The inventory at June 1 and costs charged to Work in Process’”Department 60 during
June are as follows:
Total cost to be accounted for $880,400
During June, 32,000 units were placed into production and 31,200 units were
completed, including those in inventory on June 1. On June 30, the inventory of work in
process consisted of 4,600 units which were 85% completed. Inventories are costed by
the first-in, first-out method and all materials are added at the beginning of the process.
Determine the following: (Round unit cost data to four decimal places, i.e., $4.4444, to
minimize rounding differences).
(a) Equivalent units of production for conversion cost
(b) Conversion cost per equivalent unit
(c) Total and unit cost of finished goods started in prior period and completed in the
current period
(d) Total and unit cost of finished goods started and completed in the current period
(e) Total cost of work in process inventory, June 30
Answer:
The operating budgets of a company includes the
a. cash budget
b. capital expenditures budget
c. financing budget
d. production budget
Answer:
Using the job order cost system, service organizations are able to bill customers on a
weekly or monthly basis, even when the job has not been completed.
a. True
b. False
Answer:
A process whereby the effect of fluctuations in the level of activity is built into the
budgeting system is referred to as flexible budgeting.
a. True
b. False
Answer:
In a profit center, the manager has responsibility and authority for making decisions that
affect
a. long-term liabilities
b. assets
c. investments
d. costs
Answer:
Below is a table for the present value of $1 at compound interest.
Below is a table for the present value of an annuity of $1 at compound interest.
Using the tables above, what would be the present value of $25,000 (rounded to the
nearest dollar) to be received 4 years from today, assuming an earnings rate of 10%?
a. $19,800
b. $17,075
c. $79,250
d. $15,525
Answer:
Cost of oil used to lubricate factory machinery and equipment is an example of a direct
materials cost.
a. True
b. False
Answer:
Process and job order cost systems are similar in all of the following ways except
a. both accumulate product costs’”direct materials, direct labor, and factory overhead
b. both allocate product cost to units produced
c. both maintain perpetual inventories
d. both use job order cost cards
Answer:
Which of the following measures a company’s ability to pay its current liabilities?
a. earnings per share
b. inventory turnover
c. current ratio
d. number of times interest charges earned
Answer:
Who are the individuals charged with the responsibility for directing the day-to-day
operations of a business?
a. investors
b. managers
c. shareholders
d. customers
Answer:
For a period during which the quantity of inventory at the end was smaller than that at
the beginning, income from operations reported under variable costing will be smaller
than income from operations reported under absorption costing.
a. True
b. False
Answer:
salesmen commissions
Match the costs that follow to the type of product cost (a-c) or designate as not a
product cost (d).
a. direct labor
b. direct materials
c. factory overhead
d. not a product cost
Answer:
The amount of income under absorption costing will be more than the amount of
income under variable costing when units manufactured:
a. exceed units sold
b. equal units sold
c. are less than units sold
d. are equal to or greater than units sold
Answer:
The theory of constraints is a manufacturing strategy that focuses on reducing the
influence of bottlenecks on a process.
a. True
b. False
Answer:
Panamint Systems Corporation is estimating activity costs associated with producing
disk drives, tapes drives, and wire drives. The indirect labor can be traced to four
separate activity pools. The budgeted activity cost and activity base data by product are
provided below.
Determine the activity rate for product development per change.
a. $73,000
b. $8,588
c. $30,417
d. $16,222
Answer:
Mallard Corporation uses the product cost concept of product pricing. Below is cost
information for the production and sale of 45,000 units of its sole product. Mallard
desires a profit equal to a 12% rate of return on invested assets of $800,000.
The markup percentage on product cost for the company’s product is
a. 23.4%
b. 10.98%
c. 26.1%
d. 18%
Answer:
Solvency analysis focuses on the ability of a business to pay its current and noncurrent
liabilities.
a. True
b. False
Answer:
In a process cost system, the cost of completed production in Department A is
transferred to Department B by which of the following entries?
a. debit Work in Process’”Dept. B; credit Work in Process’”Dept. A
b. debit Work in Process’”Dept. B; credit Finished Goods’”Dept. A
c. debit Work in Process’”Dept. B; credit Cost of Goods Sold’”Dept. A
d. debit Finished Goods; credit Work in Process’”Dept. B
Answer:
The relevant activity base for a cost depends upon which base is most closely
associated with the cost and the decision-making needs of management.
a. True
b. False
Answer:
Depreciation on factory plant and equipment is an example of factory overhead cost.
a. True
b. False
Answer:
Below is budgeted production and sales information for Bluebird Company for the
month of December:
The unit selling price for product XXX is $5 and for product ZZZ is $14.
Budgeted production for product ZZZ during the month is
a. 460,000 units
b. 475,000 units
c. 457,000 units
d. 463,000 units
Answer: