1) Barker Corporation uses the weighted-average method in its process costing system.
This month, the beginning inventory in the first processing department consisted of 300
units. The costs and percentage completion of these units in beginning inventory were:
A total of 9,100 units were started and 8,700 units were transferred to the second
processing department during the month. The following costs were incurred in the first
processing department during the month:
The ending inventory was 85% complete with respect to materials and 20% complete
with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all
cases, select the answer that is the closest to the answer you computed. To reduce
rounding error, carry out all computations to at least three decimal places.
What are the equivalent units for conversion costs for the month in the first processing
department?
A.140
B.8,840
C.8,700
D.9,400
2) Riha Manufacturing Corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on
direct labor-hours (DLHs). The company has two products, Y47R and G13V, about
which it has provided the following data:
The company’s estimated total manufacturing overhead for the year is $1,879,960 and
the company’s estimated total direct labor-hours for the year is 43,000.
The company is considering using a variation of activity-based costing to determine its
unit product costs for external reports. Data for this proposed activity-based costing
system appear below:
Required:
a. Determine the unit product cost of each of the company’s two products under the
traditional costing system.
b. Determine the unit product cost of each of the company’s two products under
activity-based costing system.
3) Macmullen Corporation produces and sells two products. Data concerning those
products for the most recent month appear below:
The fixed expenses of the entire company were $30,970. If the sales mix were to shift
toward Product D08Q with total dollar sales remaining constant, the overall break-even
point for the entire company:
A.would increase.
B.would decrease.
C.would not change.
D.could increase or decrease.
4) Oruro Chemical Corporation manufactures a variety of household cleaners, solvents,
and beverages. Because of a recent shortage of mytron, a key ingredient needed for
three of its products, the corporation has to decide what amount of each product would
be most advantageous to produce. Information related to the three products that use
mytron are shown below:
Assume that Oruro only has 3,000 ounces of mytron available next month. What is the
maximum amount of contribution margin that Oruro can generate next month from the
three products above given the shortage of mytron?
A) $16,000
B) $19,000
C) $21,000
D) $24,000
5) Dubey Surgical Hospital uses the direct method to allocate service department costs
to operating departments. The hospital has two service departments,
Telecommunications and Administration, and two operating departments, Surgery and
Recovery.
Telecommunications Department costs are allocated on the basis of the number of
telecommunications ports in departments and Administration Department costs are
allocated on the basis of employees. The total Surgery Department cost after service
department allocations is closest to:
A.$481,336
B.$484,059
C.$473,169
D.$478,133
6) Maraby Corporation’s current ratio at the end of Year 2 was closest to:
A.1.34
B.1.72
C.0.60
D.0.44
7) Using the direct method, the cost of goods sold adjusted to a cash basis would be:
A.$180,000
B.$174,000
C.$177,000
D.$186,000
8) Residual income:
A.is the return on investment (ROI) percentage multiplied by average operating assets.
B.is the net operating income earned above a certain minimum required return on sales.
C.is the net operating income earned above a certain minimum required return on
average operating assets.
D.will always be greater than zero.
9) What is the minimum amount the company should accept for Product X if it is to be
sold at the split-off point?
A) $22,400
B) $43,400
C) $20,800
D) $45,000
10) Wasden Corporation has an activity-based costing system with three activity cost
pools-Processing, Setting Up, and Other. Costs in the Processing cost pool are assigned
to products based on machine-hours (MHs) and costs in the Setting Up cost pool are
assigned to products based on the number of batches. Costs in the Other cost pool are
not assigned to products. Data concerning the two products and the company’s costs and
activity-based costing system appear below:
Required:
a. Calculate activity rates for each activity cost pool using activity-based costing.
b. Determine the amount of overhead cost that would be assigned to each product using
activity-based costing.
c. Determine the product margins for each product using activity-based costing.
11) Nathan Company has an Equipment Services Department that performs all needed
maintenance work on the equipment in the company’s Fabrication and Assembly
Departments. Costs of the equipment Services Department are charged to the
Fabrication and Assembly Departments on the basis of direct labor-hours. Data on
direct labor-hours for last year follow:
For the year just ended, the company budgeted its variable maintenance costs at
$200,000 for the year. Actual variable maintenance costs for the year totaled $275,000.
How much (if any) of the $275,000 in variable maintenance cost should not be charged
to the Fabrication and Assembly Departments?
A.$0
B.$75,000
C.$25,000
D.$108,000
12) Gnas Corporation’s total current assets are $210,000, its noncurrent assets are
$590,000, its total current liabilities are $160,000, its long-term liabilities are $490,000,
and its stockholders’ equity is $150,000. The current ratio is closest to:
A.1.31
B.0.76
C.0.33
D.0.36
13) During its first year of operations, Carlos Manufacturing Corporation incurred the
following costs to produce 8,000 units of its only product:
The company also incurred the following costs in selling 7,500 units of product during
its first year:
Assume that direct labor is a variable cost.
Under variable costing, what is the total cost that would be assigned to Carlos’ finished
goods inventory at the end of the first year of operations?
A.$15,000
B.$42,125
C.$44,000
D.$14,000