 Total fixed costs is $256,500. How many units of product B must be sold to break even (considering that product A and C would have to be sold as well)? A) 6,750 B) None of the answers provided C) 1,350 D) 4,050 Sales Mix = 1:3:5 Bundle CM = (1 x $50) + (3 x $30) + (5 x $10) = $190 Breakeven Bundle = $256,500 / 190 = 1,350 bundles B: 1,350 x 3 = 4,050 units In the scatterplot method, the vertical axis represents A) total activity outputs B) total activity inputs C) total activity cost D) none of the answers provided The following data pertain to activity (in units) and actual utilities cost for three recent years: Year 1: Activity Level in Units = 8,000, Utilities Cost = $12,000 Year 2: Activity Level in Units = 12,000, Utilities Cost = $15,000 Year 3: Activity Level in Units = 10,000, Utilities Cost = $17,500 Using the high-low method, what is the variable cost per unit for utilities? A) $1.50 per unit B) $1.33 per unit C) $0.75 per unit D) $1.25 per unit The break-even in units sold will decrease if there is an increase in which of the following? A) Selling price B) Sales Volume C) Variable costs per unit D) Total fixed expenses At a sales level of $300,000, James Company's gross margin is $15,000 less than its contribution margin, its operating income is $50,000, and its total selling and administrative expenses are $120,000. At this sales level, what is the company's contribution margin? A) $250,000 B) $170,000 C) $185,000 D) $155,000 Kelsh Company uses a predetermined overhead rate based on machine hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for next year: Direct materials $10,000 Direct labour $30,000 Sales commissions $40,000 Salary of production supervisor $20,000 Indirect materials $4,000 Advertising expense $8,000 Rent on factory equipment $10,000 Kelsh estimates that 5,000 direct labour hours and 10,000 machine hours will be worked during the year. What will be the predetermined overhead rate per hour? A) $6.80 B) $3.40 C) $6.40 D) $8.20 The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $400 and $200 for direct materials and charges of $300 and $500 for direct labour. From this information, what predetermined overhead rate, as a percentage of direct labour costs, does the company appear to be using? A) 240% B) 125% C) 300% D) 80% Matt Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 8,000 units and of Product B is 6,000 units. There are three activity cost pools, with estimated total overhead cost and expected activity as follows: Expected Activity Activity Cost Pool Est. Cost/ Product A/ Product B Activity 1: $20,000/ 100/ 400 Activity 2: $37,000/ 800/ 200 Activity 3: $91,200/ 800/ 3,000 The overhead cost per unit of Product A under activity-based costing is closest to which of the following? A) $2.40 B) $3.90 C) $6.60 D) $10.59 Compton Company uses a predetermined overhead rate in applying overhead to production orders on a labour cost basis in Department A and on a machine hours basis in Department B. At the beginning of the most recently completed year, the company made the following estimates: Department A/ Department B Direct labour cost: $56,000/ $33,000 Manufacturing overhead: $67,200/ $45,000 Direct labour hours: 8,000/ 9,000 Machine hours: 4,000/ 15,000 A) 83% and 500% (or 0.83 and 5) B) 83% and 300% (or 0.83 and 3) C) 120% and 500% (or 1.2 and 5) D) 120% and 300% (or 1.2 and 3) Carlo Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. The company estimated manufacturing overhead at $255,000 for the year and direct labour hours at 100,000 hours. Actual manufacturing overhead costs incurred during the year totalled $270,000; actual direct labour hours were 105,000. What was the overapplied or underapplied overhead for the year? A) $2,250 underapplied B) $15,000 overapplied C) $2,250 overapplied D) $15,000 underapplied Happy Valley Land and Snow Company provides the following ABC costing information: Activities/ Total Costs/ Activity Cost Drivers - Labour hours: $160,000/ 8,000 hours - Gas: $18,000/ 6,000 gallons - Invoices:$20,000/ 2,500 invoices Total costs = $198,000 The above activities used by their three departments are as follows: Lawn Dept./ Bush Dept./ Plowing Dept. - Labour Hours: 2,500 hours/ 1,200 hours/ 4,300 hours - Gas: 1,500 gallons/ 800 gallons /3,700 gallons - Invoices: 1,600 invoices/ 400 invoices/ 500 invoices How much of the gas cost will be assigned to the Plowing Dept? A) $25,000 B) $11,100 C) $15,000 D) None of the answers provided are correct The Samuelson Company uses a job-order costing system. Overhead is charged to production at 70% of the direct materials cost. Jobs 475, 477, and 478 have been delivered to the customer. Based on the following data for June, what was Samuelson's Work in Process inventory balance on June 30? Job Number: Work in process Inventory, June 1/ Direct Materials/ Direct Labour - 475: $1,000/ $400/ $200 - 476: $900/ $600/ $800 - 477: $800/ $900/ $1,400 - 478: $600/ $1,000/ $1,900 A) $6,450 B) $2.860 C) $2.300 D) $2,720 Merriman Company provides the following ABC costing information: Activities: Total Costs/ Activity Cost Drivers - Account inquiry hours: $400,000/ 10,000 hours - Accounting billing lines: $280,000/ 4,000,000 lines - Account verification accounts: $150,000/ 40,000 accounts - Correspondence letters: $50,000/ 4,000 letters - Total costs $880,000 The above activities used by Departments A and B as follows: Dept. A./Dept. B Account inquiry hours: 2,000 hours/ 4,000 hours Accounting billing linesL 400,000 lines/ 200,000 lines Account verification accounts: 10,000 accounts/ 8,000 accounts Correspondence letters: 1,000 letters/ 1,600 letters How much of the account inquiry cost will be assigned to Dept. A.? A) $160,000 B) $400,000 C) $80,000 D) None of the answers provided are correct $400,000 / 10,000 x 2,000 = $80,000