Acct 2302 Exam 1 - v2 - Key

Managerial Accounting
Exam 1
1. Managerial accounting places considerable weight on:
A) generally accepted accounting principles.
B) the fnancial history of the entity.
) ensuring that all transactions are properly recorded.
!) detailed segment reports about departments" products" and customers.
Answer: ! AA#B: $e%ecti&e 'hin(ing A)*A BB: ritical 'hin(ing A)*A
+,: Measurement -.: 1 -e&el: Easy
/. 'he plans of management are often expressed formally in:
A) fnancial statements.
B) performance reports.
) budgets.
!) ledgers.
Answer: AA#B: $e%ecti&e 'hin(ing A)*A BB: $esource Management
A)*A +,: Measurement -.: 1 -e&el: Easy
0. 'he phase of accounting concerned with pro&iding information to managers
for use in planning and controlling operations and in decision ma(ing is
called:
A) throughput time.
B) managerial accounting.
) fnancial accounting.
!) controlling.
Answer: B AA#B: $e%ecti&e 'hin(ing A)*A BB: $esource Management
A)*A +,: Measurement -.: 1 -e&el: Easy
1.'he cost of the cushions that are used to manufacture sofas is best described as
a:
A) manufacturing o&erhead cost.
B) period cost.
) &ariable cost.
!) con&ersion cost.
Ans: AA#B: $e%ecti&e 'hin(ing A)*A BB: ritical 'hin(ing
A)*A +,: $eporting -.: 1"/"2 -e&el: Medium
2.A security guard3s wages at a factory would be an example of:
Indirect labor Fixed manufacturing overhead
A) No No
B) Yes Yes
C) Yes No
D) No Yes
Ans: B AA#B: $e%ecti&e 'hin(ing A)*A BB: ritical 'hin(ing
A)*A +,: $eporting -.: 1"2 -e&el: Medium #ource: *A" adapted
4. Materials used in the operation of a factory" such as cleaning supplies" that
are not an integral part of the fnal product should be classifed as:
A) direct materials.
B) a period cost.
) administrati&e expense.
!) manufacturing o&erhead.
Ans: ! AA#B: $e%ecti&e 'hin(ing A)*A BB: ritical 'hin(ing
A)*A +,: $eporting -.: 1 -e&el: Easy
5. !irect costs:
A) are incurred to beneft a particular accounting period.
B) are incurred due to a specifc decision.
) can be easily traced to a particular cost ob6ect.
!) are the &ariable costs of producing a product.
7. )n&entoriable 8i.e." product) costs that ha&e become expenses can be found
in:
A) period costs.
B) selling expenses.
) cost of goods sold.
!) administrati&e expenses.
A)*A +,: $eporting -.: / -e&el: Medium
9. :hich of the following production costs" if expressed on a per unit basis"
would be most li(ely to change signifcantly as the production le&el &aries;
A) !irect materials.
B) !irect labor.
) +ixed manufacturing o&erhead.
!) $esponses A and B are both correct.
Ans: AA#B: Analytic A)*A BB: ritical 'hin(ing
A)*A +,: $eporting -.: 2 -e&el: Medium
1<. :hen the le&el of acti&ity decreases within the rele&ant range" the fxed cost
per unit will:
A) decrease.
B) increase.
) remain the same.
!) 'he e=ect cannot be predicted.
Ans: B AA#B: Analytic A)*A BB: ritical 'hin(ing
11. All of the cost categories listed below are usually found in a company3s
accounting records" except for:
A) sun( costs.
B) in&entoriable costs.
) opportunity costs.
!) mar(eting costs.
1/. Abel ompany3s manufacturing o&erhead is /<> of its total con&ersion costs.
)f direct labor is ?07"<<< and if direct materials are ?15"<<<" the
manufacturing o&erhead is:
A) ?12/"<<<
B) ?11"52<
) ?/1"/2<
!) ?9"2<<
Ans: ! AA#B: Analytic A)*A BB: ritical 'hin(ing
A)*A +,: $eporting -.: 1 -e&el: @ard
10. onsider the following costs:
Direct materials.......................................... $!"""
De#reciation on factor$ e%ui#ment............ $&'!"""
Factor$ (anitor)s salar$............................... $'!"""
Direct labor................................................ $'*!"""
+tilities for factor$..................................... $,!"""
-elling ex#enses......................................... $&.!"""
/roduction su#ervisor)s salar$................... $0!"""
Administrative ex#enses............................ $'&!"""
:hat is the total amount of manufacturing o&erhead included abo&e;
A) ?57"<<<
B) ?109"<<<
) ?11"<<<
!) ?05"<<<
Ans: A AA#B: Analytic A)*A BB: ritical 'hin(ing
#olution:
De#reciation on factor$ e%ui#ment............ $&'!"""
Factor$ (anitor)s salar$............................... '!"""
+tilities for factor$..................................... ,!"""
/roduction su#ervisor)s salar$................... 0!"""
1otal........................................................... $2*!"""
11.Manufacturing o&erhead includes:
A) all direct material" direct labor and administrati&e costs.
B) all manufacturing costs except direct labor.
) all manufacturing costs except direct labor and direct materials.
!) all selling and administrati&e costs.
12.All of the following are examples of product costs except:
A) depreciation on the company3s retail outlets.
B) salary of the plant manager.
) insurance on the factory eAuipment.
!) rental costs of the factory facility.
Ans: A AA#B: $e%ecti&e 'hin(ing A)*A BB: ritical 'hin(ing
A)*A +,: $eporting -.: / -e&el: Easy
14. on&ersion costs consist of:
A) direct and indirect labor.
B) direct labor and direct materials.
) direct labor and manufacturing o&erhead.
!) prime costs and manufacturing o&erhead.
A)*A +,: $eporting -.: / -e&el: Easy #ource: MA" adapted
15.:hich of the following statements is correct concerning 6obBorder costing;
A) CobBorder costing would be appropriate for a textboo( publisher.
B) All the costs appearing on a 6ob cost sheet are actual costs.
) )ndirect materials are charged to a specifc 6ob.
!) CobBorder costing is mainly used in frms with homogeneous products
such as oil refneries.
A)*A +,: $eporting -.: 1"/ -e&el: Medium
17. :hich of the following types of frms typically would use process costing
rather than 6obBorder costing;
A) A small appliance repair shop.
B) A manufacturer of commercial passenger aircraft.
) A specialty eAuipment manufacturer.
!) A brea(fast cereal manufacturer.
Ans: ! AA#B: $e%ecti&e 'hin(ing A)*A BB: ritical 'hin(ing
19. 'he 6ob cost sheet:
A) summariDes all costs charged to a particular 6ob.
B) contains only direct costs such as direct materials and direct labor.
) is discarded after production is completed on a particular 6ob.
!) is useful only in process costing.
A)*A +,: $eporting
/<. Elliott ompany uses a predetermined o&erhead rate based on machineB
hours to apply manufacturing o&erhead to 6obs. 'he company manufactures
tools to customer specifcations. 'he following data pertain to Cob 12<1:
Direct materials used $0!'""
Direct labor3hours 4or5ed ""
Direct labor rate #er hour $*.""
6achine3hours used '""
/redetermined overhead rate #er machine3hour............... $&7.""
:hat is the total manufacturing cost recorded on Cob 12<1;
A) ?7"7<<
B) ?9"4<<
) ?1<"0<<
!) ?11"1<<
A)*A +,: $eporting -.: /"2 -e&el: Easy #ource: *A" adapted
#olution:
!irect materials used.........................................................
?1"/<
<
!irect labor 80<< hours E ?7.<< per hour)......................... /"1<<
Manufacturing o&erhead applied 8/<< hours E ?12.<<
per hour)............................................................................
0"<<
<
'otal manufacturing cost for 6ob 12<1...............................
?9"4<
<
/1. A&ery o. uses a predetermined o&erhead rate based on direct laborBhours to
apply manufacturing o&erhead to 6obs. +or the month of .ctober" A&ery3s
estimated manufacturing o&erhead cost was ?0<<"<<< based on an
estimated acti&ity le&el of 1<<"<<< direct laborBhours. Actual o&erhead
amounted to ?0/2"<<< with actual direct laborBhours totaling 11<"<<< for the
month. @ow much was the o&erapplied or underapplied o&erhead;
A) ?/2"<<< o&erapplied
B) ?/2"<<< underapplied
) ?2"<<< o&erapplied
!) ?2"<<< underapplied
A)*A +,: $eporting -.: 0"2"7 -e&el: Medium #ource: *A" adapted
#olution:
Actual manufacturing o&erhead.........................................
?0/2"<<
<
Applied manufacturing o&erhead 8?0 per !-@F E 11<"<<<
!-@s)................................................................................. 00<"<<<
Manufacturing o&erhead o&erapplied................................ ? 2"<<<
8/redetermined overhead rate 9 $""!""" : &""!""" direct labor3hours
9 $ #er direct labor3hour
-ince a##lied manufacturing overhead exceeds actual manufacturing overhead!
manufacturing overhead is overa##lied.
//. !arrow ompany uses a predetermined o&erhead rate based on direct laborB
hours to apply manufacturing o&erhead to 6obs. -ast year" the company
wor(ed 1<"<<< direct laborBhours and incurred ?7<"<<< of actual
manufacturing o&erhead cost. )f o&erhead was underapplied by ?/"<<<" the
predetermined o&erhead rate for the company for the year must ha&e been:
A) ?5.7<
B) ?7.<<
) ?7./<
!) ?7.1<
A)*A +,: $eporting -.: 0"2"7 -e&el: @ard
#olution:
Actual manufacturing overhead ; A##lied manufacturing overhead 9 undera##lied
$*"!""" ; A##lied 9 $'!"""
A##lied 9 $2*!"""
Direct labor3hours < /redetermined overhead rate 9 A##lied manufacturing overhead
&"!""" < /redetermined overhead rate 9 $2*!"""
/redetermined overhead rate 9 $2*!""" : &"!""" direct labor3hours
/redetermined overhead rate 9 $2.*" #er direct labor3hour
/0. -inh orporation applies manufacturing o&erhead to 6obs on the basis of
pounds of direct material used. -inh estimated 14<"<<< pounds of material
usage and ?/<<"<<< of manufacturing o&erhead cost for the year. !uring the
year" -inh actually used 12<"<<< pounds of material and incurred ?151"<<< of
manufacturing o&erhead cost. :hat was -inh3s underapplied or o&erapplied
o&erhead for the year;
A) ?1/"2<< underapplied
B) ?14"2<< o&erapplied
) ?15"4<< underapplied
!) ?/9"<<< o&erapplied
A)*A +,: $eporting -.: 0"2"7 -e&el: Medium
#olution:
/redetermined overhead rate 9 $'""!""" : &."!""" #ounds
9 $&.'7 #er #ound
Actual manufacturing o&erhead........................... ?151"<<<
Applied manufacturing o&erhead 812<"<<< E
?1./2)............................................................... 175"2<<
Manufacturing o&erhead o&erapplied.................. ? 14"2<<
/1. Brus&een orporation applies manufacturing o&erhead to 6obs on the basis of
direct laborBhours. 'he following information relates to Brus&een for last year:
=stimated Actual
Direct labor3hours.......................... &7!""" &0!*""
6anufacturing overhead cost......... $""!""" $'*2!&'"
:hat was Brus&een3s underapplied or o&erapplied o&erhead for last year;
A) ?1"<<< underapplied
B) ?7"77< underapplied
) ?7"77< o&erapplied
!) ?9"<<< underapplied
A)*A +,: $eporting -.: 0"2"7 -e&el: Medium
#olution:
/redetermined overhead rate 9 $""!""" : &7!""" direct labor3hours
9 $'" #er direct labor3hour
Actual manufacturing o&erhead.......................... ?/75"1/<
Applied manufacturing o&erhead 811"7<< E ?/<) /94"<<<
Manufacturing o&erhead o&erapplied................. ? 7"77<
/2. :ashtenaw orporation uses a 6obBorder costing system. 'he following
data are for last year:
=stimated direct labor3hours &'!"""
=stimated manufacturing overhead costs $,!"""
Actual direct labor3hours &&!"""
Actual manufacturing overhead costs $2!"""
:ashtenaw applies o&erhead using a predetermined rate based on direct
laborBhours. :hat amount of o&erhead was applied to wor( in process last
year;
A) ?09"<2<
B) ?1/"4<<
) ?02"52<
!) ?04"94<
A)*A +,: $eporting -.: 0"2 -e&el: Medium
#olution:
/redetermined overhead rate 9 $,!""" : &'!""" direct labor3hours
9 $.'7 #er direct labor3hour
A##lied manufacturing
overhead
9
Actual direct
labor3hours
<
/redetermined
overhead rate
A##lied manufacturing
overhead
9 &&!""" < $.'7
A##lied manufacturing overhead 9 $7!27"
/4. 'he #il&er ompany uses a predetermined o&erhead rate to apply
manufacturing o&erhead to 6obs. 'he predetermined o&erhead rate is based
on labor cost in !ept. A and on machineBhours in !ept. B. At the beginning of
the year" the company made the following estimates:
Direct labor cost............................. $."!""" $0"!"""
6anufacturing overhead................ $,"!""" $07!"""
Direct labor3hours.......................... .!""" ,!"""
6achine3hours............................... '!""" &7!"""
:hat predetermined o&erhead rates would be used in !ept A and !ept B"
respecti&ely;
A) 45> and ?0.<<
B) 12<> and ?2.<<
) 12<> and ?0.<<
!) 45> and ?2.<<
#olution:
De#artment A>
/redetermined
overhead rate
9
=stimated total manufacturing overhead cost
=stimated total amount of the allocation base
9
$,"!"""
9 &7"? of direct labor cost
$."!"""
De#artment B>
/redetermined
overhead rate
9
=stimated total manufacturing overhead cost
=stimated total amount of the allocation base
9 $07!""" 9 $."" #er machine3hour
&7!"""
/5. $eamer ompany uses a predetermined o&erhead rate based on machineB
hours to apply manufacturing o&erhead to 6obs. 'he company has pro&ided
the following estimated costs for next year:
Direct materials.......................................... $&!"""
Direct labor................................................ $!"""
-ales commissions..................................... $0!"""
-alar$ of #roduction su#ervisor................. $'!"""
Indirect materials....................................... $0""
Advertising ex#ense................................... $*""
@ent on factor$ e%ui#ment......................... $&!"""
$eamer estimates that 2<< direct laborBhours and 1"<<< machineBhours will
be wor(ed during the year. 'he predetermined o&erhead rate per hour will be:
A) ?4.7<
B) ?4.<<
) ?0.<<
!) ?0.1<
#olution:
Manufacturing o&erhead:
#alary of production super&isor...... ?/"<<<
)ndirect materials........................... 1<<
$ent on factory eAuipment............. 1"<<<
'otal estimated manufacturing
o&erhead........................................... ?0"1<<
/redetermined
overhead rate
9
1otal estimated manufacturing overhead
=stimated machine3hours
/redetermined
overhead rate
9
$!0""
9 $.0" #er machine3hour
&!"""
/7.:hich of the following statements related to 6obBorder costing and process
costing are true;
A) Gnder both costing methods" manufacturing o&erhead costs are
included in the computation of unit product costs.
B) Gnder both costing methods" the 6ournal entry to record the completion
of production will in&ol&e crediting a wor( in process account.
) Gnder both costing methods" the 6ournal entry to record the cost of
goods sold will in&ol&e crediting the fnished goods account.
!) All of the abo&e are true.
A)*A +,: $eporting -.: 1 -e&el: @ard
/9. 'he completion of goods is recorded as a decrease in the wor( in process
in&entory account when using:
Aob3order costing /rocess costing
A) Yes No
B) Yes Yes
C) No Yes
D) No No
A)*A +,: $eporting -.: 1 -e&el: Easy #ource: *A" adapted
0<. )n process costing" a separate wor( in process account is (ept for each:
A) indi&idual order.
B) eAui&alent unit.
) processing department.
!) cost category 8i.e." materials" con&ersion cost).
01. 'he weightedBa&erage method of process costing di=ers from the +)+.
method of process costing in that the weightedBa&erage method:
A) does not consider the degree of completion of beginning wor( in process
in&entory when computing eAui&alent units of production.
B) considers ending wor( in process in&entory to be fully complete.
) will always yield a higher cost per eAui&alent unit.
!) All of the abo&e.
A)*A +,: $eporting Appendix: 1A -.: /"0"2"4 -e&el: @ard
0/. :hich of the following are needed to compute eAui&alent units for con&ersion
costs under the weighted-average method of process costing;
/ercentage com#letion of
beginning 4or5 in #rocess
/ercentage com#letion of
ending 4or5 in #rocess
A) Yes Yes
B) No Yes
C) Yes No
D) No No
00. @ealth Be&erage ompany uses a process costing system to collect costs
related to the production of its celery %a&ored cola. 'he cola is frst processed
in a Mixing !epartment at @ealth and is then transferred out and fnished up
in the Bottling !epartment. 'he fnished cases of cola are then transferred to
+inished Hoods )n&entory. 'he following information relates to @ealth3s two
departments for the month of Canuary:
6ixing Bottling
Cases of cola in 4or5 in #rocess! Aanuar$ & &"!""" !"""
Cases of cola com#letedBtransferred out during Aanuar$.. 22!""" C
Cases of cola in 4or5 in #rocess! Aanuar$ & 0!""" *!"""
@ow many cases of cola were completed and transferred to +inished Hoods
)n&entory during Canuary;
A) 44"<<<
B) 51"<<<
) 5/"<<<
!) 51"<<<
#olution:
'o sol&e for units transferred:
I :or( in process" beginning.................................... 0"<<<
I Gnits started into production during the month..... 55"<<<
J :or( in process" ending......................................... 7"<<<
K Gnits completed and transferred out during the
month..................................................................... 5/"<<<
01. 'he Assembly !epartment started the month with 70"<<< units in its
beginning wor( in process in&entory. An additional 001"<<< units were
transferred in from the prior department during the month to begin
processing in the Assembly !epartment. 'here were 01"<<< units in the
ending wor( in process in&entory of the Assembly !epartment.
@ow many units were transferred to the next processing department during
the month;
A) 115"<<<
B) /72"<<<
) 121"<<<
!) 070"<<<
#olution:
I :or( in process" beginning................................. 70"<<<
I Gnits started into production during the month.. 001"<<<
J :or( in process" ending...................................... 01"<<<
KGnits completed and transferred out during the
month.................................................................. 070"<<<
02. Barnett ompany uses the weightedBa&erage method in its process costing
system. 'he company adds materials at the beginning of the process in
!epartment M. on&ersion costs were 52> complete with respect to the
1"<<< units in wor( in process at May 1 and 2<> complete with respect to the
4"<<< units in wor( in process at May 01. !uring May" 1/"<<< units were
completed and transferred to the next department. An analysis of the costs
relating to wor( in process at May 1 and to production acti&ity for May
follows:
6aterials Conversion
Dor5 in #rocess 7B&........................ $&!*"" $!20"
Costs added during 6a$................ $0'!""" $'.!'."
'he total cost per eAui&alent unit for May was:
A) ?2.</
B) ?2.1<
) ?2.1/
!) ?2./2
A)*A +,: $eporting -.: /"0 -e&el: Medium
#olution:
Equivalent units of production
Materials
Conversio
n
'ransferred to next department............... 1/"<<< 1/"<<<
Ending wor( in process 8materials: 4"<<<
units E 1<<> completeL con&ersion:
4"<<< 0"<<<
4"<<< units E 2<> complete)...............
EAui&alent units of production................. 17"<<< 12"<<<
Cost per Equivalent Unit
Materials
Conversio
n Total
ost of beginning wor( in process........... ?10"7<< ? 0"51<
ost added during the period.................. 1/"<<< /4"/4<
'otal cost 8a)............................................ ?22"7<< ?0<"<<<
EAui&alent units of production 8b)............ 17"<<< 12"<<<
ost per eAui&alent unit" 8a) M 8b)........... ?0.1< ?/.<< ?2.1<
04. !estry ompany uses the weightedBa&erage method in its process costing
system. 'he frst processing department" the :elding !epartment" started
the month with 1<"<<< units in its beginning wor( in process in&entory that
were 0<> complete with respect to con&ersion costs. 'he con&ersion cost in
this beginning wor( in process in&entory was ?19"/<<. An additional 4<"<<<
units were started into production during the month. 'here were 19"<<< units
in the ending wor( in process in&entory of the :elding !epartment that were
5<> complete with respect to con&ersion costs. A total of ?07<"<4< in
con&ersion costs were incurred in the department during the month.
:hat would be the cost per eAui&alent unit for con&ersion costs for the
month; 8$ound o= to three decimal places.)
A) ?4.1<<
B) ?4.001
) ?4./<9
!) ?1.711
#olution:
I :or( in process" beginning..................................... 1<"<<<
I Gnits started into production during the month...... 4<"<<<
J :or( in process" ending.......................................... 19"<<<
month...................................................................... 21"<<<
Conversio
n
'ransferred to next department............................ 21"<<<
Ending wor( in process 8con&ersion: 19"<<< units
E 5<> complete)............................................... 10"0<<
EAui&alent units of production.............................. 41"0<<
Conversio
n
ost of beginning wor( in process........................ ? 19"/<<
ost added during the period............................... 07<"<4<
'otal cost 8a)......................................................... ?099"/4<
EAui&alent units of production 8b)......................... 41"0<<
ost per eAui&alent unit" 8a) M 8b)........................ ?4./<9
05. -imber ompany uses the weightedBa&erage method in its process costing
system. .perating data for the frst processing department for the month of
Cune appear below:
+nits
/ercent
Com#lete 4ith
@es#ect to
Conversion
Beginning 4or5 in #rocess inventor$........ &*!""" *"?
-tarted into #roduction during Aune........... *&!"""
=nding 4or5 in #rocess inventor$............. &2!""" *"?
According to the company3s records" the con&ersion cost in beginning wor( in
process in&entory was ?12"/41 at the beginning of Cune. Additional
con&ersion costs of ?47"/<7 were incurred in the department during the
month.
:hat was the cost per eAui&alent unit for con&ersion costs for the month;
8$ound o= to three decimal places.)
A) ?<.750
B) ?<.494
) ?<.71/
!) ?1.<4<
#olution:
I :or( in process" beginning........................................................ 17"<<<
I Gnits started into production during the month......................... 71"<<<
J :or( in process" ending............................................................. 15"<<<
month......................................................................................... 7/"<<<
Conversio
n
'ransferred to next department............................. 7/"<<<
Ending wor( in process
8con&ersion: 15"<<< units E 7<> complete)....... 10"4<<
EAui&alent units of production................................ 92"4<<
Conversio
n
ost of beginning wor( in process.......................... ?12"/41
ost added during the period................................. 47"/<7
'otal cost 8a)........................................................... ?70"15/
EAui&alent units of production 8b).......................... 92"4<<
ost per eAui&alent unit" 8a) M 8b).......................... ?<.750
07. @ammoudi ompany uses the weightedBa&erage method in its process
costing system. 'he frst processing department" the :elding !epartment"
started the month with 14"<<< units in its beginning wor( in process
in&entory that were 9<> complete with respect to con&ersion costs. 'he
con&ersion cost in this beginning wor( in process in&entory was ?41"9/<. An
additional 20"<<< units were started into production during the month and
12"<<< units were completed in the :elding !epartment and transferred to
the next processing department. 'here were /1"<<< units in the ending wor(
in process in&entory of the :elding !epartment that were 5<> complete with
respect to con&ersion costs. A total of ?191"01< in con&ersion costs were
incurred in the department during the month.
:hat would be the cost per eAui&alent unit for con&ersion costs for the
month; 8$ound o= to three decimal places.)
A) ?1.0<<
B) ?1.115
) ?/.2/1
!) ?0.445
#olution:
Conversion
'ransferred to next department........................................ 12"<<<
Ending wor( in process
8con&ersion: /1"<<< units E 5<> complete)................. 14"7<<
EAui&alent units of production.......................................... 41"7<<
Conversion
ost of beginning wor( in process.................................... ? 41"9/<
ost added during the period........................................... 191"01<
'otal cost 8a)..................................................................... ?/24"/4<
EAui&alent units of production 8b).................................... 41"7<<
ost per eAui&alent unit" 8a) M 8b).................................... ?1.115
09. *aAuet ompany uses the weightedBa&erage method in its process costing
system. 'he Molding !epartment is the second department in its production
process. 'he data below summariDe the department3s operations in Canuary.
+nits
/ercent
Com#lete 4ith
@es#ect to
Conversion
Beginning 4or5 in #rocess inventor$ 2!2"" 0"?
1ransferred in from the #rior
de#artment during Aanuar$ 7.!"""
Com#leted and transferred to the next
de#artment during Aanuar$ 7*!0""
=nding 4or5 in #rocess inventor$ 7!"" ,"?
'he accounting records indicate that the con&ersion cost that had been
assigned to beginning wor( in process in&entory was ?14"91< and a total of
?015"0/< in con&ersion costs were incurred in the department during Canuary.
:hat was the cost per eAui&alent unit for con&ersion costs for Canuary in the
Molding !epartment; 8$ound o= to three decimal places.)
A) ?2.2<<
B) ?2.444
) ?2.544
!) ?4./</
#olution:
+nits transferred out 7*!0""
Add> e%uivalent units in the ending inventor$ E7"" < ,"?
com#lete) 0!22"
=%uivalent units of #roduction .!&2"
Cost in the beginning inventor$ $ &.!,0"
Cost added during the month 02!'"
1otal cost $.0!'."
$.0!'." : .!&2" units 9 $7.2.. #er unit
1<. -awton ompany produces canned tomato soup in a single processing
department and has a process costing system in which it uses the weightedB
a&erage method. 'he company sold /2<"<<< units in the month of Canuary.
!ata concerning in&entories follow:
+nits
Inventor$ at Aanuar$ &>
Dor5 in #rocess None
Finished goods 27!"""
Inventor$ at Aanuar$ &>
Dor5 in #rocess Econversion 27? com#lete)............... &.!"""
Finished goods ."!"""
:hat were the eAui&alent units for con&ersion costs for Canuary;
A) /02"<<<
B) /15"<<<
) /21"<<<
!) /20"<<<
A)*A +,: $eporting -.: / -e&el: Medium #ource: *A" adapted
#olution:
1o calculate units transferred out>
+nits sold '7"!"""
F =nding finished goods inventor$........... ."!"""
; Beginning finished goods inventor$...... 27!"""
9 +nits transferred out.............................. '7!"""
+nits transferred out......................................................... '7!"""
=nding 4or5 in #rocess E&.!""" units < 27? com#lete). . &'!"""
=%uivalent units of #roduction.......................................... '02!"""
11. Boswal ompany uses the weightedBa&erage method in its process costing
system. 'he Assembly !epartment started the month with 4"<<< units in its
beginning wor( in process in&entory that were 7<> complete with respect to
con&ersion costs. An additional 2/"<<< units were transferred in from the
prior department during the month to begin processing in the Assembly
!epartment. 'here were 17"<<< units in the ending wor( in process in&entory
of the Assembly !epartment that were /<> complete with respect to
con&ersion costs.
:hat were the eAui&alent units for con&ersion costs in the Assembly
!epartment for the month;
A) 10"4<<
B) 1<"<<<
) 07"7<<
!) 41"<<<
#olution:
:or( in process" beginning.................................... 4"<<<
I Gnits started into production during the month. 2/"<<<
J :or( in process" ending..................................... 17"<<<
month................................................................. 1<"<<<
Conversion
1ransferred to next de#artment 0"!"""
=nding 4or5 in #rocess E&*!""" units < '"? com#lete). !.""
=%uivalent units of #roduction 0!.""
1/. Colly ompany uses the weightedBa&erage method in its process costing
system. .perating data for the *ainting !epartment for the month of April
appear below:
+nits
/ercent
Com#lete
4ith
@es#ect to
Conversion
Beginning 4or5 in #rocess inventor$ 0!2"" ,"?
1ransferred in from the #rior de#artment during A#ril... 7,!2""
=nding 4or5 in #rocess inventor$ 2!"" *"?
:hat were the eAui&alent units for con&ersion costs in the *ainting
!epartment for April;
A) 4/"91<
B) 4/"0<<
) 42"21<
!) 25"1<<
#olution:
+nits in beginning inventor$.................... 0!2""
F +nits started into #roduction................. 7,!2""
; +nits in ending inventor$...................... 2!""
9 +nits transferred out.............................. 72!&""
=%uivalent units transferred out 72!&""
Add> =%uivalent units in the ending 4or5 in #rocess
inventor$ E2!"" units < *"? com#lete) 7!*0"
=%uivalent units for conversion costs .'!,0"
10. *ar(s ompany uses the weightedBa&erage method in its process costing
system. At the start of the year" the company had 2"<<< units in process in
!epartment A that were 4<> complete with respect to con&ersion costs. At
the end of the year" 4"2<< units were in process" 1<> complete with respect
to con&ersion costs. !uring the year" 0<"<<< units were completed and
transferred on to the next department. 'he eAui&alent units for con&ersion
costs would be:
A) 0/"4<< units
B) /9"4<< units
) 00"<<< units
!) 0<"<<< units
#olution:
=%uivalent units transferred out "!"""
inventor$ E.!7"" units < 0"? com#lete) '!.""
=%uivalent units for conversion costs '!.""
11. Bart o. adds materials at the beginning of the process in !epartment M. 'he
company uses the weightedBa&erage method in its process costing system.
'he following information pertains to !epartment M3s wor( in process during
April:
+nits
Dor5 in #rocess! A#ril & Econversion ."? com#lete)..... !"""
-tarted in A#ril '7!"""
Com#leted '"!"""
Dor5 in #rocess! A#ril " Econversion 27? com#lete)... *!"""
'he eAui&alent units for con&ersion cost are:
A) /4"<<<
B) /2"<<<
) /1"/<<
!) /1"7<<
#olution:
=%uivalent units transferred out '"!"""
inventor$ E*!""" units < 27? com#lete) .!"""
=%uivalent units for conversion costs '.!"""
12. +atas orporation uses the weightedBa&erage method in its process costing
system. 'he Assembly !epartment started the month with 7"<<< units in its
beginning wor( in process in&entory that were /<> complete with respect to
con&ersion costs. An additional 92"<<< units were transferred in from the
prior department during the month to begin processing in the Assembly
!epartment. !uring the month 1</"<<< units were completed in the
Assembly !epartment and transferred to the next processing department.
'here were 1"<<< units in the ending wor( in process in&entory of the
Assembly !epartment that were /<> complete with respect to con&ersion
costs.
:hat were the eAui&alent units for con&ersion costs in the Assembly
!epartment for the month;
A) 1</"/<<
B) 1<<"4<<
) 1</"<<<
!) 77"<<<
#olution:
=%uivalent units transferred out &"'!"""
inventor$ E&!""" units < '"? com#lete) '""
=%uivalent units for conversion costs &"'!'""
14. ,atiello orporation uses the weightedBa&erage method in its process costing
system. .perating data for the -ubricating !epartment for the month of
.ctober appear below:
+nits
/ercent
Com#lete
4ith @es#ect
to Conversion
Beginning 4or5 in #rocess inventor$ ,!&"" '"?
1ransferred in from the #rior de#artment during
Gctober *!7""
Com#leted and transferred to the next de#artment
during Gctober 0&!"""
=nding 4or5 in #rocess inventor$ .!."" 2"?
:hat were the eAui&alent units for con&ersion costs in the -ubricating
!epartment for .ctober;
A) 11"<<<
B) 10"1/<
) 04"<<<
!) 12"4/<
#olution:
+nits in beginning inventor$................... ,!&""
F +nits started into #roduction................... *!7""
; +nits in ending inventor$........................ .!.""
9 +nits transferred out................................ 0&!"""
=%uivalent units transferred out 0&!"""
Add> =%uivalent units in the ending 4or5 in #rocess 0!.'"
inventor$ E.!."" units < 2"? com#lete)
=%uivalent units for conversion costs 07!.'"
15. New ompany uses the weightedBa&erage method in its process costing
system. 'he company had 0"<<< units in wor( in process at April 1 that were
4<> complete with respect to con&ersion cost. !uring April" 1<"<<< units
were completed. At April 0<" 1"<<< units remained in wor( in process and
they were 1<> complete with respect to con&ersion cost. !irect materials are
added at the beginning of the process. @ow many units were started during
April;
A) 9"<<<
B) 9"7<<
) 1<"<<<
!) 11"<<<
#olution:
'o sol&e for units started into production:
I :or( in process" ending......................................... 1"<<<
I Gnits completed and transferred out during the
month..................................................................... 1<"<<<
J :or( in process" beginning.................................... 0"<<<
K Gnits started into production during the month..... 11"<<<
17.)n the computation of costs per eAui&alent unit" the weightedBa&erage method of
process costing considers:
A) costs incurred during the current period only.
B) costs incurred during the current period plus cost of ending wor( in
process in&entory.
) costs incurred during the current period plus cost of beginning wor( in
process in&entory.
!) costs incurred during the current period less cost of beginning wor( in
process in&entory.
A)*A +,: $eporting -.: 0 -e&el: Easy #ource: *A" adapted
19. :hich of the following are needed to compute the cost per eAui&alent unit for
materials under the weightedBa&erage method of process costing;
6aterial cost assigned to beginning
4or5 in #rocess last #eriod
6aterial cost added to #roduction
during the current #eriod
A) Yes Yes
B) No Yes
C) Yes No
D) No No
2<. All of the following statements are correct when referring to process costing
except:
A) *rocess costing would be appropriate for a 6eweler who ma(es custom
6ewelry to order.
B) A process costing system has the same basic purposes as a 6obBorder
costing system.
) Gnits produced are indistinguishable from each other.
!) osts are accumulated by department.
A)*A +,: $eporting -.: 1< -e&el: Medium
Bonus
21.Malcolm ompany uses a weightedBa&erage process costing system. All
materials at Malcolm are added at the beginning of the production
process. 'he eAui&alent units for materials at Malcolm would be the sum of:
A) units in ending wor( in process and the units started.
B) units in beginning wor( in process and the units started.
) units in ending wor( in process and the units started and completed.
!) units in beginning wor( in process and the units started and completed.
A)*A +,: $eporting -.: / -e&el: @ard
2/.Cersey ompany has a process costing system in which it uses the weightedB
a&erage method. 'he eAui&alent units for con&ersion costs for the month
were 15"2<< units. 'he beginning wor( in process in&entory consisted of
12"<<< units" 4<> complete with respect to con&ersion costs. 'he ending
wor( in process in&entory consisted of 1<"<<< units" 52> complete with
respect to con&ersion costs. 'he number of units started during the month
was:
A) /2"<<< units
B) 01"<<< units
) 02"<<< units
!) 1<"<<< units
A)*A +,: $eporting -.: / -e&el: @ard
#olution:
+nits transferred out............................................................. 0"!""" 8
=nding 4or5 in #rocess E&"!""" units < 27? com#lete)..... 2!7""
=%uivalent units for conversion costs.................................. 02!7""
8 -olve bac54ards> 02!7"" ; 2!7"" 9 0"!"""
+nits in beginning inventor$..................... &7!"""
F +nits started........................................... 7!""" 8
; +nits in ending inventor$...................... &"!"""
9 +nits transferred out.............................. 0"!"""
8 -olve bac54ards> +nits started 9 0"!""" ;&7!""" F &"!""" 9 7!"""

Acct 2302 Exam 1 - v2 - Key

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Acct 2302 Exam 1 - v2 - Key

Uploaded by

Copyright:

Available Formats

Managerial Accounting

You might also like