1) national inc. manufactures two models of cmd that can be used as cell phones, mpx,
and digital camcorders.
national uses a volume-based costing system to apply factory overhead based on direct
labor dollars. the unit prime costs of each product were as follows:
national’s controller had been researching activity-based costing and decided to switch
to it. a special study determined national’s two products have the following budgeted
activities:
using activity-based costing, total overhead per unit of the high f model is (rounded to
the nearest cent):
a.$42.61
b.$45.99
c.$61.32
d.$66.73
e.$168.00
2) humming company manufactures high quality musical instruments for professional
musicians. the company estimated that it would incur $120,000 in factory overhead
costs and 8,000 direct labor-hours for the year. the april 1 balances in the inventory
accounts follow:
job s10 is the only job in process on april 1 . the following transactions were recorded
for the month of april.
a. purchased materials on account, $90,000.
b. issued $91,000 of materials to production, $4,000 of which was for indirect
materials. cost of direct materials issued:
c. incurred and paid payroll cost of $20,460:
direct labor cost ($13/hour; total 920 hours)
d. recognized depreciation for the month:
g. incurred other factory overhead costs $1,600
h. applied factory overhead to production on the basis of direct labor-hours.
i. completed job s10 during the month and transferred it to the finished goods
warehouse.
j. sold job j21 on account for $59,000.
k. received $25,000 of collections on account from customers during the month.
required:
1> calculate the company’s predetermined overhead rate.
2> prepare journal entries for the april transactions. letter your entries from a to k.
3> what was the balance of the materials inventory account on april 30?
4> what was the balance of the work-in-process inventory account on april 30?
5> what was the amount of underapplied or overapplied overhead?
3) staley co. manufactures computer monitors. the following is a summary of its basic
cost and revenue data:
assume that staley co. is currently selling 600 computer monitors per month and
monthly fixed costs are $80,000.
if an $18,000 increase in the advertising budget would increase monthly sales by
$60,000, the new level of operating income for staley co. would be:
a.$19,800
b.$21,800
c.$24,800
d.$23,800
e.$20,800
4) which one of the following is defined, at any given sales volume, as the ratio of the
total contribution margin to operating profit at that sales volume?
a.contribution margin ratio
b.margin of safety ratio (mos%)
c.degree of operating leverage (dol)
d.breakeven point
e.margin of safety (mos)
5) c.m. fly, owner of falcon aircraft co., is preparing the accounting record for the year
just ended. during the year, he had projected that the company would produce 300
falcon aircraft for its clients with a factory overhead cost of $150,000,000. however,
business was better than expected and the company was able to produce 400 aircraft at
factory overhead cost of $175,000,000. what is the amount per unit that falcon aircraft
has over or underapplied factory overhead?
a.$62,500 overapplied
b.$62,500 underapplied
c.$125,000 overapplied
d.$125,000 underapplied
e.none of the above
6) fresplanade co. had the following historical pattern for its credit sales:
75% collected in the month of sale
12% collected in the first month after sale
8% collected in the second month after sale
3% collected in the third month after sale
2% uncollectible
the sales on open account (credit sales) have been budgeted for the last six months of
the year as shown below:
july $72,000
august $84,000
september $96,000
october $108,000
november $120,000
december $102,000
the estimated cash collection by fresplanade co. during september from credit sales in
july, august, and september is:
a.$83,160
b.$79,380
c.$87,840
d.$54,000
e.$71,640
7) marin products produces three products dbb-1, dbb-2, and dbb-3 from a joint
process. each product may be sold at the split-off point or processed further. additional
processing requires no special facilities, and production costs of further processing are
entirely variable and traceable to the products involved. key information about marin’s
production, sales, and costs follows.
the amount of joint costs allocated to product dbb-1 using the net realizable value
method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%,
and round all dollar amounts to the nearest whole dollar):
a.$2,009,160
b.$286,500
c.$881,640
d.$667,345
e.$709,200
8) a normal costing system uses actual costs for direct materials and direct labor, and:
a.actual costs for factory overhead
b.estimated factory overhead costs based on material cost
c.estimated factory overhead costs based on labor cost
d.estimated costs for factory overhead
e.charges actual factory overhead as a lump sum
9) all of the following are required resources for cost leadership except:
a.substantial capital investment
b.unique skills compared to industry standards
c.products designed for ease of manufacturing
d.process engineering skills
10) fresplanade co. had the following historical pattern for its credit sales:
75% collected in the month of sale
12% collected in the first month after sale
8% collected in the second month after sale
3% collected in the third month after sale
2% uncollectible
the sales on open account (credit sales) have been budgeted for the last six months of
the year as shown below:
july $72,000
august $84,000
september $96,000
october $108,000
november $120,000
december $102,000
the estimated total cash collections by fresplanade co. during december from accounts
receivable is:
a.$113,160
b.$101,400
c.$143,640
d.$125,640
e.$102,420
11) important changes in the contemporary business environments include all of the
following except:
a.management organizations
b.climate change
c.information technology
d.customer expectations
e.global competition
12) label corp. recorded sales of $2,235,245. the company’s breakeven sales point (in
dollars) is $1,650,000 and its margin of safety ratio (mos%) at the current sales level is
27%. what sales are needed to increase the company’s margin of safety ratio (mos%) to
38%?
a.$2,277,000
b.$2,661,290
c.$2,932,640
d.$3,024,050
13) the concepts of cost allocation that are used in manufacturing can also apply in:
a.service and not-for-profit industries
b.service industries
c.not-for-profit industries
d.limited instances outside of manufacturing
e.the concepts apply only in manufacturing