Embry-Riddle ACCT 312 Midterm (2014)

The purchase of raw materials on account in a process costing system is recorded with a:AnswerDebit to Purchases and credit to Cash.Debit to Purchases and a credit to Accounts Payable.Debit to Raw Materials Inventory and a credit to Accounts Payable.Debit to Accounts Payable and a credit to Raw Materials Inventory.Debit to Goods in Process Inventory and a credit to Accounts PayableWhich of the following companies would be best served by a plantwide overhead rate?AnswerA company which manufactures many different products and whose operations are an equal mix of labor and mechanized work.A company which manufactures few products and whose operations are labor intensive.A company which manufactures many different products and whose operations are highly mechanized.A company whose products use overhead resources in very different ways.A and D are both situations where a plantwide overhead rate would be the best choice.Which of the following is(are) true?AnswerOverhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.The departmental overhead rate is not usually based on measures closely related to production volume.The departmental overhead rate is most accurate in assigning overhead costs that are not driven by production volume.Allocated overhead costs will be the same no matter which allocation method is used.When cost analysts are able to logically trace cost objects to costs, costing accuracy is improved.Large aircraft manufacturers such as McDonnell Douglas normally use:AnswerJob order costing.Process costing.Mixed costing.Full costing.Simple costing.The cost object(s) of the plantwide overhead rate method is(are):AnswerThe unit of product.The production departments of the company.The production activities of the company.Manufacturing cost pools.Any of the above can be a cost object when using the plantwide overhead rate method.Which one of the following statements is not true?AnswerTotal fixed costs remain the same regardless of volume.Total variable costs change with volume.Total variable costs decrease as the volume increases.Fixed costs per unit increase as the volume decreases.Variable costs per unit remain the same regardless of the volume.A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $20,000?Answer$ 5,000.$ 16,000.$ 25,000.$125,000.$250,000.A cost that remains the same in total even when volume of activity varies is a:AnswerFixed cost.Curvilinear cost.Variable cost.Step-wise variable cost.Standard cost.Job order costing systems normally use:AnswerPeriodic inventory systems.Perpetual inventory systems.Real inventory systems.General inventory systems.All of the above.A job order cost accounting system would best fit the needs of a company that makes:AnswerShoes and apparel.Paint.Cement.Custom machinery.Pencils and erasers.A method of assigning overhead costs to a product using a single overhead rate is:AnswerPlantwide overhead rate method.Cost pool overhead rate method.Departmental overhead rate method.Activity-based costing.Overhead cost allocation method.To compute an equivalent unit of production, one must be able to reasonably estimate:AnswerThe percentage of completion.Units completed.Units started and completed.Direct labor cost.Materials cost.A cost that remains constant over a limited range of volume, but increases by a lump sum when volume increases beyond a maximum amount, is a(n):AnswerStep-wise cost.Fixed cost.Curvilinear cost.Incremental cost.Opportunity cost.The Goods in Process Inventory account for the AB Corp. follows: .jpg”>The cost of units transferred to finished goods is:Answer$ 97,000.$105,900.$ 88,100.$ 95,200.$92,500A company’s overhead rate is 60% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used. .jpg”>Answer$106,400.$113,120.$ 30,240.$211,680.$324,800.K Company estimates that overhead costs for the next year will be $2,900,000 for indirect labor and $800,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 80,000 direct labor hours are planned for this next year, what is the company’s plantwide overhead rate?Answer$.02 per direct labor hour.$46.25 per direct labor hour.$36.25 per direct labor hour.$10 per direct labor hour.$.10 per direct labor hour.A company’s normal operating range, which excludes extremely high and low volumes that are not likely to occur, is called the:AnswerMargin of safety.Contribution range.Break-even point.Relevant range.High-low point.A mixed cost:AnswerRequires the future outlay of cash and is relevant for future decision making.Does not change with changes in the volume of activity within the relevant range.Is directly traceable to a cost object.Contains a combination of fixed costs and variable costs.Has already been incurred and cannot be avoided so it is irrelevant for decision making.The three major cost components of a manufactured product are:AnswerMarketing, selling, and administrative costs.Indirect labor, indirect materials, and miscellaneous factory expenses.Direct materials, direct labor, and factory overhead.Differential costs, opportunity costs, and sunk costs.General, selling, and administrative costs.Products that have been completed and are ready to be sold by the manufacturer are called:AnswerFinished goods inventory.Goods in process inventory.Raw materials inventory.Cost of goods sold.Factory supplies.A cost that changes in proportion to changes in volume of activity is a(n):AnswerDifferential cost.Fixed cost.Incremental cost.Variable cost.Product cost.A cost that changes in proportion to changes in volume of activity is a(n):AnswerDifferential cost.Fixed cost.Incremental cost.Variable cost.Product cost.The Machining Department started the current month with a beginning goods in process inventory of $10,000. During the month, it was assigned the following costs: direct materials, $76,000; direct labor, $24,000; and factory overhead, 50% of direct labor cost. Also, inventory with a cost of $109,000 was transferred out of the department to the next phase in the process. The ending balance of the Goods in Process Inventory account for the Machining Department is:Answer$ 13,000.$ 56,000.$ 59,000.$110,000.$165,000.A job cost sheet shows information about each of the following items except:AnswerThe direct labor costs assigned to the job.The name of the customer.The costs incurred by the marketing department in selling the job.The overhead costs assigned to the job.The direct materials costs assigned to the job.Which of the following characteristics applies to process cost accounting and not to job order cost accounting?AnswerUse of a predetermined overhead rate.Identifiable lots of production.Equivalent units of production.Labor time ticket for each employee.Use of a single Goods in Process account.Medlar Corp. maintains a Web-based general ledger. Overhead is applied on the basis of direct labor costs. Its bookkeeper accidentally deleted most of the entries that had been recorded for January. A printout of the general ledger (in T-account form) showed the following:.gif”>.gif”>.jpg”>A review of the prior year’s financial statements, the current year’s budget, and January’s source documents produced the following information:(1) Accounts Payable are used for raw material purchases only. January purchases were $49,000.(2) Factory overhead costs for January were $17,000 none of which is indirect materials.(3) The January 1 balance for finished goods inventory was $10,000.(4) There was a single job in process at January 31 with a cost of $2,000 for direct materials and $1,500 for direct labor.(5) Total cost of goods manufactured for January was $90,000.(6) All direct laborers earn the same rate ($13/hour). During January, 2,500 direct labor hours were worked.(7) The predetermined overhead allocation rate is based on direct labor costs. Budgeted (expected) overhead for the year is $195,000 and budgeted (expected) direct labor is $390,000.Write in the missing amounts a through o above in the T-accounts above.Use the following information to prepare the manufacturing statement for Forsythe Company for the month ended June 30: .gif”>Joseph Co. has three products A, B, and C, and its fixed costs are $69,000. The sales mix for its products are 3 units of A, 4 units of B, and 1 unit of C. Information about the three products follows:.gif”>.jpg”>(a) Calculate the company’s break-even point in composite units and sales dollars.(b) Calculate the number of units of each individual product to be sold at the break-even point. Prepare the required general journal entries to record the following transactions for the Bell Company.(a.) Purchased $40,000 of raw materials on account.(b.) Used $12,000 of direct materials in the Mixing Department, and $17,000 of direct materials in the Assembly Department.(c.) Used $5,000 of indirect materials..gif”>Identify items a, b, and c in the cost-volume-profit graph shown below. .jpg”>Match the following terms 1 to 7 with the definitions a through g._______ (1) Equivalent units of production._______ (2) Job order cost accounting system_______ (3) Hybrid manufacturing system________ (4) Process manufacturing system_________ (5) Process cost accounting system_________ (6) Materials consumption report________ (7) Process cost summary(a) Costing system to determine the cost of producing each job or job lot.(b) Document that summarizes the materials a department uses during a reporting period; replaces materials requisition.(c) Report of costs charged to a department, its equivalent units of production achieved, even the costs assigned to its output.(d) A manufacturing system that contains features of both process and job order systems.(e) Number of units that would be completed if all effort during a period had been applied to units that were started and finished.(f) System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units. passing through that process to determine cost per equivalent unit.(g) Process of products in a continuous flow of steps.