1) Alden Company recorded the following transactions for the just completed month.
The company had no beginning inventories.
(a) $72,000 in raw materials were purchased for cash.
(b) $67,000 in raw materials were requisitioned for use in production. Of this amount,
$56,000 was for direct materials and the remainder was for indirect materials.
(c) Total labor wages of $112,000 were incurred and paid in cash. Of this amount,
$94,000 was for direct labor and $18,000 was for indirect labor.
(d) Additional manufacturing overhead costs of $108,000 were incurred and paid in
cash.
(e) Manufacturing overhead costs of $130,000 were applied to jobs using the company’s
predetermined overhead rate.
(f) All of the jobs worked on during the month were completed and shipped to
customers.
(g) The underapplied or overapplied overhead for the month was closed out to Cost of
Goods Sold.
Required:
a. Post the above transactions to T-accounts.
b. Determine the cost of goods manufactured.
c. Determine the cost of goods sold (after closing Manufacturing Overhead).
2) Galla Corporation makes a product with the following standard costs:
The company budgeted for production of 2,400 units in June, but actual production was
2,500 units. The company used 19,850 pounds of direct material and 980 direct
labor-hours to produce this output. The company purchased 21,700 pounds of the direct
material at $6.70 per pound. The actual direct labor rate was $19.20 per hour and the
actual variable overhead rate was $1.80 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The labor efficiency variance for June is:
A.$384 F
B.$400 U
C.$400 F
D.$384 U
3) If a cost object such as a product or customer has a negative yellow margin, then:
A.its red margin will be positive.
B.its red margin may be either positive or negative.
C.its red margin will be negative.
D.its red margin will be zero.
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
mytronare 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) The finished goods inventory at the end of September after allocation of any
underapplied or overapplied manufacturing overhead for the month is closest to:
A.$37,150
B.$35,190
C.$35,194
D.$37,146
6) Oddo Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in December.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The labor rate variance for December is:
A.$5,372 F
B.$4,998 U
C.$5,372 U
D.$4,998 F
7) Overhill Corporation uses the FIFO method in its process costing system. In the
Cutting Department in June, units were 80% complete with respect to conversion in the
beginning work in process inventory and 25% complete with respect to conversion in
the ending work in process inventory. Other data for the department for June follow:
The cost per equivalent unit for conversion cost is closest to:
A.$1.48
B.$1.50
C.$1.16
D.$1.82
8) Henry Company has an Equipment Services department which 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 the most recent year follow:
The company budgeted its variable maintenance costs at $16,200 for the year. Actual
variable maintenance costs totaled $22,800.
For purposes of measuring performance, how much variable maintenance cost should
be charged to the Assembly Department at the end of the year?
A.$12,600
B.$12,160
C.$11,400
D.$6,600
9) Brees Inc., a company that produces and sells a single product, has provided its
contribution format income statement for April.
If the company sells 5,800 units, its total contribution margin should be closest to:
A.$55,800
B.$52,200
C.$6,642
D.$47,000
10) Indirect labor is a(n):
A) Prime cost.
B) Conversion cost.
C) Period cost.
D) Opportunity cost.
11) Monson Corporation has two products: G and P. The company uses activity-based
costing and has prepared the following analysis showing the total cost and activity for
each of its three activity cost pools:
The annual production and sales of Product G is 10,640 units. The annual production
and sales of Product P is 26,600.
The activity rate under the activity-based costing system for Activity 2 is closest to:
A.$89.33
B.$21.97
C.$26.67
D.$16.00
12) ( The following data pertain to an investment proposal:
The net present value of the proposed investment is closest to:
A.$4,713
B.$2,445
C.$2,268
D.$19,000
13) Arizaga Corporation manufactures canoes in two departments, Fabrication and
Waterproofing. In the Fabrication Department, fiberglass panels are attached to a canoe-
shaped aluminum frame. The canoes are then transferred to the Waterproofing
department to be coated with sealant. Arizaga uses a weighted-average process cost
system to collect costs in both departments.
All materials in the Fabrication Department are added at the beginning of the
production process. On July 1, the Fabrication Department had 320 canoes in process
that were 20% complete with respect to conversion cost. On July 31, Fabrication had
540 canoes in process that were 30% complete with respect to conversion cost. During
July, the Fabrication Department completed 6,700 canoes and transferred them to the
Waterproofing Department.
What are the Fabrication Department’s equivalent units related to materials for July?
A.6,160
B.6,380
C.6,920
D.7,240
14) Mason Enterprises has prepared the following budget for the month of July:
Assuming that total fixed expenses will be $150,000 and the sales mix remains
constant, the break-even point would be closest to:
A.$276,008
B.$235,292
C.$294,545
D.$141,278
15) For performance evaluation purposes, the variable costs of a service department
should be charged to operating departments using:
A.the actual variable rate and the budgeted level of activity for the period.
B.the budgeted variable rate and the actual level of activity for the period.
C.the budgeted variable rate and the budgeted level of activity for the period.
16) Garbarino Corporation would like to determine the relative profitability of a
number of jobs. For illustration purposes, the company has provided the following data
for job C54V:
What is the profitability index for job C54V?
A.$290 per hour
B.$58 per hour
C.0.30
D.0.20
17) The conversion cost for September was:
A) $114,000
B) $131,000
C) $171,000
D) $103,000
18) The company’s price-earnings ratio for Year 2 is closest to:
A.0.76
B.10.64
C.16.52
D.7.73
