Question

6. Which of the following would be considered a product cost for external financial reporting purposes? A) Cost of a warehouse used to store finished goods. B) Cost of guided public tours through the company's facilities. Cost of travel necessary to sell the manufactured product. Cost of sand spread on the factory floor to absorb oil from manufacturing machines. 7. Manufacturing overhead consists of: A) indirect materials but not indirect labor. B) indirect labor but not indirect materials. C) all manufacturing costs. D) all manufacturing costs, except direct materials and direct labor. 8. Which of the following statements regarding pull manufacturing is false? A) Pull manufacturing maintains lower inventory levels than push manufacturing B) Pull manufacturing often uses Kanban. C) Lean manufacturing is based on pull manufacturing, instead of push manufacturing. D) Pull manufacturing is always superior to push manufacturing E) The Theory of Constraints is a technique used in pull manufacturing that is not useful in push manufacturing 9. Which of the following industries is more suitable for using a process costing system? A) auto repair shop. B) automobile manufacturing. C) medical clinics. D) public accounting firm. E) custom furniture maker. 13. TEB estimated the following production cost for 1,000 units of product for job 588 during 2022: Direct materials: 600 pounds at $5 per pound = $3,000 Direct labor: 2,000 hours at $10 per hour = $20,000 Manufacturing overhead ($65,000 estimated for the year divided by 6,000 estimated machine hours = $10.8333 per machine hour): 1,500 hours at $10.8333 per machine hour = $16,250 TEB, Inc. incurred the following actual costs for job 588: Direct materials: 620 pounds at $4.50 per pound = $2,790 Direct labor: 1,970 hours at $9.90 per hour = $19,503 Manufacturing overhead: $68,733 actual for the year; 6,300 actual machine hours; 1,475 actual machine hours used on job 588 Using actual costing, the total product cost for the following job rounded to the nearest dollar would be __________? 14. The journal entry required to record factory depreciation includes: A) a debit to Cost of Goods Manufactured account. B) a debit to Factory Overhead account. C) a debit to Depreciation Expense account. D) a debit to Accumulated Depreciation account. E) none of the above. 15. All of the following are debited to the Work-in-Process Inventory account, except A) cost of the completed goods being transferred out of the plant. B) direct labor cost consumed/incurred. C) direct materials cost consumed/used. D) applied factory overhead cost. E) none of the above. Use the following to answer questions 30-31: Advanced Company is installing an ABC system and needs to know the level of a few activities. Advanced has already determined which costs are directly traceable to product and customers. Only those costs left to be allocated/assigned are of concern here. Advanced Company produces two products—high-tech global positioning systems (GPS) and low-tech compasses—using portions of the same assembly line. One design department handles the design of both products. The GPSs are made in batches of 50, while the compasses are made in batches of 5,000. GPSs each require a one-hour inspection, while compasses each require a one-minute inspection. Indicate whether the following two activities are: A. Unit level B. Batch level C. Product level D. Customer level E. Facility sustaining or Organization sustaining 30. Setup machines (see answer choices immediately above) 31. Have the annual financial statements audited (see answer choices immediately above) 32. Which one of the following is a true statement about activity-based costing? A) There is generally one and only one cost driver for each activity. B) The activity driver (used to assign the overhead to the cost objects) must be a cost driver. C) There is no such thing as a resource driver. D) Process mapping is a good way to identify activities for activity-based costing. E) Every activity-based costing system will have the same activities, as long as the companies are in the same industry. 33. The master budget process usually begins with the: A) production budget. B) selling and administrative expense budget. C) sales budget. D) cash budget. 34. Holdren Company expects the following credit sales for the first four months of the year: January, $13,500; February, $18,000; March, $16,000; April, $19,000. Experience has shown that payment for the credit sales is received as follows: 10% in the month of sale, 60% in the first month after sale, 20% in the second month after sale, and 10% is uncollectible. How much cash can Holdren Company expect to collect in March as a result of credit sales? _________ Use the following to answer questions 36-38: Chicken Nuggets, LLC, provides chicken nuggets to fast food restaurants. The standard cost card for chicken nuggets indicates each nugget takes two ounces of chicken meat at $0.03 per ounce, 30 seconds of direct labor at $12.00 per hour, and 30 seconds of overhead at $6.00 per hour, for a total standard cost of $0.21 per nugget. Current production cost for 200,000 nuggets show material cost of $11,024 for 440,960 ounces of chicken at $0.025 per ounce; $19,380 for 1,675 hours of direct labor at $11.57 per hour; and $10,050 of overhead applied for 1,675 hours at $6.00 per hour. Legend: U = Unfavorable F = Favorable (Include U or F, after the amount) 36. (10) The direct material quantity (usage) variance is calculated to be ________? 37. (10) The direct labor efficiency variance is calculated to be ________? 38. (10) The direct labor rate variance is calculated to be ________? 39. A cost that is often overlooked, because it is not recorded on the books, is called a (an): A) sunk cost B) fixed cost C) missing cost D) opportunity cost E) variable cost 40. A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year. Fixed expenses charged to the product total $90,000 per year. The company estimates that $50,000 of these fixed expenses will saved if the product is dropped. These data indicate that if Product A is dropped, the company's overall net operating income would: A) decrease by $20,000 per year. B) increase by $20,000 per year. C) decrease by $10,000 per year. D) increase by $30,000 per year. 41. Manor Company plans to discontinue a department that has a contribution margin of $25,000 and $50,000 in fixed costs. Of the fixed costs, $21,000 cannot be eliminated. The effect on the profit of Manor Company of discontinuing this department would be: A) an increase of $4,000. B) a decrease of $4,000. C) a decrease of $25,000. D) an increase of $25,000. 42. Products A, B, and C are produced from a single raw material input. The raw material costs $90,000, from which 5,000 units of A, 10,000 units of B, and 15,000 units of C can be produced each period. Product A can be sold at the split-off point for $2 per unit, or it can be processed further at a cost of $5,500 and then sold for $6 per unit. Product A should be: A) sold at the split-off point, since further processing would result in a loss of $0.75 per unit. B) processed further, since this will increase profits by $14,500 each period. C) processed further, since this will increase profits by $5,500 each period. D) sold at the split-off point, since further processing will result in a loss of $5,500 each period. 50 and 51 use the following information: TEB, Inc., which manufactures video games, consists of two divisions, each operating as a profit center. Division A makes a component that is needed by Division B; however, if the price from Division A is too high, Division B has indicated it would purchase the component from an outside supplier. Additional information related to the divisions is: Division B’s annual needs for component 10,000 units Division A’s capacity 40,000 units Division A’s current sales at $170 per unit 30,000 units Division As total cost per unit ($140 variable and $10 fixed) $150 Division A’s annual fixed cost $1,500,000 Price per unit to buy from outside supplier $160 Assume Division A has an offer from a foreign buyer to purchase 10,000 units at $150 per unit. Assume the company management (Vice-President above the two divisions) wants Division A to supply/transfer 10,000 units to Division B. 50. The most logical minimum acceptable transfer price is __________? 51. The most logical maximum acceptable transfer price is __________?

Answer 1

Answer :

6)

Product Cost Include:

Cost of sand spread on the factory floor to absorb oil from manufacturing machines

7)

Manufacturing overhead consists of:

"all manufacturing costs, except direct materials and direct labor"

8)

A) Pull manufacturing maintains lower inventory levels than push manufacturing

9)

B) automobile manufacturing

( Process costing used where more than processes are required to manufacure the product)

13)

Total Product Cost:

Material (620 pounds @ 4.50) 2790

Labour (1970 hours @ 9.90) 19503

OH (68733/ 6300 MH *1475) 16092.25

Total Product Cost for Job 588 38385.25

"Total Product cost for Job 588 is $ 38,385 "

14)

Journal Entry to record Factory depreciation:

Factory Overheads exp A/c (Dr)

To Accumulated depreciation a/c (Cr)

15)

"15. All of the following are debited to the Work-in-Process Inventory account, except"

A) cost of the completed goods being transferred out of the plant.