#ame $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
NOTE: This homework assignment is %ue at the &eginning o' class on Mon%a() *e&ruar( +) 201!, Make a cop( on that %ate to go over in class, This homework will not be accepted after that time.
#ame $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
.ro&lems are worth as in%icate% 'or a total o' 55 points, /uestions are worth 5 points each 'or a total o' 105,
-ra%e $$$$$$$$$
$$$$ Total points 2!0
2, 6alton Manu'acturing Compan( gathere% the 'ollowing %ata 'or the month,
How much net operating income will &e reporte% 'or the perio%7
[10points]
+, *or the month o' April Re% Hawk) 1nc, sol% !)000 units 'or a total o' 4+8)000, 9aria&le costs per unit was 4!,25 an% 'i:e% costs 'or April totale% 415)000, ;sing the contri&ution margin 'ormat %etermine net income 'or the month o' April, [10points]
Multiple Choice
1, The three &asic elements o' manu'acturing cost are %irect materials) %irect la&or) an%< A, cost o' goo%s manu'acture%, =, cost o' goo%s sol%, C, work in process, >, manu'acturing overhea%, 2, 6hich terms &elow correctl( %escri&e the cost o' the &lack paint use% to paint the %ots on a pair o' %ice7
A, A =, = C, C >, > +, An opportunit( cost is< A, the %i''erence in total costs which results 'rom selecting one alternative instea% o' another, =, the &ene'it 'orgone &( selecting one alternative instea% o' another, C, a cost which ma( &e save% &( not a%opting an alternative, >, a cost which ma( &e shi'te% to the 'uture with little or no e''ect on current operations, !, 6hich o' the 'ollowing statements is correct7 A, Managerial accounting is primaril( concerne% with the organi?ation as a whole rather than with segments o' the organi?ation, =, Managerial accounting places less emphasis on nonmonetar( %ata than 'inancial accounting, C, >i''erential costs can &e either 'i:e% or varia&le, >, 6ages pai% to pro%uction supervisors woul% &e consi%ere% %irect la&or, 3
5, The cost o' shipping parts 'rom a supplier is consi%ere% a pro%uct cost, TR;@ *A2 @
10, The term pro%uct costs an% manu'acturing cost are s(non(mous, TR;@ *A2 @
11, The inventor( o' 'inishe% goo%s on han% at the en% o' a perio% is consi%ere% an asset) &ut inventories o' raw materials an% workBinBprocess are not consi%ere% assets until pro%uction is complete%, TR;@ *A2 @
12, The varia&le cost per unit is constant an% %oes not %epen% on how man( units are pro%uce%, TR;@ *A2 @
1+, The cost o' napkins put on each person3s tra( at a 'ast 'oo% restaurant is a 'i:e% cost, TR;@ *A2 @
1!, A 'actor( supervisor3s salar( woul% &e classi'ie% as a %irect cost o' a unit o' pro%uct, TR;@ *A2 @
15, A sunk cost is a cost that has alrea%( &een incurre%, TR;@ *A2 @
1,6ashtenaw Corporation uses a Eo&Bor%er costing s(stem, The 'ollowing %ata are 'or last (ear< F5 .ointsG
6ashtenaw applies overhea% using a pre%etermine% rate &ase% on %irect la&orBhours, 6hat pre%etermine% overhea% rate was use% last (ear7 $$$$$$$$$$$ per %irect la&or hour, 4+,25
2, The 'ollowing %ata have &een recor%e% 'or recentl( complete% Co& 501 on its Eo& cost sheet, F20 points 5 eachG >irect materials cost was 4+)08A, Actual machineBhours worke% 10!, Actual %irect la&or hours incurre% +0, The %irect la&or wage rate is 412 per la&orBhour,
The compan( applies manu'acturing overhea% on the &asis o' machineBhours, The pre%etermine% overhea% rate is 411 per machineBhour, Compute the 'ollowing< a. Total Direct Material costs applied to Job 501. ____________.
c. Total applied
Multiple Choice 5
1, 6hich o' the 'ollowing companies woul% &e most likel( to use a Eo&Bor%er costing s(stem rather than a process costing s(stem7 A, 'ast 'oo% restaurant =, ship&uil%ing C, cru%e oil re'ining >, can%( making 2, 1n a Eo&Bor%er costing s(stem) the use o' in%irect materials woul% usuall( &e recor%e% as a %e&it to< A, Raw Materials, =, 6ork in .rocess, C, Manu'acturing Dverhea%, >, *inishe% -oo%s, +, 1vor( Compan( uses a Eo&Bor%er costing s(stem, 6hat (earBen% Eournal entr( coul% 1vor( make to %ispose o' (close out" 4!)150 o' overapplie% manu'acturing overhea% cost7
A, A =, = C, C >, >
!, 1n a Eo&Bor%er costing s(stem) %irect la&or costs usuall( are recor%e% initiall( with a %e&it to< A, Manu'acturing Dverhea%, =, *inishe% -oo%s inventor(, C, >irect 2a&or @:pense, >, 6ork in .rocess,
5, 1n a Eo&Bor%er costing s(stem) the entr( to recor% %epreciation on manu'acturing eHuipment woul% inclu%e< 6
A, a %e&it to the 6ork in .rocess inventor( account, =, a %e&it to the >epreciation @:pense account, C, a %e&it to the Manu'acturing Dverhea% account, >, a cre%it to the 6ork in .rocess inventor( account,
8, 6hen appl(ing manu'acturing overhea% to Eo&s) the 'ormula to calculate the amount is as 'ollows< A, .re%etermine% overhea% rate %ivi%e% &( the actual manu'acturing overhea% incurre% on the particular Eo&, =, .re%etermine% overhea% rate times the actual manu'acturing overhea% incurre% on the particular Eo&, C, .re%etermine% overhea% rate %ivi%e% &( the actual units o' allocation &ase charge% to the particular Eo&, >, .re%etermine% overhea% rate times the actual units o' allocation &ase charge% to the particular Eo&,
A, 6hen closing overapplie% manu'acturing overhea% to cost o' goo%s sol%) which o' the 'ollowing woul% &e true7 A, 6ork in process will %ecrease, =, Cost o' goo%s sol% will increase, C, #et income will %ecrease, >, -ross margin will increase, True I *alse /uestions 0, Co&Bor%er costing is use% in those situations where units o' a pro%uct are homogeneous) such as in the manu'acture o' sugar, TR;@ *A2 @
5, Co&Bor%er costing is usuall( not use% in service organi?ations such as hospitals an% law 'irms, TR;@ *A2 @
10, elling an% A%ministrative e:penses are charge% to the manu'acturing overhea% account, TR;@ *A2 @
11 A Eo& cost sheet is use% to accumulate costs charge% to a Eo&, , TR;@ *A2 @ 12 ;n%er a Eo&Bor%er cost s(stem the 6ork in .rocess account is %e&ite% with the cost o' materials purchase%, , TR;@ *A2 @ JJJJJJJDne more page 1+ The process o' assigning overhea% cost to Eo&s is known as overhea% application, , TR;@ *A2 @ 7
1! A %e&it &alance in the Manu'acturing Dverhea% account at the en% o' the (ear means that , , manu'acturing overhea% is overapplie%, TR;@ *A2 @
15 .erio% costs are e:pense% as incurre%) rather than going into the 6ork in .rocess account, , TR;@ *A2 @ 18 6hen a Eo& has &een complete%) the goo%s are trans'erre% 'rom the pro%uction %epartment to the , 'inishe% goo%s warehouse an% the Eournal entr( woul% inclu%e a cre%it to 6ork in .rocess, TR;@ *A2 @
1A, ;n%erapplie% or overapplie% manu'acturing overhea% represents the %i''erence &etween actual overhea% costs an% applie% overhea% costs, TR;@ *A2 @
10, 1' manu'acturing overhea% applie% e:cee%s the actual manu'acturing overhea% costs o' the perio%) then manu'acturing overhea% is overapplie%, TR;@ *A2 @
15, The la&or time ticket contains the %etails o' how much time an emplo(ee takes on each task throughout the %a(, TR;@ *A2 @
20, .re%etermine% overhea% rates are &ase% on actual cost an% activit( %ata, TR;@ *A2 @
21, Actual manu'acturing overhea% costs are trace% to speci'ic Eo&s, TR;@ *A2 @
22, A cre%it &alance in the Manu'acturing Dverhea% account at the en% o' the (ear means that overhea% was un%erapplie%, TR;@ *A2 @ %nd o! $o e&or'