chapter 53 cost accounting

CHAPTER 53_COST ACCOUNTING

Job Order Costing

1. Under Pick Co.'s job order costing system, manufacturing overhead is applied to work in process usinga predetermined annual overhead rate. During January, Pick's transactions included the following:Direct materials issued to production $90,000 Indirect materials issued to production 8,000 Manufacturing overhead incurred 125,000 Manufacturing overhead applied 113,000 Direct labor costs 107,000

Pick had neither beginning nor ending work-in-process inventory. What was the cost of jobs completed in January? a. $302,000b. $310,000c. $322,000d. $330,000

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2. DJ Co. has a job-order cost system. The following debits (credits) appeared in the Work in processaccount for the month of March:March 1, balance $12,000 March 31, direct materials 40,000 March 31, direct labor 30,000 March 31, manufacturing overhead applied 27,000 March 31, to finished goods (100,000)

DJ Co. applies overhead at a predetermined rate of 90% of direct labor cost. Job No. 101, the only job still in process at the end of March, has been charged with manufacturing overhead of $2,250. What was the amount of direct materials charged to Job No. 101? a. $2,250b. $2,500c. $4,250d. $4,725

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31. Birk Co. uses a job order cost system. The following debits (credit) appeared in Birk's work-in-process account for the month of April:

April Description Amount 1 Balance $4,000

30 Direct materials 24,000 30 Direct labor 16,000 30 Factory overhead 12,800 30 To finished goods (48,000)

Birk applies overhead to production at a predetermined rate of 80% of direct labor cost. Job No.5, the only job still in process at the end of April, has been charged with direct labor of $2,000. What was the amount of direct materials charged to Job No. 5? a. $ 3,000 b. $ 5,200 c. $ 8,800 d. $24,000

2676 32. In a job order cost system, the use of direct materials previously purchased usually is recorded as an

increase in a. Work-in-process control b. Factory overhead applied c. Factory overhead control d. Stores control

2205 33. Jonathan Mfg. adopted a job-costing system. For the current year, budgeted cost driver activity levels for

direct labor hours and direct labor costs were 20,000 and $100,000, respectively. In addition, budgeted variable and fixed factory overhead were $50,000 and $25,000, respectively. Actual costs and hours for the year were as follows. Direct labor hours 21,000 Direct labor costs $110,000 Machine hours 35,000

For a particular job, 1,500 direct-labor hours were used. Using direct-labor hours as the cost driver, what amount of overhead should be applied to this job? a. $3,214 b. $5,357 c. $5,625 d. $7,500

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34. A Job order cost system uses a predetermined factory overhead rate based on expected volume and expected fixed cost. At the end of the year, underapplied might be explained by which of the following situations? Actual volume Actual fixed costs a. Greater than expected Greater than expected b. Greater than expected Less than expected c. Less than expected Greater than expected d. Less than expected Less than expected

2181 Process Costing 3. The following information pertains to Lap Co.'s Palo Division for the month of April:

Number of units

Cost of materials

Beginning work-in-process 15,000 $5,500 Started in April 40,000 18,000 Units completed 42,500 Ending work-in-process 12,500

All materials are added at the beginning of the process. Using the weighted-average method, the cost per equivalent unit for materials is a. $0.59 b. $0.55 c. $0.45 d. $0.45

4645 4. Weighted average and first in, first out (FIFO) equivalent units would be the same in a period when which

of the following occurs? a. No beginning inventory exists. b. No ending inventory exists. c. Beginning inventory units equal inventory units. d. Both a beginning and an ending inventory exist but are not necessarily equal.

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5. In process 2, material G is added when a batch is 60% complete. Ending work-in-process units, which are 50% complete, would be included in the computation of equivalent units for Conversion costs Material G a. Yes No b. No Yes c. No No d. Yes Yes

2185 35. In developing a predetermined factory overhead application rate for use in a process costing system,

which of the following could be used in the numerator and denominator? Numerator Denominator a. Actual factory overhead Actual machine hours b. Actual factory overhead Estimated machine hours c. Estimated factory overhead Actual machine hours d. Estimated factory overhead Estimated machine hours

2179 36. In a process cost system, the application of factory overhead usually would be recorded as an increase

in a. Finished goods inventory control b. Factory overhead control c. Cost of goods sold d. Work-in-process inventory control

2744 37. Mart Co. adds materials at the beginning of the process in Department M. The following information

pertains to units in Department M's work-in-process during April:

Work-in-process, April 1 (60% complete as to conversion cost) 1,500 Started in April 12,500 Completed 10,000 Work-in-process, April 30 (75% complete as to conversion cost) 4,000

Under the weighted-average method, the equivalent units for conversion cost are a. 13,000 b. 12,500 c. 12,000 d. 10,900

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38. Yarn Co.'s inventories in process were at the following stages of completion at the end of April

No. of units Percent complete 200 90 100 80 400 10

Equivalent units of production amounted to a. 300 b. 360 c. 660 d. 700

2677 39. Kerner Manufacturing uses a process cost system to manufacture laptop computers. The following

information summarizes operations relating to laptop computer model #KJK20 during the quarter ending March 31:

Units Work-in-process inventory, January 1 100 Started during the quarter 500 Completed during the quarter 400 Work-in-process inventory, March 31 200

Beginning work-in-process inventory was 50% complete for direct materials and direct labor costs. Ending work-in-process inventory was 75% complete for direct materials and direct labor costs. Direct labor work-in-process inventory on January 1 was $25,000. Direct labor costs added during the quarter were $360,000. What is the total value of direct labor costs in ending work-in-process inventory using the weighted-average unit cost inventory valuation method? a. $ 91,500 b. $ 97,500 c. $105,000 d. $108,000

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40. Kerner Manufacturing uses a process cost system to manufacture laptop computers. The following information summarizes operations relating to laptop computer model #KJK20 during the quarter ending March 31:

Units Work-in-process inventory, January 1 100 Started during the quarter 500 Completed during the quarter 400 Work-in-process inventory, March 31 200

Beginning work-in-process inventory was 50% complete for direct materials and direct labor costs. Ending work-in-process inventory was 75% complete for direct materials and direct labor costs. Direct material work-in-process inventory on January 1 was $50,000. Direct material costs added during the quarter were $720,000. What is the total value of material costs in ending work-in-process inventory using the weighted-average unit cost inventory valuation method? a. $183,000 b. $194,000 c. $210,000 d. $216,000

7077 41. Kerner Manufacturing uses a process cost system to manufacture laptop computers. The following

information summarizes operations relating to laptop computer model #KJK20 during the quarter ending March 31: Units Work-in-process inventory, January 1 100 Started during the quarter 500 Completed during the quarter 400 Work-in-process inventory, March 31 200

Beginning work-in-process inventory was 50% complete for direct materials and direct labor costs. Ending work-in-process inventory was 75% complete for direct materials and direct labor costs. Direct material work-in-process inventory on January 1 was $50,000. Direct material costs added during the quarter were $720,000. What is the total value of material costs in ending work-in-process inventory using the FIFO unit cost, inventory valuation method? a. $183,000 b. $194,000 c. $210,000 d. $216,000

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42. During current year, the following manufacturing activity took place for a company's products.

Beginning work-in-process, 70% complete 10,000 units Units started into production during the year 150,000 units Units completed during the year 140,000 units Ending work-in-process, 25% complete 20,000 units

What was the number of equivalent units produced using the first-in, first-out method? a. 138,000 b. 140,000 c. 145,000 d. 150,000

8225 43. Bing Company had no beginning work-in-process inventory, and the ending work-in-process inventory is

50% complete as to conversion costs. The number of equivalent units as to conversion costs would be a. The same as the units completed b. The same as the units placed in process c. Less than the units placed in process d. Less than the units completed

2229 44. Which of the following is a disadvantage of using a process costing system versus job-order costing?

a. It is difficult to determine cost of goods sold when partial shipments are made before completion. b. It is difficult to ensure that material and labor are accurately charged to each specific job. c. It involves the calculation of stage of completion of goods-in-process and the use of equivalent units. d. It is expensive to use as a good deal of clerical work is required.

7665 45. Black, Inc. employs a weighted average method in its process costing system. Black's work in process

inventory on June 30 consists of 40,000 units. These units are 100% complete with respect to materials and 60% complete with respect to conversion costs. The equivalent unit costs are $5.00 for materials and $7.00 for conversion costs. What is the total cost of the June 30 work in process inventory? a. $200,000 b. $288,000 c. $368,000 d. $480,000

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46. In the computation of manufacturing cost per equivalent unit, the weighted-average method of process costing considers a. Current cost less cost of beginning work-in-process inventory b. Current costs plus cost of ending work-in-process inventory c. Current costs plus cost of beginning work-in-process inventory d. Current costs only

2224 91. Complex Company keeps inventory records using a FIFO cost flow assumption. Product enters

Department B from Department A. Product conversion costs are incurred evenly in Department B, and material is added to the product at the end of the process. In May, there was no ending WIP inventory for Department B. In June, 3,000 units were transferred from Department A to Department B, at a total cost of $7,500. At the end of June, 1,000 units were finished and 2,000 units were 40% complete. During June, $9,000 was incurred for conversion costs and $500 for material costs in Department B. Department C is unrelated to Department A and B. in Department C, Complex produces two products, Y and Z, from the same raw material. Joint product costs are $900. The process yields 200 units of Y and 400 units of Z. Sales values at split-off are estimated to be $5 and $3.50 per unit, respectively.

What are the equivalent units of production for conversion and material costs for Department B for June? Conversion Material a. 1,800 1,000 b. 1,800 2,000 c. 2,000 1,000 d. 3,000 1,000


Department B from Department A. Product conversion costs are incurred evenly in Department B, and material is added to the product at the end of the process. In May, there was no ending WIP inventory for Department B. In June, 3,000 units were transferred from Department A to Department B, at a total cost of $7,500. At the end of June, 1,000 units were finished and 2,000 units were 40% complete. During June, $9,000 was incurred for conversion costs and $500 for material costs in Department B. Department C is unrelated to Department A and B. in Department C, Complex produces two products, Y and Z, from the same raw material. Joint product costs are $900. The process yields 200 units of Y and 400 units of Z. Sales values at split-off are estimated to be $5 and $3.50 per unit, respectively. What is the unit cost of WIP inventory in Department B at the end of June? a. $4.50 b. $5.00 c. $5.50 d. $8.00

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93. Complex Company keeps inventory records using a FIFO cost flow assumption. Product enters Department B from Department A. Product conversion costs are incurred evenly in Department B, and material is added to the product at the end of the process. In May, there was no ending WIP inventory for Department B. In June, 3,000 units were transferred from Department A to Department B, at a total cost of $7,500. At the end of June, 1,000 units were finished and 2,000 units were 40% complete. During June, $9,000 was incurred for conversion costs and $500 for material costs in Department B. Department C is unrelated to Department A and B. in Department C, Complex produces two products, Y and Z, from the same raw material. Joint product costs are $900. The process yields 200 units of Y and 400 units of Z. Sales values at split-off are estimated to be $5 and $3.50 per unit, respectively.

What is the total cost of the finished goods from Department B in June? a. $4,500 b. $5,500 c. $8,000 d. $16,000


Department B from Department A. Product conversion costs are incurred evenly in Department B, and material is added to the product at the end of the process. In May, there was no ending WIP inventory for Department B. In June, 3,000 units were transferred from Department A to Department B, at a total cost of $7,500. At the end of June, 1,000 units were finished and 2,000 units were 40% complete. During June, $9,000 was incurred for conversion costs and $500 for material costs in Department B. Department C is unrelated to Department A and B. in Department C, Complex produces two products, Y and Z, from the same raw material. Joint product costs are $900. The process yields 200 units of Y and 400 units of Z. Sales values at split-off are estimated to be $5 and $3.50 per unit, respectively.

What is the amount of joint costs to allocate to each product in Department C on the basis of relative sales value at split-off? Product Y Product Z a. $300 $600 b. $370 $530 c. $375 $525 d. $450 $450

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95. A processing department produces joint products Ajac and Bjac, each of which incurs separable production costs after split-off. Information concerning a batch produced at a $60,000 joint cost before split-off follows:

Product Separable costs Sales value Ajac $ 8,000 $ 80,000 Bjac 22,000 40,000 Total $30,000 $120,00

What is the joint cost assigned to Ajac if costs are assigned using the relative net realizable value? a. $16,000 b. $40,000 c. $48,000 d. $52,000

6922 Spoilage 7. During March, Hamilton Company incurred the following costs on Job 10 for the manufacture of 200

motors:

Direct materials $330 Direct labor 400 Factory overhead (150% of direct labar) 600

Original cost accumulation: $1,330 Direct materials $50 Direct labor 80

Direct costs of reworked 10 units: $130 The rework costs were attributable to exacting specifications of Job 10 and the full rework costs were charged to this specific job. The cost per finished unit of Job 10 was a. $7.90 b. $7.30 c. $7.00 d. $6.65

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8. In its April production, Hern Corp., which does not use a standard cost system, incurred total production costs of $900,000, of which Hern attributed $60,000 to normal spoilage and $30,000 to abnormal spoilage. Hern should account for this spoilage as a. Period cost of $90.000 b. Inventoriable cost of $90.000 c. Period cost of $60,000 and inventoriable cost of $30.000 d. Inventoriable cost of $60,000 and period cost of $30.000

5459 9. The Forming Department is the first of a two-stage production process. Spoilage is identified when the

units have completed the Forming process. Costs of spoiled units are assigned to units completed and transferred to the second department in the period spoilage is identified. The following information concerns Forming's conversion costs in May:

Units Conversion costs Beginning work-in-process (50% complete) 2,000 $10,000 Units started during May 8,000 75,500 Spoilage-normal 500 Units completed & transferred 7,000 Ending work-in-process (80% complete) 2,500

Using the weighted average method, what was Forming's conversion cost transferred to the second production department? a. $59,850 b. $64,125 c. $67,500 d. $71,250

5789 47. The sale of scrap from a manufacturing process usually would be recorded as a(an)

a. Decrease in factory overhead control b. Decrease in finished goods control c. Increase in factory overhead control d. Increase in finished goods control

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48. A department adds material at the beginning of a process and identifies defective units when the process is 40% complete. At the beginning of the period, there was no work in process. At the end of the period, the number of work-in-process units equaled the number of units transferred to finished goods. If all units in ending work-in-process were 66-2/3% complete, then ending work-in-process should be allocated a. 50% of all normal defective unit costs b. 40% of all normal defective unit costs c. 50% of the material costs and 40% of the conversion costs of all normal defective unit costs d. None of the normal defective unit costs

2174 49. Simpson Company manufactures electric drills to the exacting specifications of various customers.

During April, Job 43 for the production of 1,100 drills was completed at the following costs per unit:

Direct materials $5 Direct labor 4 Applied factory overhead 6 $15

Final inspection of Job 43 disclosed 50 defective units and 100 spoiled units. The defective drills were reworked at a total cost of $250, and the spoiled drills were sold to a jobber for $750. What would be the unit cost of the good units produced on Job 43? a. $16.50 b. $16.00 c. $15.00 d. $14.50

7394 50. During June, Delta Co. experienced scrap, normal spoilage, and abnormal spoilage in its manufacturing

process. The cost of units produced includes a. Scrap, but not spoilage b. Normal spoilage, but neither scrap nor abnormal spoilage c. Scrap and normal spoilage, but not abnormal spoilage d. Scrap, normal spoilage, and abnormal spoilage

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Cost Allocations 10. Mighty, Inc. processes chickens for distribution to major grocery chains. The two major products resulting

from the production process are white breast meat and legs. Joint costs of $600,000 are incurred during standard production runs each month, which produce a total of 100,000 pounds of white breast meat and 50,000 pounds of legs. Each pound of white breast meat sells for $2 and each pound of legs sells for $1. If there are no further processing costs incurred after the split-off point, what amount of the joint costs would be allocated to the white breast meat on a relative sales value basis? a. $120,000 b. $200,000 c. $400,000 d. $480,000

7890 11. Which of the following is not a basic approach to allocating costs for costing inventory in joint-cost

situations? a. Sales value at split-off b. Flexible budget amounts c. Physical measures such as weights or volume d. Constant gross margin percentage net realizable value method

8936 12. Kode Co. manufactures a major product that gives rise to a by-product called May. May's only separable

cost is a $1 selling cost when a unit is sold for $4. Kode accounts for May's sales by deducting the $3 net amount from the cost of goods sold of the major product. There are no inventories. If Kode were to change its method of accounting for May from a by-product to a joint product, what would be the effect on Kode's overall gross margin? a. No effect b. Gross margin increases by $1 for each unit of May sold. c. Gross margin increases by $3 for each unit of May sold. d. Gross margin increases by $4 for each unit of May sold.

5461 Activity-Based Costing 14. Limitations of an activity-based costing system include which of the following?

a. Control of overhead costs is enhanced. b. Activity-based costing systems are less reliable. c. The expense of obtaining cost data is relatively high. d. It eliminates arbitrary assignment of overhead costs.

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15. Merry Co. has two major categories of factory overhead: material handling and quality control. The costs expected for these categories for the coming year are as follows:

Material handling $120,000 Quality inspection 200,000

The plant currently applies overhead based on direct labor hours. The estimated direct labor hours are 80,000 per year. The plant manager is asked to submit a bid and assembles the following data on a proposed job:

Direct materials $4,000 Direct labor (2,000 hours) 6,000

What amount is the estimated product cost on the proposed job? a. $ 8,000 b. $10,000 c. $14,000 d. $18,000

8934 16. A CPA would recommend implementing an activity-based costing system under which of following

circumstances? a. The client is a single-product manufacturer. b. Most of the client’s costs currently are classified as direct costs. c. The client produced products that heterogeneously consume resources. d. The client produced many different products that homogeneously consume resources.

9473 17. Book Co. uses the activity-based costing approach for cost allocation and product costing purposes.

Printing, cutting, and binding functions make up the manufacturing process. Machinery and equipment are arranged in operating cells that produce a complete product starting with raw materials. Which of the following are characteristic of Book's activity-based costing approach?

I. Cost drivers are used as a basis for cost allocation. II. Costs are accumulated by department or function for purposes of product costing. III. Activities that do not add value to the product are identified and reduced to the extent possible.

a. I only b. I and II c. I and III d. II and III

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18. Boyle, Inc. makes two products, X and Y, that require allocation of indirect manufacturing costs. The following data was compiled by the accountant before making any allocations:

Product X Product Y Quantity produced 10,000 20,000 Direct manufacturing labor hours 15,000 5,000 Setup hours 500 1,500

The total cost of setting up manufacturing processes and equipment is $400,000. The company uses a job-costing system with a single indirect cost rata. Under this system, allocated costs were $300,000 and $100,000 for X and Y, respectively. If an activity-based system is used, what would be the allocated costs for each product? Product X Product Y a. $100,000 $300,000 b. $150,000 $250,000 c. $200,000 $200,000 d. $250,000 $150,000

9499 19. In an activity-based costing system, what should be used to assign a department's manufacturing

overhead costs to products produced in varying lot sizes? a. A single cause and effect relationship b. Multiple cause and effect relationships c. Relative net sales values of the products d. A product's ability to bear cost allocations

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Standard Cost Concepts 20. Based on the following information pertaining to 1,200,000 papers that were processed by DEP

Company: Total cost $1,050,000 Labor cost $950,000 Labor hours 190,000

The following processing standards have been set for DEP Co.'s clerical workers: Number of hours per 1,000 papers processed 150 Normal number of papers processed per year 1,600,000 Wage rate per 1,000 papers $ 750 Standard variable cost of processing 1,600,000 papers $1,280,000 Fixed costs per year $ 200,000

DEP Company's expected total cost to process 1,200,000 papers, assuming standard performance, is a. $1,480,000 b. $1,280,000 c. $1,160,000 d. $1,100,000

1509 21. Based on the following information pertaining to 1,200,000 papers that were processed by DEP

Company: Total cost $1,050,000 Labor cost $950,000 Labor hours 190,000

The following processing standards have been set for DEP Co.'s clerical workers: Number of hours per 1,000 papers processed 150 Normal number of papers processed per year 1,600,000 Wage rate per 1,000 papers $ 750 Standard variable cost of processing 1,600,000 papers $1,280,000 Fixed costs per year $ 200,000

DEP's labor rate variance is a. $50,000 unfavorable b. $40,000 favorable c. $10,000 unfavorable d. $0

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22. Relevant information for material A follows: Actual quantity purchased 6,500 lbs. Standard quantity allowed 6,000 lbs. Actual price $3.30 Standard price $4.00

What was the direct material quantity variance for material A? a. $2,000 favorable b. $1,900 favorable c. $1,900 unfavorable d. $2,000 unfavorable

9470 23. For the current period production levels, Woodwork Co. budgeted 11,000 board feet of production and

purchased 15,000 board feet. The material cost was budgeted at $7 per foot. The actual cost for the period was $8.50 per foot. What was Woodwork's material price variance for the period? a. $ 6,000 unfavorable b. $16,500 unfavorable c. $19,500 unfavorable d. $22,500 unfavorable

8715 24. Hart Company uses job order costing. Factory overhead is applied to production at a determined rate of

150% of direct-labor cost. Any over- or underapplied factory overhead is closed to the cost of goods sold account at the end of each month ▪ Job 1001 was the only job in process at the end of April, with accumulated costs as follows: Direct materials $4,000 Direct labor 2,000 Applied factory overhead 3,000 $9,000 ▪ Jobs 1002, 1003, and 1004 were started during May. ▪ Direct materials requisitions for May totaled $26,000. ▪ Direct-labor cost of $20,000 was incurred for May. ▪ Actual factory overhead was $32,000 for May. ▪ The only job still in process at the end of May was job 1004, with costs of $2,800 for direct materials

and $1,800 for direct labor.

The cost of goods manufactured May was a. $77,700 b. $78,000 c. $79,700 d. $85,000

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25. Hart Company uses job order costing. Factory overhead is applied to production at a determined rate of 150% of direct-labor cost. Any over- or underapplied factory overhead is closed to the cost of goods sold account at the end of each month

▪ Job 1001 was the only job in process at the end of April, with accumulated costs as follows:

Direct materials $4,000 Direct labor 2,000 Applied factory overhead 3,000 $9,000

▪ Jobs 1002, 1003, and 1004 were started during May. ▪ Direct materials requisitions for May totaled $26,000. ▪ Direct-labor cost of $20,000 was incurred for May. ▪ Actual factory overhead was $32,000 for May. ▪ The only job still in process at the end of May was job 1004, with costs of $2,800 for direct materials

and $1,800 for direct labor.

Over- or underapplied factory overhead should be closed to the cost of goods sold account at the end of May, in the amount of

a. $ 700 overapplied b. $1,000 overapplied c. $1,700 underapplied d. $2,000 underapplied

7396 26. The difference between standard hours at standard wage rates and actual hours at standard wage rates

is referred to as which of the following types of variances? a. Labor rate b. Labor usage c. Direct labor spending d. Indirect labor spending

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27. Based on the following inventory balances and manufacturing cost data for the month of January for Summit Company. Under Summit's cost system, any over- or underapplied overhead is closed to the cost of goods sold account at the end of the calendar year. Inventories: Beginning Ending Direct materials $15,000 $20,000 Work-in-process 7,500 10,000 Finished goods 32,000 25,000

Month of January Cost of goods manufactured $257,500 Factory overhead applied 75,000 Direct materials used 95,000 Actual factory overhead 72,000

What was the total amount of direct-material purchases during January? a. $ 90,000 b. $ 95,000 c. $ 97,000 d. $100,000

7397 28. Based on the following inventory balances and manufacturing cost data for the month of January for

Summit Company. Under Summit's cost system, any over- or underapplied overhead is closed to the cost of goods sold account at the end of the calendar year. Inventories: Beginning Ending Direct materials $15,000 $20,000 Work-in-process 7,500 10,000 Finished goods 32,000 25,000

Month of January Cost of goods manufactured $257,500 Factory overhead applied 75,000 Direct materials used 95,000 Actual factory overhead 72,000

How much direct-labor cost was incurred during January? a. $85,000 b. $87,500 c. $90,000 d. $93,000

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30. Quick Co. was analyzing variances for one of its operations. The initial budget forecast production of 20,000 units during the year with a variable manufacturing overhead rate of $10 per unit. Quick produced 19,000 units during the year. Actual variable manufacturing costs were $210,000. What amount would be Quick's flexible budget variance for the year? a. $10,000 favorable b. $20,000 favorable c. $10,000 unfavorable d. $20,000 unfavorable

8515 59. Companies in what type of industry may use a standard cost system for cost control?

Mass production industry Service industry a. Yes Yes b. Yes No c. No No d. No Yes

5460 60. When a manager is concerned with monitoring total cost, total revenue, and net profit conditioned upon

the level of productivity, an accountant would normally recommend Flexible budgeting Standard costing a. Yes Yes b. Yes No c. No Yes d. No No

2182 61. A standard cost system may be used in

a. Neither process costing nor job order costing b. Process costing but not job order costing c. Either job order costing or process costing d. Job order costing but not process costing

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62. Fount Company uses a standard cost system. For April, total overhead is budgeted at $80,000 based on the normal capacity of 10,000 direct-labor hours. At standard, each unit of finished product requires two direct-labor hours. The following data are available for April production activity: Equivalent units of product 4,750 Direct-labor hours worked 9,250 Actual total overhead incurred $79,500

What amount should Fount credit to the applied factory overhead account for April? a. $76,000 b. $78,000 c. $79,500 d. $80,000

1520 63. Baby Frames, Inc., evaluates manufacturing overhead in its factory by using variance analysis. The

following information applies to the month of May:

Actual Budgeted Number of frames manufactured 19,000 20,000 Variable overhead costs $4,100 $2 per direct labor hour Fixed overhead costs $22,000 $20,000 Direct labor hours 2,100 hours 0.1 hour per frame

What is the fixed overhead spending variance? a. $1,000 favorable b. $1,000 unfavorable c. $2,000 favorable d. $2,000 unfavorable

6998 64. Which of the following standard costing variances would be least controllable by a production supervisor?

a. Overhead volume b. Overhead efficiency c. Labor efficiency d. Material usage

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65. Rigley Company has underapplied overhead of $55,000 for the calendar year. Before disposition of the underapplied overhead, selected year-end balances from Rigley's accounting records are:

Sales $1,200,000 Cost of goods sold 900,000 Direct materials inventory 150,000 Work-in-process inventory 200,000 Finished goods inventory 100,000

Under Rigley's cost accounting system, over or underapplied overhead is allocated to appropriate inventories and cost of goods sold based on year-end balances. In its annual income statement, Rigley should report costs of goods sold as a. $858,750 b. $863,333 c. $936,667 d. $941,250

1519 66. To meet its monthly budgeted production goals, Acme Mfg. Co. planned a need for 10,000 widgets at a

price of $20 per widget. Acme's actual units were 11,200 at a price of $18.50 per widget. What amount reflects Acme's price variance? a. $7,200 unfavorable b. $15,000 favorable c. $16,800 favorable d. $24,000 unfavorable

8241 67. Which of the following variances would be useful in calling attention to a possible short-term problem in

the control of overhead costs? Spending variance Volume variance a. Yes Yes b. No Yes c. Yes No d. No No

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68. The following were among Gage Co.'s April costs:

Normal spoilage $ 5,000 Freight out 10,000 Excess of actual manufacturing costs over standard costs 20,000 Standard manufacturing costs 100,000 Actual prime manufacturing costs 80,000

Gage's April actual manufacturing overhead was a. $ 40,000 b. $ 45,000 c. $ 55,000 d. $120,000

2675 96. Mason Company uses a job-order cost system and applies manufacturing overhead to jobs using a

predetermined overhead rate based on direct-labor dollars. The rate for the current year is 200 percent of direct-labor dollars. This rate was calculated last December and will be used throughout the current year. Mason had one job, No. 150, in process on August 1 with raw materials costs of $2,000 and direct-labor costs of $3,000. During August, raw materials and direct labor added to jobs were as follows:

No.150 No.151 No.152 Raw materials -- $4,000 $1,000 Direct labor $1,500 5,000 2,500

Actual manufacturing overhead for the month of August was $20,000. During the month, Mason completed job Nos. 150 and 151. For August, manufacturing overhead was a. Overapplied by $4,000 b. Underapplied by $7,000 c. Underapplied by $2,000 d. Underapplied by $1,000

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97. On the accompanying diagram, the line OW represents the standard labor cost at any output volume expressed in direct labor hours. Point S indicates the actual output at standard cost, and Point A indicates the actual costs required to produce S.

Are the rate variance and efficiency variance favorable or unfavorable? Rate Efficiency a. Favorable Unfavorable b. Favorable Favorable c. Unfavorable Unfavorable d. Unfavorable Favorable

7479 Joint Product Costing 51. Actual sales values at the split-off point for joint products Y and Z are not known. For purposes of

allocating joint costs to products Y and Z, the relative sales value at split-off method is used. An increase in the costs beyond split-off occurs for product Z, while those of product Y remain constant. If the selling prices of finished products Y and Z remain constant, the percentage of the total joint costs allocated to product Y and product Z would a. Decrease for product Y and increase for product Z b. Decrease for product Y and product Z c. Increase for product Y and product Z d. Increase for product Y and decrease for product Z

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52. Rome Co. produces two joint products. BEC and CAL. Joint production costs for June were $30,000. During June, further processing costs beyond the split-off point, needed to convert the products into saleable from, were $25,000 and $35,000 for 800 units of BEC and 400 units of CAL, respectively. BEC sells for $100 per unit, and CAL sells for $200 per unit. Rome uses the net realizable value method for allocating joint product costs. For June, the joint costs allocated to product BEC were a. $20,000 b. $16,500 c. $13,500 d. $10,000

1489 53. A company manufactures two products, X and Y, through a joint process. The joint (common) costs

incurred are $500,000 for a standard production run that generates 240,000 gallons of X and 160,000 gallons of Y. X sells for $4.00 per gallon, while Y sells for $6.50 per gallon. If there are no additional processing costs incurred after the split-off point, what is the amount of joint cost for each production run allocated to X on a physical-quantity basis? a. $200,000 b. $240,000 c. $260,000 d. $300,000

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54. The diagram below represents the production and sales relationships of joint products P and Q. Joint costs are incurred until split-off, then separable costs are incurred in refining each product. Market values of P and Q at split-off are used to allocate joint costs.

If the market value of P at split-off increases and all other costs and selling prices remain unchanged, then the gross margin of P Q a. Increases Decreases b. Increases Increases c. Decreases Decreases d. Decreases Increases

7402 By-Product Costs 55. In accounting for by-products, the value of the by-product may be recognized at the time of

Production Sale a. Yes Yes b. No Yes c. No No d. Yes No

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56. The following information pertains to a by-product called Moy:

Sales in July 5,000 units Selling price per unit $6 Selling costs per unit 2 Processing costs 0

Inventory of Moy was recorded at net realizable value when produced in June. No units of Moy were produced in July. What amount should be recognized as profit on Moy's July sales? a. $0 b. $10,000 c. $20,000 d. $30,000

2679 57. Mig Co. produces gasoline and a gasoline by-product. The following information is available pertaining

to sales and production of the first year of operations:

Total production costs to split-off point $120,000 Gasoline sales 270,000 By-product sales 30,000 Gasoline inventory, ending 15,000 Additional by-product costs:

Marketing 10,000 Production 15,000

Mig accounts for the by-product at the time of production. What are Mig's cost of sales for gasoline and the by-product for the first year of operations? Gasoline By-product a. $105,000 $25,000 b. $115,000 $0 c. $108,000 $37,000 d. $100,000 $0

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58. Alley Co. produces main products Kul and Ju. The process also yields by-product Bef. Net realizable value of by-product Bef is subtracted from joint production cost of Kul and Ju. The following information pertains to production in July at a joint cost of $54,000:

Product Units produced Market value Additional cost after split-off

Kul 1,000 $40,000 $ 0 Ju 2,500 $60,000 $ 0 Bef 500 $ 9,000 $5,000

If Alley uses the net realizable value method for allocating joint cost, how much of the joint cost should be allocated to product Kul? a. $13,500 b. $14,286 c. $20,000 d. $33,333

7403 Variances in Variable OH Costs 29. The following information pertains to Roe Co.'s June manufacturing operations:

Standard direct labor hours per unit 2 Actual direct labor hours 10,500 Number of units produced 5,000 Standard variable overhead per standard direct labor hour $3 Actual variable overhead $28,000

Roe's June unfavorable variable overhead efficiency variance was a. $0 b. $1,500 c. $2,000 d. $3,500

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Service Department Costs 13. Parat College allocates support department costs to its individual schools using the step method.

Information for May is as follows:

Support departments Costs incurred Maintenance Power $99,000 $54,000 Services percentages provided to:

Maintenance -- 10% Power 20% -- School of Education 30% 20% School of Technology 50% 70% 100% 100%

What is the amount of May support department costs allocated to the School of Education? a. $40,500 b. $42,120 c. $46,100 d. $49,125

5792 Variance Analysis 77. Under the two-variance method for analyzing overhead, which of the following variances consists of both

variable and fixed overhead elements? Controllable

(budget) variance Volume variance

a. No No b. Yes No c. Yes Yes d. No Yes

7404

78. Information on Wright Company's overhead costs for the June production activity is as follows:

Budgeted fixed overhead $ 37,500 Standard fixed overhead rate per direct-labor hour $ 3 Standard variable overhead rate per direct-labor hour $ 6 Standard direct-labor hours allowed for actual production 12,000 Actual total overhead incurred $110,000

Wright has a standard absorption and flexible budgeting system, and uses the two-variance method (two-way analysis) for overhead variances. The volume (denominator) variance for June is a. $1,500 unfavorable b. $1,500 favorable c. $2,000 unfavorable d. $2,000 favorable

7405 79. Under the two-variance method for analyzing factory overhead, which of the following is used in the

computation of the controllable (budget) variance? Budget allowance

based on actual hours

Budget allowance based on standard

hours a. No No b. Yes No c. Yes Yes d. No Yes

2202 80. When using the two-variance method for analyzing factory overhead, the difference between the budget

allowance based on standard hours allowed and the factory overhead applied to production is the a. Controllable variance b. Net overhead variance c. Volume variance d. Efficiency variance

2225

81. Columbia Company uses a standard cost system and prepared the following budget at normal capacityfor the month of June:

Direct-labor hours 12,000 Variable factory overhead $24,000 Fixed factory overhead $54,000 Total factory overhead per direct-labor hour $6.50 Actual June direct labor hours worked 11,000 Actual June total factory overhead $73,500 Standard direct labor hours allowed for capacity attained in June 10,500

Using the two-way analysis of overhead variances, what is the budget (controllable) variance for June? a. $1,500 favorableb. $2,500 favorablec. $4,500 favorabled. $5,250 unfavorable

1523

82. Based on the following pertaining to Baby Frames, Inc., applicable to the month of May. Baby Framesevaluates manufacturing overhead by using variance analysis.

Actual Budgeted Number of frames manufactured 19,000 20,000 Variable overhead costs $ 4,100 $2 per DL hour Fixed overhead costs $22,000 $20,000; $1 per unit Direct labor hours 2,100 hours 0.1 hour per frame

What is the variable overhead efficiency variance? a. $200 favorableb. $200 unfavorablec. $400 favorabled. $400 unfavorable

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83. Based on the following pertaining to Baby Frames, Inc., applicable to the month of May. Baby Framesevaluates manufacturing overhead by using variance analysis.

Actual Budgeted Number of frames manufactured 19,000 20,000 Variable overhead costs $ 4,100 $2 per DL hour Fixed overhead costs $22,000 $20,000; $1 per unit Direct labor hours 2,100 hours 0.1 hour per frame

What is the fixed overhead volume variance? a. $200 favorableb. $200 unfavorablec. $400 favorabled. $400 unfavorable

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84. Based on the following information pertaining to Rand Company:

Units actually produced 76,000 Actual direct labor hours worked 160,000 Actual variable overhead incurred $500,000 Actual fixed overhead incurred 384,000

Based on monthly normal volume of 100,000 units (200,000 direct labor hours), Rand's standard cost system contains the following overhead costs:

Variable $6 per unit Fixed $4 per unit

The fixed overhead budget variance was a. $ 8,000 unfavorableb. $ 8,000 favorablec. $16,000 unfavorabled. $16,000 favorable

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※BISK問題集の誤植により回答選択が上記のようにQ82と同じ記載になっています。この中に正解はなく、正しいものを解説していますのでご確認ください。

85. Based on the following information pertaining to Rand Company:




The unfavorable variable overhead spending variance was a. $12,000 b. $20,000 c. $24,000 d. $44,000

1513 86. Based on the following information pertaining to Rand Company:




The fixed overhead volume variance was a. $96,000 unfavorable b. $96,000 favorable c. $80.000 unfavorable d. $80,000 favorable

1514

87. Under the three-variance method for analyzing factory overhead, which of the following is used in the computation of the spending variance? Actual factory

overhead Budget allowance based on actual

hours a. Yes No b. No No c. No Yes d. Yes Yes

2212 88. Based on the following information available from Rust company:

Actual factory overhead $30,000 Fixed overhead, actual $14,400 Fixed overhead, budgeted $14,000 Actual hours 7,000 Standard hours 7,600 Variable overhead rate per direct-labor hour $ 2.50

Rust uses a three-way analysis of overhead variances. What is the spending variance? a. $1,500 favorable b. $1,500 unfavorable c. $1,900 favorable d. $3,000 unfavorable

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89. Based on the following information available from Rust company:

Actual factory overhead $30,000 Fixed overhead, actual $14,400 Fixed overhead, budgeted $14,000 Actual hours 7,000 Standard hours 7,600 Variable overhead rate per direct-labor hour $ 2.50

Rust uses a three-way analysis of overhead variances. What is the efficiency variance? a. $1,500 favorable b. $1,500 unfavorable c. $1,900 favorable d. $3,000 unfavorable

7401 90. A department's three-variance overhead standard costing system reported unfavorable spending and

volume variances. The activity level selected for allocating overhead to the product was based on 80% of practical capacity. If 100% of practical capacity had been selected instead, how would the reported unfavorable spending and volume variances be affected? Spending variance Volume variance a. Increased Unchanged b. Increased Increased c. Unchanged Increased d. Unchanged Unchanged

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Variances in Prime Costs 69. Tyro Co. uses a standard cost system. The following information pertains to direct labor for product B for

the month of May: Actual rate paid $8.40 per hour Standard rate $8.00 per hour Standard hours allowed for actual production 2,000 hours Labor efficiency variance $800 unfavorable

What were the actual hours worked? a. 1,900 b. 1,905 c. 1,905 d. 2,100

1511 70. An increase in production levels within a relevant range most likely would result in

a. Increasing the total cost b. Increasing the variable cost per unit c. Decreasing the total fixed cost d. Decreasing the variable cost per unit

9472 71. Kemper Company follows a practice of isolating variances at the earliest point in time. When is the

appropriate time to isolate and recognize a direct material price variance? a. When a purchase order is originated b. When material is purchased c. When material is used in production d. When material is issued

2234 72. Virgil Corp. uses a standard cost system. In May, Virgil purchased and used 17,500 pounds of materials

at a cost of $70,000. The materials usage variance was $2,500 unfavorable and the standard materials allowed for May production was 17,000 pounds. What was the materials price variance for May? a. $17,500 favorable b. $17,500 unfavorable c. $15,000 favorable d. $15,000 unfavorable

7892

73. A company produces widgets with budgeted standard direct materials of 2 pounds per widget at $5 per pound. Standard direct labor was budgeted at 0.5 hour per widget at $15 per hour. The actual usage in the current year was 25,000 pounds and 3,000 hours to produce 10,000 widgets. What was the direct labor usage variance? a. $25,000 favorable b. $25,000 unfavorable c. $30,000 favorable d. $30,000 unfavorable

8223 74. Management has reviewed the standard cost variance analysis and is trying to explain an unfavorable

labor efficiency variance of $8,000. Which of the following is the most likely cause of the variance? a. The new labor contact increased wages. b. The maintenance of machinery has been inadequate for the last few months. c. The department manager has chosen to use highly skilled workers. d. The quality of materials has improved greatly.

9498 75. Yola Co. manufactures one product with a standard direct labor cost of four hours at $12.00 per hour.

During June, 1,000 units were produced using 4,100 hours at $12.20 per hour. The unfavorable direct labor efficiency variance was a. $1,220 b. $1,200 c. $ 820 d. $ 400

3355 76. The standard direct material cost to produce a unit of Lem is 4 meters at $2.50 per meter. During May,

4,200 meters of material costing $10,080 were purchased and used to produce 1,000 units of Lem. What was the material price variance for May? a. $400 favorable b. $420 favorable c. $ 80 unfavorable d. $480 unfavorable

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Solutions

Job Order Costing 1. b 2. c 31. b 32. a 33. c 34. c

Process Costing 3. d 4. a 5. a 35. d 36. d 37. a 38. a 39. c 40. c 41. d 42. a 43. c 44. c 45. c 46. c 91. a 92. a 93. c 94. c 95. c

Spoilage 7. a 8. d 9. c 47. a 48. a 49. b 50. c

Cost Allocations 10. d 11. b 12. b

Activity-Based Costing 14. c 15. d 16. c 17. c 18. a 19. b

Standard Cost Concepts 20. c 21. d 22. d 23. d 24. a 25. d 26. b 27. d 28. c 30. d 59. a 60. a 61. c 62. a 63. d 64. a 65. d 66. c 67. c 68. a 96. c 97. d

Joint Product Costing 51. d 52. b 53. d 54. d

By-Product Costs 55. a 56. a 57. d 58. c

Variances in Variable OH Costs 29. b

Service Department Costs 13. c

Variance Analysis 77. b 78. a 79. d 80. c 81. a 82. d 83. b 84. d 85. b 86. a 87. d 88. a 89. a 90. c

Variances in Prime Costs 69. d 70. a 71. b 72. a 73. c 74. b 75. b 76. b

chapter 53 cost accounting

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