1) Which of the following best describes transferred-in costs in process costing?
A) These costs are incurred in previous departments that are carried forward to
subsequent departments.
B) These costs are transferred in to the company by an external vendor.
C) These costs are incurred in transferring raw materials and labor from the place of
availability to the factory.
D) These costs cannot be controlled by an organization as they are transferred to the
organization from the market participants.
2) During 2015, Fly High Corporation incurred manufacturing expenses of $200,000 to
produce 40,000 finished units. It was determined that 35,000 units were sold by
November end while 5,000 units remained in ending inventory. The storage cost for
December is $0.5 per unit.
Required:
a.What is the cost of producing one unit?
b.What is the amount that will be reported on the income statement for cost of goods
sold?
c.What is the cost incurred for storing the inventory?
3) The budgeted direct-labor cost rate includes ________.
A) budgeted total costs in indirect cost pool
B) budgeted total direct-labor costs in the denominator
C) budgeted total direct-labor costs in the numerator
D) budgeted total direct-labor hours in the numerator
4) What is the total amount of the costs listed above that are NOT direct costs of the
Northridge Store?
A) $172,000
B) $33,000
C) $80,000
D) $94,000
5) Shiffon Electronics manufactures music player. Its costing system uses two cost
categories, direct materials and conversion costs. Each product must pass through the
Assembly Department, the Programming department, and the Testing Department.
Direct materials are added at the beginning of the production process. Conversion costs
are allocated evenly throughout production. Shiffon Electronics uses weighted-average
costing.
The following information is available for the month of March 2015 for the Assembly
department.
The cost details for the month of March are as follows:
What are the equivalent units for direct materials and conversion costs, respectively, for
March?
A) 1,100 units; 1,100 units
B) 1,050 units; 1,100 units
C) 1,100 units; 1,050 units
D) 1000 units; 1050 units
6) Which of the following is an example of nonfinancial performance measure?
A) percentage of products started and completed without requiring any rework
B) direct manufacturing labor efficiency variance
C) direct materials price variance
D) quantity discounts obtained on order of large quantity
7) The Green Company processes unprocessed goat milk up to the splitoff point where
two products, condensed goat milk and skim goat milk result. The following
information was collected for the month of October:
The costs of purchasing the of unprocessed goat milk and processing it up to the splitoff
point to yield a total of 98,000 gallons of saleable product was $184,480. There were no
inventory balances of either product.
Condensed goat milk may be processed further to yield 42,000 gallons (the remainder is
shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $4
per usable gallon. Xyla can be sold for $20 per gallon.
Skim goat milk can be processed further to yield 54,200 gallons of skim goat ice cream,
for an additional processing cost per usable gallon of $4. The product can be sold for $9
per gallon.
There are no beginning and ending inventory balances.
Using estimated net realizable value, what amount of the joint costs would be allocated
Xyla and the skim goat ice cream?
A) $672,000 and $271,000
B) $131,464 and $53,016
C) $92,240 and $92,240
D) $144,480 and $72,140
8) Product-sustaining costs in activity-based costing are similar to ________.
A) mixed costs
B) variable costs
C) semi-variable costs
D) fixed costs
9) Fine Suiting Company sells shirts for men and boys. The average selling price and
variable cost for each product are as follows:
Fixed costs are $35,200.
Required:
a.What is the breakeven point in units for each type of shirt, assuming the sales mix is
1:1?
b.What is the operating leverage, assuming the sales mix is 2:1 in favor of men’s shirts,
and sales total 5,000 shirts?
10) The Swivel Chair Company manufacturers a standard recliner. During February, the
firm’s Assembly Department started production of 145,000 chairs. During the month,
the firm completed 175,000 chairs and transferred them to the Finishing Department.
The firm ended the month with 18,000 chairs in ending inventory. All direct materials
costs are added at the beginning of the production cycle. Weighted-average costing is
used by Swivel.
Of the 145,000 units Swivel started during February, how many were finished during
the month?
A) 177,000
B) 197,000
C) 127,000
D) 217,000