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    of 16
    Adrian Estrada ~ Gonzalez SID & 19331740 Section : |-330~m UNIVERSITY OF CALIFORNIA, BERKELEY Haas Schoo) of Business UGBA 102B - Managerial Accounting - Summer ‘04 Midterm Exam - B Total Points: 110 Time: 21/2 hours Questions 1-20 are multiple choice questions. Mark the appropriate answer using a 2B pencil on the scantron sheet. Do all your calculations on the exam next to the question. Each multiple choice question is worth 3 points. Q21 and 22 should be completed on the exam. Use the templates provided on the exam. They are both worth 25 points each, GOOD LUCK! 1, A key concept of the JIT inventory system is: A) the raw materials, work in process, and finished goods inventories of manufacturing compenies act as buffers so that operations can proceed smoothly even if suppliers are late with deliveries or a department is unable to operate for a brief period due to breakdowns or other reasons. B) the maintenance of a stock of raw materials so that defective materials can be replaced quickly so as to maintain a high rate of productivity. inventories ate costly to carry and can be kept to minintum levels or eliminated completely with careful planning, D) the use of many suppliers so as to ensure rapid delivery of materials for production. 2. Green Company's costs for the month of August were as follows: direct materials, $27,000; direct Jabor, $34,000; sales-salaries, $14,000; indirect labor, $10,000; indirect materials, $15,000; generat oorporate-ndministrative-costy $22,000, taxes on manufacturing fecility, $2,000; and rent on fectory, $17,000. The beginning werk in process inventory was $16,000 and the ending work in process inventory was $9,000 ‘What was the cost of goods manufactured for the month? A) $105,000 een pM 97,000 B) $132,000 : 4 © $112,000 ere Wie 9,08 has D) $138,000 a 7 7 Total 15,000 ig000 otal 195,000 sees 000 tbe 4,0? > : f 4,0 ou 6. Cost of goods manufactured for the year we A) $171,000. B) $244,000. ) $160,000, P $243,000. 7. Ifa company applies overhead to jobs on the basis of a predetermined overhead rate, a ° 3 dal Coat ‘edit balance inthe Manufacturing Overhead account at the end of any period means Bg that: Laka the amount of overhead cost charged to jobs is less than the estimated overhead cost lye for the period, more overhead cost has been incurred during the period than has been charged to jobs. bx ») @ more overhead cost has been charged to jobs than has been incurred during the v id. perio the amount of overhead cost charged to jobs is greater than the estimated cost for the period. | 8. Freeman Company uses a predetermined overhead rate based on direct labor hours t0 apply manufacturing overhead to jobs. At the beginning of the yeas, the eompany estimated manufacturing overhead would be $150,000 and direct labor hours would be 10,000, The actual figures for the year were $186,000 for manufacturing overhead and 12,000 ditect labor hours. The cost records for the year will show: A) underapplied overhead of $30,000. B) overapplied overhead of $6,000. 1$0,000 C) overapplied overhead of $30,000, 0,000 PP voderapplied overhead of $6,000. 1S fax t Oo Me Igy ew Page 3 1,58 /DLe Use the following to answer questions 10-11: Hamilton Company uses job-order costing. Manufacturing overhead is applied using @ predetermined rate of 150% of direct Tabor cost. Any over- or underapplied manufacturing overhead is closed to the Cost of Goods Sold account at the end of each month. Additional information is available a3 follows: © Job 101 was the only job in process at January 31. The job cost sheet for this job contained the following costs at the beginning of the month: DM 2 4,090 Direct materials $4,000 6,00? Direct Jabor $2,000 ate ‘Applied manufacturing overhead $3,000 pe? 38,000 Tov? ane © Jobs 102, 193, and 104 were started during February 4 ° Direct materials requisitions for February totaled $26,000. © Direct labor cost of $20,000 was incurred for February. ° Actual manufacturing overhead was $32,000 for February. © The only job still in process at February 28 was Job 104, with costs of $2,800 for direct materials and $1,800 for direct labor. ? 10, The cost of goods manufactured for February was: A) 585,000. @) $79,700. C) $77,700. D) $78,000. 11. For the month of February, the manufacturing overhead was: A) $700 overapplied. 8) $2,000 underapplied. C) $1,000 overapplied. D) $2,000 overapplied. Page $ Dog MP. oe { lor}oo) weldiy nine Gop,or8 ane 14, Huffer Company uses the weighted-average method in its prosess costing system. The following information pertains to Processing Department D for the month of May: Number Cost of ofunits materials ‘Beginning work in process 30,000 $11,000 Started in May 80,000 $36,000 Units completed 85,000 Ending work in process 33,000 All matetials are added at the beginning of the process. The cost per equivelent unit for materials is closest to: Mote A) $0.45. Beg wiP qr B) $0.59. a @ 30.55. : ees D) $0.43, ya (15,) (Appendix) Ebis Company uses the FIFO method in its process costing svstem. The first processing department, the Welding Department, started the month with 13,000 units in its beginning work in provess inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory wes $12,610. An additional 89,000 units were started into production during the month, There ‘were 22,000 units in the ending work in process inventory of the Welding Department that were 30% complete with respect to conversion costs. A total of $806,085 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 on the department's production report? (Round off to three decimal places.) $9.450 B) $9.057 99500 - Dy $8626 1300 38. The overhead cost per unit of Product B under the traditional costing system is closest to: A) $2.63, $7.49. JOo DUH XK £70.¥6 = 27065 _ $54.13. > 8 $4.32. $00 veer £4, )3 19, The predetermined overhead rete (i.e., activity rate) for Activity 1 under the activity- ‘based costing system is closest to: A) $28.97. 3 $13.17. ©) $24.15. D) $83.66. 20, The overhead cost per unit of Product A under the activity-based costing system is closest to: A) S11.24. B) $86.97. @ $70.79, D) $81.20. taqeePhgocu > (2 poo [G00 2 2K) foun om Tet = eed Absovetion i OM Voviable> om tl = Cha DL & c Seog pe eo 3 onty ——— vue 3 vue ie) ae c FMP oni Ig € 20/ ust $ (72 —e ait it pM 1% 14000 = 116009 pe & ¥ 19,090 = we,oue Tf Mo 3 ¥ 12,080 = F000 were for 2 “ood £20, 07 Le Total Cosh 33-0000 + wie oO — erdwiP 54,000 Coe ASO ‘The absorption costing income statements follow: Yeart Year 2 Sales (90 x 600) pee en,00u tan, 004 Less cost of goods sole: Beginning inventory. . oO 64,000 ‘Add cost of goods manufactured | 0/000 * ® =77,000 , Baqow 340,003 G,000 x Uo = 24900 ee Goods available tor sale . - F000 Zoyove Less ending inventory (3.900% 92) yy, 099 Q Cost of goaded... te eee 25bow 304,000 Grose margin 149 00 4,00 Less selling and administrative expenses.-¥ 000. -.72,0%D).. oe ove __ tha, 982 Net operating income ....-...2 05... M200 T9007) u Bach year Yor mull have ty Over produce co “That Ane. transefactevi, ina deterred Iw \nventoyy doesnt ye to Coct af qoods Zo on \ncers gene! ote make the Your \oe lee tt Gu(fered a Keeping worl Paar, Trvencte ts costly due to worehouse Peo . il hae Snvertor- # rig Ame wie k Sb spoilast Uy ee Worenne ikebhoad ob Trot. sO by using, Voyidle Cacti bet Income whore you. canvot fampev wl inventory, + mate The Cowpony. Tok lite Hh made Pobis when ft cleat, L ® Bours De per eetinns. Mereane St, Catto That way ne mater how muck Yow gyeroroduc Ye mL ot Lanug Hf you Sell @ ew Se fe Mos Manufactr * ¥ overhead Ww 4, Actual amounts at the end of 2000 are as follows: Machin, MO 192%, 000 Fonithne Mo 5 825;290 —— Manotserring overiead incorreé ‘Direct manvfecturing labor costs Applied I9p-09.006__ Masi MO was overapplied (09,000 LS Compute the arider- or overallocated manufacturing overhead for each deparpngry - 220,000K S07 /1,090000 Yjodow xe &A03000 Why might Solomon use two different manufacturing overhead cost pools in its job-costing system? The Machming depertmset js highh automated, 5 42 -Ynochive hours 0 correlate wi a sue Fishing cept is tore Chilled tor bur jutens\e 1g 6. Solomon is considering using Activity-based costing Tor its Dover plant. Sate and ¢4 np, explain two main aspects of Activity-based costing. a; O fctwity Coghysy, fates Dit account bem Hanufetan ne gal non yronufacts ry (ast ,This is because vA its Could conta ot nigh Von manufactey | Cost such as desiegning ost That ae The unit coct moreacé £0 w/ Aetvrh- cochy you oft & realighe Wau of uhut ct joke +o produc suck unit (D Betin, coder can Mane varios Cost Avivens hot Mike Naaliiired cosy elo wot fours on Volume, This Ss g0 The castum low volume products dout receive lees Mauufa chrirg svew lead Nrecanse Thee ave aten GF ob Tom .lugtead Ir feasts mm ono costly aes ect are relevuck Punt prelces. S ow 3. Haack Inc. is @ merchandising company. Last month the company's cost of goods sold was $84,000. The company’s beginning merchandise inventory was $20,000 and its ending merchandise inventory was $18,000. What was the total amount of the company's Bete purchases for the month? CHGS Whe ) $122,000 Bet C) $86,000 todd D) $84,000 CRI Use the following to answer questions 4-6 Geneva Steel Corporation produces large sheets of heavy gauge steel. The company showed the following amounts relating to its production for the year just completed: Direct materials used in production __ $110,000 Direct labor costs for the year $5,000 Work in process, beginning. 22,000 wo Finished goods, beginning 45,000 Cost of goods available for sale 288,000 Cost of goods sold 238,000 Work in process, ending 16,000 4, The balance of the finished goods inventory at the end of the year was: A) $193,000. a 3 $45,000. FE ¥S;ow €P$50,000. HK gy2,000 D) $95,000. Bae 5. Manufacturing overhead cost for the year was: A). $56,000. $72,000. ©) $78,000. D) $84,000. F,Da0 Fy HAH0V0 ~ lh, 0V0% 743 oF {0000+ Page? Te ow 9. Lucas Co. has a job order cost system, For the mouth of April, the following debits (credits) appeared in the Work in Process account: April 1 Balance $ 24,000 30 Direct materials 80,000 30 Direct labor 60,000 30 Manufacturing overhead 54,000 30 To finished goods (200,000) wie Pred coe corer 5 BE dio | co ew Livro) Du B40 De 69,00 Mo_s4e" ey, 10? Lucas applies overhead at a predetermined rate of 90% of direct labor cost, Job No. 100, the only job still in process at the end of April, has been charged with manufacturing Binet of $4,500. The amount of direct materials charged to Job No. 100 was: 38,500. B) $4,500. ©) $5,000. ae D) $18,000. gd 440,08 = S40w ugoo XSOW =& oU be ov Se Ho tS 1530 Page 4 12. (Appendix) All production costs have been steadily rising in the Donaet Company for several periods. The company maintains large work in process inventories. Donner Company's cost per equivalent unit computed using the FIFO method would be: ‘could be the lower than, the same as, or higher than that computed under the weighted-average method, (89 lower than that computed under the weighted-average method. (©) ‘the same as that computed under the weighted-average method. D) highes than that computed under the weighted-average method. 13, The following data were taken from the accounting records of the Hazel Corporation which uses the weighted-average method in its process costing system: Beginning work in process inventory (100% complete as to materials, 70% complete as to conversion) 30,000 units Started in process during the period 90,000 units Ending work in process inventory (100% complete as to materials; {60% complete as to conversion) 20,000 units The equivalent units of production for conversion costs was: A) 111,000 units. B) 100,000 units. M e C) 112,000 units. 7 ayo BW) 102,000 units. 40,0°O % ow 350 130 50, 900(IHtN 9 a rey Oo ee wore) Top [yee | Page 6 16. Departmental overhead rates may not correctly assign overhead costs due to: “DY the use of direct labor hours in allocating overhead costs to products rather than machine time or quantity of materials used. 5, B) difficulties associated with identifying cost pools for the first stage of the allocation process. ® over-retiance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production. the high correlation between direct labor-hours and the incurrence of overhead costs. Use the following to answer questions 17-20: Acton Company has two products: A and B. The annual production and sales of Product A is, 800 units and of Product B is $00 units. The company has traditionally used direct labor-hours as the Basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labor hours per unit and Product B requires 0.2 direct labor hours per unit. The total estimated overhead for next period is $92,023. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with estimated overhead costs and expected activity as follows: Estimated & ie) Activity Overhead Expected Activity Down OY Cost Pool Costs Product A ProduetB Total ;BOCH eH Activity 1 $14,487 500°) 600 1,100 ~ Activity 2 364,800 2,500 | 500 3,000 General Factory $12,736, 240 100 340 Total 892,023) DLH (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor hours.) EMO 93,023 17, The predetermined overhead rate under the traditional costing system is closest to: A) $21.60. B) $13.17. (EY $270.66. °D) $37.46. Page 8 Qa: Dexter Company produces and sells a single product, a wooden hand loom for weaving small items such as scarves. Selected cost and operating data relating to the product for ‘pwo years are given below: ‘Selling price per unit. + 8 50 ‘Manufacturing costs: Variable por unit produced Direct materials Direct labor... Variable overhead Fixed per year Seling an acministrative costs: Variable per unit sol, Fixed per year Units in beginning inventory «-- Units produced during the year. . Units Sold during the year Units in ending inventory. Required: Y, Compute the unit product cost for each year under: a. Absorption costing b. Variable costing 2. Using the format provided on the next page, prepare an income statement for ea ‘year asing the absorption costing and variable costing format. \ 3. Using the format provided, reconcile the absorption costing net operating income figures for each year and then explain why the net operating income for absorption costing is different for the two years while the net operating income under variable costing is the same. (The bonus of the president of Dexter Company is based on the net income calculated under absorption costing. He wants to increase the net income for year 3 by increasing production over sales. Give three feasons why this is a bad idea. J. How would you recommend Dexter Company calculate the bonus for its president ~ give two stiggestions? to .come statements follow. % The variable costi Year? Year2 sales (SOX ¥d00) . You, 00u Yoo, ovo Less variable expenses: Variable cost of goods sol 1Ggo00 Goo0 x x0 Variable selling and acmiitatve 40 expenses 5» {000 ‘The reconciliation of the variable and absorption costing net operating incomes follows fear 7 Year 2 Variable costing nei operating ingome, . 0,000 10, 0W fad (deduct) coy Man desherd * 1 etd \ 4 oo) John ode | aero)... a BGe b4err) ly fdd coct of Fixed Manufactrin, ° OVerw, dt endive tryenctong: \ Absorotion costing let operating income... 3y,e00 (14.28 ) in s job-order costing system at its Dover, Delaware plant. The plant has 2 Machining Departments and a finishing department. Solomon uses two direct cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the Machining department — with machine hours as the allocation base, and the Finishing deparnnen, with direct manufacturing labor costs as the .. allocation base). The year 2000 budget for the piant is as follows: Maching —-wH ie Fret Deparment ect Mey ¢ $10,900,000 5.000.000 Lalor Coe Direct manuaeruring labor cost 00.000 000.008 Direct manufacturing ebor-boure Bono, * 160000 Machine-hours . 200,000 33,000 \0, 000, Ovo 500, ow 3.09, 000 Yon, 0¥e s¢ Required: eee 2D 1, What is the budgeted overhead rate that should be used in the Machining department? In the Finishing department? ; al ca ja “Machine deg’ SO|,ir Frise clegh> abit 2, During the month of January, the job cbst record for Job 43) shows the following. oy Mechinin Finishing Deparanent Department Direct meverials used $14,000 $3,000 Direct manufacoring labor cos S660 Gs Direct menofacroning sborshours x6 50 Meche hoon & 8 po xe? tesco ‘What js the total manufacturing overhead allocated to Job 4317, jy

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