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173. Which of the following items is NEVER relevant to the cost flows of a service organization?
174. Assume the following data for Rodriguez Services, an accounting firm, for November:
Beginning materials inventory
$ 20,000
Beginning work-in-process inventory
40,000
Ending work-in-process inventory
50,000
Ending materials inventory
10,000
Actual overhead costs
100,000
Direct materials used
60,000
Direct labor
200,000
What is the cost of services sold for November?
175. Figure 2-16
A small engine repair shop purchased materials costing $9,000 in July. The beginning inventory of material
parts was $4,500 and the ending inventory of material parts was $4,000. Payments for direct labor for July
totaled $27,000, secretarial costs were $2,000, and overhead of $5,000 was incurred. In addition, $5,000 was
spent on advertising and $2,000 for the franchise name. Revenue for July was $50,000.
Refer to Figure 2-16. What is the cost of services sold for July?
176. Figure 2-16
A small engine repair shop purchased materials costing $9,000 in July. The beginning inventory of material
parts was $4,500 and the ending inventory of material parts was $4,000. Payments for direct labor for July
totaled $27,000, secretarial costs were $2,000, and overhead of $5,000 was incurred. In addition, $5,000 was
spent on advertising and $2,000 for the franchise name. Revenue for July was $50,000.
Refer to Figure 2-16. What is the gross margin for July?
177. One or more of the following is (are) a cost accounting system(s) that use(s) only unit-based activity
drivers to assign costs to cost objects.
178. Which of the following would be associated with a functional-based cost accounting information system?
179. In a functional-based management system, one is NOT likely to find
180. In a cost management system, the cost view does NOT include
181. The system that focuses on the management of activities with the objective of improving the value
received by the customer and the profit received by providing this value is called.
182. Which of the following items would be associated with both a functional-based cost accounting
information system and an activity based cost information system?
183. In a cost management system, the process view does NOT include
184. Which is NOT a benefit of an activity-based cost management system?
185. In an activity-based management system, one is NOT likely to find
186. Which of the following is a trait of a functional-based cost management system?
187. Which of the following is NOT a trait of a functional-based cost management system?
188. Which of the following is a trait of an activity-based cost management system?
189. The optimal level in the trade-off between measurement and error costs is when
190. Error costs can be defined as
191. Describe a cost management information system, its objectives, and major subsystems.
The cost management information system is an accounting information subsystem that is primarily concerned
with producing outputs for internal users using inputs and processes needed to satisfy management objectives.
The objectives are as follows:
192. The following items (partial list) are associated with a functional-based cost accounting information
system, an activity-based cost accounting information system, or both:
a.
materials purchasing cost incurrence
b.
assignment of purchasing cost to products using direct labor hours
c.
assignment of purchasing cost using number of purchase orders
d.
usage of direct materials
e.
direct materials cost assigned to products using direct tracing
f.
materials handling cost incurrence
g.
materials handling cost assigned using direct labor hours
h.
materials handling cost assigned using the number of moves as the driver
i.
computer
j.
materials handling equipment
k.
decision to make a part or buy it from a supplier
l.
costing out of products
m.
report detailing individual product costs
Required:
1.
For an activity-based cost system, classify the items into
one of the following categories:
a.
interrelated parts
b.
processes
c.
objectives
d.
inputs
e.
outputs
f.
user actions
2.
How would the choices differ between the two systems?
What are the costs and benefits of each?
193. Explain the differences between direct tracing, driver tracing, and allocation.
194. Classify the following costs incurred by a step railing manufacturing company as direct materials, direct
labor, factory overhead, or period costs:
a.
Wages paid to production workers
b.
Utilities in the office
c.
Depreciation on machinery in plant
d.
Steel
e.
Accountant's salary
f.
Rent on factory building
g.
Rent on office equipment
h.
Maintenance workers' wages
i.
Utilities in the plant
j.
Maintenance on office equipment
195. Big Foot Athletics designs and manufactures running shoes. A new model of shoes, Fast Track, has been
developed and is ready for production.
Required:
Which costs will the production manager collect from the value chain, and how would these costs be used in
different decisions?
a.
traditional product costs
b.
operating product costs
c.
value-chain product costs
196. Information from the records of the Maloney Company for the month of May 2014 is as follows:
Purchases of direct materials
$ 54,000
Indirect labor
15,000
Direct labor
31,200
Depreciation on factory machinery
9,000
Sales
165,900
Selling and administrative expenses
18,900
Rent on factory building
21,000
Inventories
May 1, 2014
May 31, 2014
Direct materials
$24,000
$26,100
Work in process
6,300
9,600
Finished goods
15,000
17,100
Required:
a.
Prepare a statement of cost of goods manufactured for the month of May.
b.
Prepare an income statement for the month of May.
c.
Determine prime and conversion costs.
197. The following information pertains to the Montpelier Company:
Direct materials purchases
$ 62,400
Beginning direct materials
10,400
Factory overhead
58,400
Beginning work in process
10,600
Cost of goods manufactured
164,000
Ending finished goods
20,000
Gross margin
21,000
Selling and administrative expenses
7,000
Beginning finished goods
16,000
Ending work in process
8,000
Ending direct materials
12,400
Direct labor
?
Direct materials used
?
Operating income (loss)
?
Total manufacturing costs added
?
Cost of goods sold
?
Sales
?
Required:
Determine the following values:
a.
Net income
b.
Total manufacturing costs added
c.
Cost of goods sold
d.
Sales
e.
Direct materials used
f.
Direct labor
198. Information about Mobile Enterprises for the year ending December 31, 2014, is as follows:
Sales
$300,000
Selling and administrative expenses
18,000
Net income
8,000
Beginning inventories:
Direct materials
20,000
Work in process
18,000
Finished goods
62,000
Ending direct materials is 20 percent larger than beginning direct materials. Ending work in process is half of the beginning work in process. Ending
finished goods increased by $8,000 during the year. Prime costs and conversion costs are 70 percent and 60 percent of total manufacturing costs
added, respectively. Materials purchases are $113,200.
Required:
a.
Prepare a statement of cost of goods manufactured.
b.
Prepare an income statement.
Note: Find the numbers for the income statement first.
199. The following costs were incurred by the Awesome Company:
Direct labor
$ 600,000
Direct material purchases
555,000
Depreciation on plant
30,000
Factory supervisor's salary
75,000
Plant maintenance
15,000
Plant utilities
27,000
Sales
1,950,000
Selling and administrative expenses
300,000
Beginning direct materials inventory
51,000
Beginning work-in-process inventory
24,000
Beginning finished goods inventory
54,000
Ending direct materials inventory
45,000
Ending work in process
39,000
Ending finished goods
72,000
Required:
Calculate the following values:
a.
Direct materials used
b.
Cost of goods manufactured
c.
Cost of goods sold
d.
Operating income
200. Foremost Corporation incurred the following costs:
Beginning direct materials inventory
$ 17,000
Beginning work-in-process inventory
8,000
Beginning finished goods inventory
18,000
Ending direct materials inventory
15,000
Ending work in process
13,000
Ending finished goods
24,000
Factory supervisor's salary
25,000
Depreciation on plant
10,000
Sales
650,000
Selling and administrative expenses
100,000
Plant maintenance
5,000
Plant utilities
9,000
Direct material purchases
185,000
Direct labor
200,000
Required:
Calculate the following values:
a.
Direct materials used
b.
Cost of goods manufactured
c.
Cost of goods sold
d.
Operating income
201. The cost of goods sold for the Immaculate Corporation for the month of April 2014 was $450,000. Work-
in-process inventory at the end of April was 95 percent of the work-in-process inventory at the beginning of the
month. Overhead is 80 percent of the direct labor cost. During the month, $110,000 of direct materials were
purchased. Revenues for Immaculate were $600,000, and the selling and administrative costs were $70,000.
Other information about Immaculate's inventories and production for April was as follows:
Ending inventories-April 30
Direct materials
$ 19,000
Work in process
?
Finished goods
105,000
Beginning inventories-April 1
Direct materials
$ 22,200
Work in process
40,000
Finished goods
208,500
Required:
a.
Prepare a cost of goods manufactured and cost of goods sold statements.
b.
Prepare an income statement.
c.
What are the prime costs, conversion costs, and period costs?
202. Corlis Custom Builders designs decks, gazebos, and play equipment for residential homes. The following
was provided for the year ended September 30, 2014:
Direct labor
$600,000
Direct material purchases
40,000
Administrative
130,000
Overhead
75,000
Selling
265,000
Beginning direct materials inventory
20,000
Beginning designs in process
14,000
Ending direct materials inventory
10,000
Ending designs in process
39,000
The average design fee is $700. There were 2,000 designs processed during the year.
Required:
a.
Prepare a statement of cost of services sold.
b.
Prepare an income statement.
c.
Discuss three differences between services and tangible products.
203. Define activity-based management. In your answer, present the activity-based management model in good
form.
204. In choosing a cost management system, the controller must balance the total costs of implementing such
systems. What costs must be balanced to determine total cost? How do functional-based and activity-based cost
systems balance the trade-offs?
205. Describe several of the major differences between a functional-based cost management system and an
activity-based cost management system.
