Acct 2302 Exam 1 - v2 - Key

Managerial Accounting
Exam 1
1. Managerial accounting places considerable weight on:
A) generally accepted accounting principles.
B) the financial history of the entity.
C) ensuring that all transactions are properly recorded.
D) detailed segment reports about departments, products, and customers.
Answer: D AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA
FN: Measurement LO: 1 Level: Easy
2. The plans of management are often expressed formally in:
A) financial statements.
B) performance reports.
C) budgets.
D) ledgers.
Answer: C AACSB: Reflective Thinking AICPA BB: Resource Management
AICPA FN: Measurement LO: 1 Level: Easy
3. The phase of accounting concerned with providing information to managers
for use in planning and controlling operations and in decision making is
called:
A) throughput time.
B) managerial accounting.
C) financial accounting.
D) controlling.
Answer: B AACSB: Reflective Thinking AICPA BB: Resource Management
AICPA FN: Measurement LO: 1 Level: Easy
4.The cost of the cushions that are used to manufacture sofas is best described as
a:
A)
manufacturing overhead cost.
B)
period cost.
C)
variable cost.
D)
conversion cost.
Ans: C
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Reporting
LO: 1,2,5
Level: Medium
5.A security guard's wages at a factory would be an example of:
A)
B)
C)
D)
Indirect labor Fixed manufacturing overhead

No
No
Yes
Yes
Yes
No
No
Yes
Ans: B
AICPA FN: Reporting
LO: 1,5

Level: Medium
Source: CPA, adapted
6. Materials used in the operation of a factory, such as cleaning supplies, that

are not an integral part of the final product should be classified as:
A)
direct materials.
B)
a period cost.
C)
administrative expense.
D)
manufacturing overhead.
Ans: D
AICPA FN: Reporting
LO: 1
Level: Easy
7. Direct costs:
A)
are incurred to benefit a particular accounting period.
B)
are incurred due to a specific decision.
C)
can be easily traced to a particular cost object.
D)
are the variable costs of producing a product.
Ans: C
AICPA FN: Reporting
LO: 1
Level: Easy
8. Inventoriable (i.e., product) costs that have become expenses can be found
in:
A)
period costs.
B)
selling expenses.
C)
cost of goods sold.
D)
administrative expenses.
Ans: C
AICPA FN: Reporting
LO: 2
Level: Medium
9. Which of the following production costs, if expressed on a per unit basis,

would be most likely to change significantly as the production level varies?
A)
Direct materials.
B)
Direct labor.
C)
Fixed manufacturing overhead.
D)
Responses A and B are both correct.
Ans: C
AACSB: Analytic
AICPA FN: Reporting
LO: 5
Level: Medium
10. When the level of activity decreases within the relevant range, the fixed cost
per unit will:
A)
decrease.
B)
increase.
C)
remain the same.
D)
The effect cannot be predicted.
Ans: B
AACSB: Analytic
AICPA FN: Reporting
LO: 5
Level: Medium
11. All of the cost categories listed below are usually found in a company's
accounting records, except for:
A)
sunk costs.
B)
inventoriable costs.
C)
opportunity costs.
D)
marketing costs.
Ans: C
AICPA FN: Reporting
LO: 7
Level: Easy
12. Abel Company's manufacturing overhead is 20% of its total conversion costs.
If direct labor is $38,000 and if direct materials are $47,000, the
manufacturing overhead is:
A)
$152,000
B)
$11,750
C)
$21,250
D)
$9,500
Ans: D
AACSB: Analytic
AICPA FN: Reporting
LO: 1
Level: Hard
13. Consider the following costs:
Direct materials..........................................
Depreciation on factory equipment............
Factory janitors salary...............................
Direct labor................................................
Utilities for factory.....................................
Selling expenses.........................................
Production supervisors salary...................
Administrative expenses............................
$33,000
$12,000
$23,000
$28,000
$9,000
$16,000
$34,000
$21,000
What is the total amount of manufacturing overhead included above?

A)
$78,000
B)
$139,000
C)
$44,000
D)
$37,000
Ans: A
AACSB: Analytic
AICPA FN: Reporting
LO: 1
Level: Medium
Solution:
Depreciation on factory equipment............ $12,000
Factory janitors salary............................... 23,000

Utilities for factory.....................................
9,000
Production supervisors salary................... 34,000
Total........................................................... $78,000
14.Manufacturing overhead includes:

A)
all direct material, direct labor and administrative costs.
B)
all manufacturing costs except direct labor.
C)
all manufacturing costs except direct labor and direct materials.
D)
all selling and administrative costs.
Ans: C
AICPA FN: Reporting
LO: 1
Level: Easy
15.All of the following are examples of product costs except:
A)
depreciation on the company's retail outlets.
B)
salary of the plant manager.
C)
insurance on the factory equipment.
D)
rental costs of the factory facility.
Ans: A
AICPA FN: Reporting
LO: 2
Level: Easy
16. Conversion costs consist of:

A)
direct and indirect labor.
B)
direct labor and direct materials.
C)
direct labor and manufacturing overhead.
D)
prime costs and manufacturing overhead.
Ans: C
AICPA FN: Reporting
LO: 2
Level: Easy
Source: CMA, adapted
17.Which of the following statements is correct concerning job-order costing?

A)
Job-order costing would be appropriate for a textbook publisher.
B)
All the costs appearing on a job cost sheet are actual costs.
C)
Indirect materials are charged to a specific job.
D)
Job-order costing is mainly used in firms with homogeneous products

such as oil refineries.
Ans: A
AICPA FN: Reporting
LO: 1,2
Level: Medium
18. Which of the following types of firms typically would use process costing
rather than job-order costing?
A)
A small appliance repair shop.
B)
A manufacturer of commercial passenger aircraft.
C)
A specialty equipment manufacturer.
D)
A breakfast cereal manufacturer.
Ans: D
AICPA FN: Reporting
LO: 1
Level: Easy
19. The job cost sheet:

A)
summarizes all costs charged to a particular job.
B)
contains only direct costs such as direct materials and direct labor.
C)
is discarded after production is completed on a particular job.
D)
is useful only in process costing.
Ans: A
AICPA FN: Reporting
20. Elliott Company uses a predetermined overhead rate based on machinehours to apply manufacturing overhead to jobs. The company manufactures
tools to customer specifications. The following data pertain to Job 1501:
Direct materials used

$4,200
Direct labor-hours worked
300
Direct labor rate per hour
$8.00
Machine-hours used
200
Predetermined overhead rate per machine-hour............... $15.00
What is the total manufacturing cost recorded on Job 1501?

A)
$8,800
B)
$9,600
C)
$10,300
D)
$11,100
Ans: B
AACSB: Analytic
AICPA FN: Reporting
LO: 2,5
Level: Easy
Solution:
Direct materials used.........................................................
$4,20
0
Direct labor (300 hours $8.00 per hour).........................
2,400
Manufacturing overhead applied (200 hours $15.00

per hour)............................................................................
3,00
0
Total manufacturing cost for job 1501...............................
$9,60
0
21. Avery Co. uses a predetermined overhead rate based on direct labor-hours to
apply manufacturing overhead to jobs. For the month of October, Avery's
estimated manufacturing overhead cost was $300,000 based on an
estimated activity level of 100,000 direct labor-hours. Actual overhead
amounted to $325,000 with actual direct labor-hours totaling 110,000 for the
month. How much was the overapplied or underapplied overhead?
A)
$25,000 overapplied
B)
$25,000 underapplied
C)
$5,000 overapplied
D)
$5,000 underapplied
Ans: C
AACSB: Analytic
AICPA FN: Reporting
LO: 3,5,8
Level: Medium
Solution:
Actual manufacturing overhead.........................................
$325,00
0
Applied manufacturing overhead ($3 per DLH* 110,000

DLHs).................................................................................
330,000
Manufacturing overhead overapplied................................
$ 5,000
*Predetermined overhead rate = $300,000 100,000 direct labor-hours

= $3 per direct labor-hour
Since applied manufacturing overhead exceeds actual manufacturing overhead,
manufacturing overhead is overapplied.
22. Darrow Company uses a predetermined overhead rate based on direct laborhours to apply manufacturing overhead to jobs. Last year, the company
worked 10,000 direct labor-hours and incurred $80,000 of actual
manufacturing overhead cost. If overhead was underapplied by $2,000, the
predetermined overhead rate for the company for the year must have been:
A)
$7.80
B)
$8.00
C)
$8.20
D)
$8.40
Ans: A
AACSB: Analytic
AICPA FN: Reporting
LO: 3,5,8
Level: Hard
Solution:
Actual manufacturing overhead Applied manufacturing overhead = underapplied

$80,000 Applied = $2,000
Applied = $78,000
Direct labor-hours Predetermined overhead rate = Applied manufacturing overhead
10,000 Predetermined overhead rate = $78,000
Predetermined overhead rate = $78,000 10,000 direct labor-hours
Predetermined overhead rate = $7.80 per direct labor-hour
23. Linh Corporation applies manufacturing overhead to jobs on the basis of

pounds of direct material used. Linh estimated 160,000 pounds of material
usage and $200,000 of manufacturing overhead cost for the year. During the
year, Linh actually used 150,000 pounds of material and incurred $171,000 of
manufacturing overhead cost. What was Linh's underapplied or overapplied
overhead for the year?
A)
B)
$16,500 overapplied
C)
D)
$29,000 overapplied
Ans: B
AACSB: Analytic
AICPA FN: Reporting
LO: 3,5,8
Level: Medium
Solution:
Predetermined overhead rate = $200,000 160,000 pounds

= $1.25 per pound
Actual manufacturing overhead...........................
$171,000
Applied manufacturing overhead (150,000

$1.25)...............................................................
187,500
Manufacturing overhead overapplied..................
$ 16,500

24. Brusveen Corporation applies manufacturing overhead to jobs on the basis of

direct labor-hours. The following information relates to Brusveen for last year:
Direct labor-hours..........................
Manufacturing overhead cost.........
Estimated Actual
15,000
14,800
$300,000 $287,120
What was Brusveen's underapplied or overapplied overhead for last year?

A)
$4,000 underapplied
B)
$8,880 underapplied
C)
$8,880 overapplied
D)
$9,000 underapplied
Ans: C
AACSB: Analytic
AICPA FN: Reporting
LO: 3,5,8
Level: Medium
Solution:

= $20 per direct labor-hour
Actual manufacturing overhead..........................
$287,120
Applied manufacturing overhead (14,800 $20)
296,000
Manufacturing overhead overapplied.................
$ 8,880

25.
Washtenaw Corporation uses a job-order costing system. The following
data are for last year:
Estimated direct labor-hours

Estimated manufacturing overhead costs
Actual direct labor-hours
Actual manufacturing overhead costs
12,000
$39,000
11,000
$37,000
Washtenaw applies overhead using a predetermined rate based on direct

labor-hours. What amount of overhead was applied to work in process last
year?
A)
$39,050
B)
$42,600
C)
$35,750
D)
$36,960
Ans: C
AACSB: Analytic
AICPA FN: Reporting
LO: 3,5
Level: Medium
Solution:

= $3.25 per direct labor-hour
Applied manufacturing
overhead
Actual direct
labor-hours
Predetermined
overhead rate
Applied manufacturing
overhead
11,000
$3.25
Applied manufacturing overhead = $35,750
26. The Silver Company uses a predetermined overhead rate to apply

manufacturing overhead to jobs. The predetermined overhead rate is based
on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of
the year, the company made the following estimates:
Direct labor cost............................. $60,000 $40,000

Manufacturing overhead................ $90,000 $45,000
Direct labor-hours..........................
6,000
9,000
Machine-hours...............................
2,000 15,000
What predetermined overhead rates would be used in Dept A and Dept B,
respectively?
A)
67% and $3.00
B)
150% and $5.00
C)
150% and $3.00
D)
67% and $5.00
Ans: C
AACSB: Analytic
AICPA FN: Reporting
LO: 3
Level: Easy
Solution:
Department A:
Predetermined
=
overhead rate
=
Department B:
Predetermined
=
overhead rate
=
Estimated total manufacturing overhead cost

Estimated total amount of the allocation base
$90,000
$60,000
= 150% of direct labor cost
Estimated total manufacturing overhead cost

Estimated total amount of the allocation base
$45,000
= $3.00 per machine-hour
15,000
27. Reamer Company uses a predetermined overhead rate based on machinehours to apply manufacturing overhead to jobs. The company has provided
the following estimated costs for next year:
Direct materials..........................................
Direct labor................................................
Sales commissions.....................................
Salary of production supervisor.................
Indirect materials.......................................
Advertising expense...................................
Rent on factory equipment.........................
$1,000
$3,000
$4,000
$2,000
$400
$800
$1,000
Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will
be worked during the year. The predetermined overhead rate per hour will be:
A)
$6.80
B)
$6.00
C)
$3.00
D)
$3.40
Ans: D
AACSB: Analytic
AICPA FN: Reporting
LO: 3
Level: Medium
Solution:
Manufacturing overhead:
Salary of production supervisor......
$2,000
Indirect materials...........................
400
Rent on factory equipment.............
1,000
Total estimated manufacturing

overhead...........................................
$3,400
Total estimated manufacturing overhead

Predetermined
=
overhead rate
Estimated machine-hours
Predetermined
=
overhead rate
$3,400
1,000
$3.40 per machine-hour
28.Which of the following statements related to job-order costing and process

costing are true?
A)
Under both costing methods, manufacturing overhead costs are

included in the computation of unit product costs.
B)
Under both costing methods, the journal entry to record the completion
of production will involve crediting a work in process account.
C)
Under both costing methods, the journal entry to record the cost of
goods sold will involve crediting the finished goods account.
D)
All of the above are true.
Ans: D
AACSB: Analytic
AICPA FN: Reporting
LO: 1
Level: Hard
29. The completion of goods is recorded as a decrease in the work in process

inventory account when using:
A)
B)
C)
D)
Job-order costing Process costing

Yes
No
Yes
Yes
No
Yes
No
No
Ans: B
AICPA FN: Reporting
LO: 1
Level: Easy
30. In process costing, a separate work in process account is kept for each:
A)
individual order.
B)
equivalent unit.
C)
processing department.
D)
cost category (i.e., materials, conversion cost).
Ans: C
AICPA FN: Reporting
LO: 1
Level: Easy
31. The weighted-average method of process costing differs from the FIFO
method of process costing in that the weighted-average method:
A)
does not consider the degree of completion of beginning work in process

inventory when computing equivalent units of production.
B)
considers ending work in process inventory to be fully complete.
C)
will always yield a higher cost per equivalent unit.
D)
All of the above.
Ans: A
AACSB: Analytic
AICPA FN: Reporting
Appendix: 4A
LO: 2,3,5,6
Level: Hard
32. Which of the following are needed to compute equivalent units for conversion
costs under the weighted-average method of process costing?
A)
B)
C)
D)
Percentage completion of
beginning work in process
Yes
No
Yes
No
Percentage completion of
ending work in process
Yes
Yes
No
No
Ans: B
AICPA FN: Reporting
LO: 2
Level: Easy
33. Health Beverage Company uses a process costing system to collect costs
related to the production of its celery flavored cola. The cola is first processed
in a Mixing Department at Health and is then transferred out and finished up
in the Bottling Department. The finished cases of cola are then transferred to
Finished Goods Inventory. The following information relates to Health's two
departments for the month of January:
Mixing Bottling
Cases of cola in work in process, January 1
10,000
3,000
Cases of cola completed/transferred out during January.. 77,000
?
Cases of cola in work in process, January 31
4,000
8,000
How many cases of cola were completed and transferred to Finished Goods
Inventory during January?
A)
66,000
B)
71,000
C)
72,000
D)
74,000
Ans: C
AACSB: Analytic
AICPA FN: Reporting
LO: 1
Level: Medium
Solution:
To solve for units transferred:

+ Work in process, beginning....................................
3,000
+ Units started into production during the month..... 77,000

Work in process, ending.........................................
8,000
= Units completed and transferred out during the

month.....................................................................
72,000
34. The Assembly Department started the month with 83,000 units in its
beginning work in process inventory. An additional 334,000 units were
transferred in from the prior department during the month to begin
processing in the Assembly Department. There were 34,000 units in the
ending work in process inventory of the Assembly Department.
How many units were transferred to the next processing department during
the month?
A)
417,000
B)
285,000
C)
451,000
D)
383,000
Ans: D
AACSB: Analytic
AICPA FN: Reporting
LO: 1
Level: Easy
Solution:

+ Work in process, beginning.................................
83,000
+ Units started into production during the month.. 334,000

Work in process, ending......................................
34,000
=Units completed and transferred out during the

month.................................................................. 383,000
35. Barnett Company uses the weighted-average method in its process costing
system. The company adds materials at the beginning of the process in
Department M. Conversion costs were 75% complete with respect to the
4,000 units in work in process at May 1 and 50% complete with respect to the
6,000 units in work in process at May 31. During May, 12,000 units were
completed and transferred to the next department. An analysis of the costs
relating to work in process at May 1 and to production activity for May
follows:
Work in process 5/1........................

Costs added during May................
Materials Conversion
$13,800
$3,740
$42,000
$26,260
The total cost per equivalent unit for May was:

A)
$5.02
B)
$5.10
C)
$5.12
D)
$5.25
Ans: B
AACSB: Analytic
AICPA FN: Reporting
LO: 2,3
Level: Medium
Solution:
Equivalent units of production

Materials
Conversio
n
Transferred to next department...............
12,000
12,000
Ending work in process (materials: 6,000

units 100% complete; conversion:
6,000
3,000
6,000 units 50% complete)...............

Equivalent units of production.................
18,000
15,000
Cost per Equivalent Unit

Materials
Cost of beginning work in process........... $13,800
Cost added during the period..................
Conversio
n
Total
$ 3,740
42,000
26,260
Total cost (a)............................................ $55,800
$30,000
Equivalent units of production (b)............
18,000
Cost per equivalent unit, (a) (b)...........
$3.10
15,000
$2.00 $5.10
36. Destry Company uses the weighted-average method in its process costing
system. The first processing department, the Welding Department, started
the month with 10,000 units in its beginning work in process inventory that
were 30% complete with respect to conversion costs. The conversion cost in
this beginning work in process inventory was $19,200. An additional 60,000
units were started into production during the month. There were 19,000 units
in the ending work in process inventory of the Welding Department that were
70% complete with respect to conversion costs. A total of $380,060 in
conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the
month? (Round off to three decimal places.)
A)
$6.400
B)
$6.334
C)
$6.209
D)
$4.811
Ans: C
AACSB: Analytic
AICPA FN: Reporting
LO: 2,3
Level: Medium
Solution:

+ Work in process, beginning.....................................
10,000
+ Units started into production during the month...... 60,000

Work in process, ending..........................................
19,000

month......................................................................
51,000
Conversio
n
Transferred to next department............................
51,000
Ending work in process (conversion: 19,000 units

70% complete)...............................................
13,300
Equivalent units of production..............................
64,300

Conversio
n
Cost of beginning work in process........................ $ 19,200
Cost added during the period...............................
380,060
Total cost (a)......................................................... $399,260
Equivalent units of production (b).........................
64,300
Cost per equivalent unit, (a) (b)........................
$6.209
37. Limber Company uses the weighted-average method in its process costing
system. Operating data for the first processing department for the month of
June appear below:
Percent
Complete with
Respect to
Units
Conversion
Beginning work in process inventory........ 18,000
80%
Started into production during June........... 81,000
Ending work in process inventory............. 17,000
80%
According to the company's records, the conversion cost in beginning work in
process inventory was $15,264 at the beginning of June. Additional
conversion costs of $68,208 were incurred in the department during the
month.
What was the cost per equivalent unit for conversion costs for the month?
(Round off to three decimal places.)
A)
$0.873
B)
$0.696
C)
$0.842
D)
$1.060
Ans: A
AACSB: Analytic
AICPA FN: Reporting
LO: 2,3
Level: Medium
Solution:

+ Work in process, beginning........................................................
18,000
+ Units started into production during the month.........................
81,000
Work in process, ending.............................................................
17,000
month.........................................................................................
82,000
Conversio
n
Transferred to next department.............................
82,000
Ending work in process

(conversion: 17,000 units 80% complete).......
13,600
Equivalent units of production................................
95,600

Conversio
n
Cost of beginning work in process..........................
$15,264
Cost added during the period.................................
68,208
Total cost (a)...........................................................
$83,472
Equivalent units of production (b)..........................
95,600
Cost per equivalent unit, (a) (b)..........................
$0.873
38. Hammoudi Company uses the weighted-average method in its process

costing system. The first processing department, the Welding Department,
started the month with 16,000 units in its beginning work in process
inventory that were 90% complete with respect to conversion costs. The
conversion cost in this beginning work in process inventory was $61,920. An
additional 53,000 units were started into production during the month and
45,000 units were completed in the Welding Department and transferred to
the next processing department. There were 24,000 units in the ending work
in process inventory of the Welding Department that were 70% complete with
respect to conversion costs. A total of $194,340 in conversion costs were
incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the
month? (Round off to three decimal places.)
A)
$4.300
B)
$4.147
C)
$2.524
D)
$3.667
Ans: B
AACSB: Analytic
AICPA FN: Reporting
LO: 2,3
Level: Medium
Solution:

Conversion
Transferred to next department........................................
45,000
Ending work in process

(conversion: 24,000 units 70% complete).................
16,800
Equivalent units of production..........................................
61,800

Conversion
Cost of beginning work in process....................................
$ 61,920
Cost added during the period...........................................
194,340
Total cost (a).....................................................................
$256,260
Equivalent units of production (b)....................................
61,800
Cost per equivalent unit, (a) (b)....................................
$4.147
39. Paquet Company uses the weighted-average method in its process costing
system. The Molding Department is the second department in its production
process. The data below summarize the department's operations in January.
Beginning work in process inventory

Transferred in from the prior
department during January
Completed and transferred to the next
department during January
Ending work in process inventory
Percent
Complete with
Respect to
Units
Conversion
7,700
40%
56,000
58,400
5,300
90%
The accounting records indicate that the conversion cost that had been
assigned to beginning work in process inventory was $16,940 and a total of
$347,320 in conversion costs were incurred in the department during January.
What was the cost per equivalent unit for conversion costs for January in the
Molding Department? (Round off to three decimal places.)
A)
$5.500
B)
$5.666
C)
$5.766
D)
$6.202
Ans: C
AACSB: Analytic
AICPA FN: Reporting
LO: 2,3
Level: Medium
Solution:
Units transferred out

Add: equivalent units in the ending inventory (5300 90%
complete)
58,400
4,770
63,170
Cost in the beginning inventory

Cost added during the month
Total cost
$364,260 63,170 units = $5.766 per unit
$ 16,940
347,320
$364,260
40. Lawton Company produces canned tomato soup in a single processing

department and has a process costing system in which it uses the weightedaverage method. The company sold 250,000 units in the month of January.
Data concerning inventories follow:
Units
Inventory at January 1:
Work in process
None
Finished goods
75,000
Inventory at January 31:
Work in process (conversion 75% complete)............... 16,000
Finished goods
60,000
What were the equivalent units for conversion costs for January?
A)
235,000
B)
247,000
C)
251,000
D)
253,000
Ans: B
AACSB: Analytic
AICPA FN: Reporting
LO: 2
Level: Medium
Solution:
To calculate units transferred out:

Units sold
250,000
+ Ending finished goods inventory...........

Beginning finished goods inventory......
= Units transferred out..............................
60,000
75,000
235,000
Units transferred out.........................................................

Ending work in process (16,000 units 75% complete)..
Equivalent units of production..........................................
235,000
12,000
247,000
41. Boswal Company uses the weighted-average method in its process costing
system. The Assembly Department started the month with 6,000 units in its
beginning work in process inventory that were 80% complete with respect to
conversion costs. An additional 52,000 units were transferred in from the
prior department during the month to begin processing in the Assembly
Department. There were 18,000 units in the ending work in process inventory
of the Assembly Department that were 20% complete with respect to
conversion costs.
What were the equivalent units for conversion costs in the Assembly
Department for the month?
A)
43,600
B)
40,000
C)
38,800
D)
64,000
Ans: A
AACSB: Analytic
AICPA FN: Reporting
LO: 2
Level: Medium
Solution:

Work in process, beginning....................................
6,000
+ Units started into production during the month.
52,000
Work in process, ending.....................................
18,000

month.................................................................
40,000
Transferred to next department

Ending work in process (18,000 units 20% complete).
Conversion
40,000
3,600
43,600
42. Jolly Company uses the weighted-average method in its process costing
system. Operating data for the Painting Department for the month of April
appear below:

Transferred in from the prior department during April...
Units
4,700
59,700
7,300
Percent
Complete
with
Respect to
Conversion
90%
80%
What were the equivalent units for conversion costs in the Painting
Department for April?
A)
62,940
B)
62,300
C)
65,540
D)
57,100
Ans: A
AACSB: Analytic
AICPA FN: Reporting
LO: 2
Level: Medium
Solution:
Units in beginning inventory....................

+ Units started into production.................
Units in ending inventory......................
= Units transferred out..............................
4,700
59,700
7,300
57,100
Equivalent units transferred out

Add: Equivalent units in the ending work in process
inventory (7,300 units 80% complete)
Equivalent units for conversion costs
57,100
5,840
62,940
43. Parks Company uses the weighted-average method in its process costing
system. At the start of the year, the company had 5,000 units in process in
Department A that were 60% complete with respect to conversion costs. At
the end of the year, 6,500 units were in process, 40% complete with respect
to conversion costs. During the year, 30,000 units were completed and
transferred on to the next department. The equivalent units for conversion
costs would be:
A)
32,600 units
B)
29,600 units
C)
33,000 units
D)
30,000 units
Ans: A
AACSB: Analytic
AICPA FN: Reporting
LO: 2
Level: Easy
Solution:

30,000
2,600
32,600
44. Bart Co. adds materials at the beginning of the process in Department M. The
company uses the weighted-average method in its process costing system.
The following information pertains to Department M's work in process during
April:
Units
Work in process, April 1 (conversion 60% complete)..... 3,000
Started in April
25,000
Completed
20,000
Work in process, April 30 (conversion 75% complete)... 8,000
The equivalent units for conversion cost are:
A)
26,000
B)
25,000
C)
24,200
D)
21,800
Ans: A
AACSB: Analytic
AICPA FN: Reporting
LO: 2
Level: Medium
Solution:

20,000
6,000
26,000
45. Fatas Corporation uses the weighted-average method in its process costing
system. The Assembly Department started the month with 8,000 units in its
beginning work in process inventory that were 20% complete with respect to
conversion costs. An additional 95,000 units were transferred in from the
prior department during the month to begin processing in the Assembly
Department. During the month 102,000 units were completed in the
Assembly Department and transferred to the next processing department.
There were 1,000 units in the ending work in process inventory of the
Assembly Department that were 20% complete with respect to conversion
costs.
What were the equivalent units for conversion costs in the Assembly
Department for the month?
A)
102,200
B)
100,600
C)
102,000
D)
88,000
Ans: A
AACSB: Analytic
AICPA FN: Reporting
LO: 2
Level: Easy
Solution:

102,000
200
102,200
46. Natiello Corporation uses the weighted-average method in its process costing
system. Operating data for the Lubricating Department for the month of
October appear below:
Percent
Complete
with Respect
Units to Conversion
9,100
20%

Transferred in from the prior department during
October
Completed and transferred to the next department
during October
38,500
41,000
6,600
70%
What were the equivalent units for conversion costs in the Lubricating
Department for October?
A)
41,000
B)
43,120
C)
36,000
D)
45,620
Ans: D
AACSB: Analytic
AICPA FN: Reporting
LO: 2
Level: Easy
Solution:
Units in beginning inventory...................

+ Units started into production...................
Units in ending inventory........................
= Units transferred out................................
9,100
38,500
6,600
41,000

41,000
4,620

45,620
47. Kew Company uses the weighted-average method in its process costing
system. The company had 3,000 units in work in process at April 1 that were
60% complete with respect to conversion cost. During April, 10,000 units
were completed. At April 30, 4,000 units remained in work in process and
they were 40% complete with respect to conversion cost. Direct materials are
added at the beginning of the process. How many units were started during
April?
A)
9,000
B)
9,800
C)
10,000
D)
11,000
Ans: D
AACSB: Analytic
AICPA FN: Reporting
LO: 2
Level: Medium
Solution:
To solve for units started into production:

+ Work in process, ending.........................................
4,000
+ Units completed and transferred out during the

month.....................................................................
10,000
Work in process, beginning....................................
3,000
= Units started into production during the month.....
11,000
48.In the computation of costs per equivalent unit, the weighted-average method of
process costing considers:
A)
costs incurred during the current period only.
B)
costs incurred during the current period plus cost of ending work in
process inventory.
C)
costs incurred during the current period plus cost of beginning work in
process inventory.
D)
costs incurred during the current period less cost of beginning work in
process inventory.
Ans: C
AICPA FN: Reporting
LO: 3
Level: Easy
49. Which of the following are needed to compute the cost per equivalent unit for
materials under the weighted-average method of process costing?
A)
B)
C)
D)
Material cost assigned to beginning

work in process last period
Yes
No
Yes
No
Material cost added to production

during the current period
Yes
Yes
No
No
Ans: A
AICPA FN: Reporting
LO: 3
Level: Medium
50. All of the following statements are correct when referring to process costing
except:
A)
Process costing would be appropriate for a jeweler who makes custom

jewelry to order.
B)
A process costing system has the same basic purposes as a job-order

costing system.
C)
Units produced are indistinguishable from each other.
D)
Costs are accumulated by department.
Ans: A
AICPA FN: Reporting
LO: 10
Level: Medium
Bonus
51.Malcolm Company uses a weighted-average process costing system. All
materials at Malcolm are added at the beginning of the production
process. The equivalent units for materials at Malcolm would be the sum of:
A)
units in ending work in process and the units started.
B)
units in beginning work in process and the units started.
C)
units in ending work in process and the units started and completed.
D)
units in beginning work in process and the units started and completed.
Ans: B
AACSB: Analytic
AICPA FN: Reporting
LO: 2
Level: Hard
52.Jersey Company has a process costing system in which it uses the weightedaverage method. The equivalent units for conversion costs for the month
were 47,500 units. The beginning work in process inventory consisted of
15,000 units, 60% complete with respect to conversion costs. The ending
work in process inventory consisted of 10,000 units, 75% complete with
respect to conversion costs. The number of units started during the month
was:
A)
25,000 units
B)
34,000 units
C)
35,000 units
D)
40,000 units
Ans: C
AACSB: Analytic
AICPA FN: Reporting
LO: 2
Level: Hard
Solution:
Units transferred out.............................................................

Ending work in process (10,000 units 75% complete).....
40,000 *
7,500
Equivalent units for conversion costs..................................

* Solve backwards: 47,500 7,500 = 40,000
47,500
Units in beginning inventory..................... 15,000

+ Units started........................................... 35,000 *
Units in ending inventory...................... 10,000
= Units transferred out.............................. 40,000
* Solve backwards: Units started = 40,000 15,000 + 10,000 = 35,000

Acct 2302 Exam 1 - v2 - Key

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Managerial Accounting

manufacturing overhead cost.

Indirect labor Fixed manufacturing overhead

AICPA BB: Critical Thinking

6. Materials used in the operation of a factory, such as cleaning supplies, that

are incurred to benefit a particular accounting period.

are incurred due to a specific decision.

can be easily traced to a particular cost object.

are the variable costs of producing a product.

cost of goods sold.

9. Which of the following production costs, if expressed on a per unit basis,

Fixed manufacturing overhead.

Responses A and B are both correct.

remain the same.

The effect cannot be predicted.

What is the total amount of manufacturing overhead included above?

Depreciation on factory equipment............ $12,000

Factory janitors salary............................... 23,000

14.Manufacturing overhead includes:

all direct material, direct labor and administrative costs.

all manufacturing costs except direct labor.

all manufacturing costs except direct labor and direct materials.

all selling and administrative costs.

depreciation on the company's retail outlets.

salary of the plant manager.

insurance on the factory equipment.

rental costs of the factory facility.

16. Conversion costs consist of:

direct and indirect labor.

direct labor and direct materials.

direct labor and manufacturing overhead.

prime costs and manufacturing overhead.

17.Which of the following statements is correct concerning job-order costing?

Job-order costing would be appropriate for a textbook publisher.

Indirect materials are charged to a specific job.

Job-order costing is mainly used in firms with homogeneous products

A small appliance repair shop.

A manufacturer of commercial passenger aircraft.

A specialty equipment manufacturer.

A breakfast cereal manufacturer.

19. The job cost sheet:

summarizes all costs charged to a particular job.

is discarded after production is completed on a particular job.

is useful only in process costing.

AICPA BB: Critical Thinking

Direct materials used

What is the total manufacturing cost recorded on Job 1501?

Direct materials used.........................................................

Direct labor (300 hours $8.00 per hour).........................

Manufacturing overhead applied (200 hours $15.00

Total manufacturing cost for job 1501...............................

Actual manufacturing overhead.........................................

Applied manufacturing overhead ($3 per DLH* 110,000

Manufacturing overhead overapplied................................

*Predetermined overhead rate = $300,000 100,000 direct labor-hours

Actual manufacturing overhead Applied manufacturing overhead = underapplied

23. Linh Corporation applies manufacturing overhead to jobs on the basis of

Predetermined overhead rate = $200,000 160,000 pounds

Applied manufacturing overhead (150,000

Manufacturing overhead overapplied..................

Since applied manufacturing overhead exceeds actual manufacturing overhead,

24. Brusveen Corporation applies manufacturing overhead to jobs on the basis of

What was Brusveen's underapplied or overapplied overhead for last year?