Question

1. Which of the following costs is considered an indirect cost to its given cost object?

a. New plumbing system for a house

b. An operation for a family pet

c. Rent in a yearly budget

d. Wax glaze for an apple

e. Cleaning services for an office

2. Toshiba adds completed transformers to their televisions during assembly. The transformers would be considered what types of cost?

a. Variable cost and product cost

b. Fixed cost and product cost

c. Fixed cost and period cost

d. Mixed cost and product cost

e. Variable cost and period cost

3. What value would be debited to the left side of the finished goods inventory T-Account?

a. Manufacturing Overhead

b. Cost of Goods Manufactured

c. Cost of Goods Sold

d. Materials Used in Production

e. Indirect Materials

4. Which of the following describes how costs behave when production activity decreases within the relevant range?

a. Variable cost per unit increases and total fixed costs remain constant

b. Fixed cost per unit increases and total variable cost decreases

c. Total cost increases and fixed cost per unit remains constant

d. Fixed cost per unit decreases and variable cost per unit remains constant

e. Total cost decreases and variable cost per unit increases

5. Quixotic Industries is considering a transition in their factory from manufacturing A-types (which they currently manufacture) to B-types, which they have not previously manufactured. What costs should be considered?

a. Lab tests conducted prior to manufacturing A-types

b. Salary to factory foreperson, who would oversee either type of production

c. Factory changes to accommodate production of B-types

d. Selling expenses for remaining A-types

e. None of the above

6. Direct Labor is considered which type(s) of cost (circle/write all that apply)?

a. Period

b. Product

c. Prime

d. Conversion

e. Non-Inventorial

7. A mixed cost, when graphed for activity, would generally have which of the following traits?

a. Straight line starting at 0

b. Curved line starting at 0

c. Straight line starting above 0

d. Curved line starting above 0

e. None of the above

8. Activity-based costing would make the most sense to use in which of the following circumstances?

a. The company makes multiple lines of products requiring different processes, and applies MOH differently in different processing departments.

b. The company makes one product and assigns MOH differently to different departments.

c. The company makes multiple products, and uses a plantwide applied MOH

d. The company makes one product and uses a plantwide MOH

e. None of the above

9. Which of the following calculations would NOT equal Contribution Margin? (FE = total Fixed Expenses, VE = total Variable Expenses, CMR= Contribution Margin Ratio)

a. Profit + FE

b. CMR x Sales

c. Breakeven Sales - FE

d. Sales - VE

e. Sales x CM per unit/Sales price per unit

10. Which one of the following could be used (by itself) to determine what percent of sales is not variable expenses?

a. Degree of Operating Leverage

b. Breakeven Sales

c. Margin of safety %

d. Contribution margin/Unit

e. None of the above

11. Goliath Incorporated applies manufacturing overhead on the basis of direct labor hours. At the beginning of 2017, the cost accountant estimated the following information for the year:

Total direct labor hours 2,000

Total direct labor cost $80,600

Total direct materials cost $150,750

Total machine hours 7,100

Total manufacturing overhead cost $50,200

At the end of 2017, the cost accountant noted that actual direct labor hours incurred was 2,300, total direct labor cost was $87,200 and actual manufacturing overhead incurred was $60,800 during the year. Was manufacturing overhead under-applied or over-applied and by how much?

PdOR = 50,200 (est MOH)/ 2000 (DLH base) = $25.10/DLH

Actual hours x PdOR = 2,300 x 25.10 = 57,730 Applied Overhead

60,800 MOH incurred – 57,730 Applied Overhead = 3,070 Underapplied

Use the following information for Questions 12-14:

Futility Utility Co. applies manufacturing overhead to jobs on the basis of direct labor cost. At the beginning of the month, the estimated manufacturing overhead was $45,000 and the estimated direct labor cost was $36,000. During March, the following transactions were recorded by the company:

Raw materials:

Purchased $41,000

Used (80% direct materials) $45,000

Labor:

Direct labor hours worked 3,500

Direct labor cost incurred $38,500

Indirect labor cost incurred $9,500

Manufacturing overhead costs incurred (total) $47,000

Inventories:

Raw materials, 3/1 $12,000

Work in process, 3/1 $14,500

Work in process 3/31 $16,000

Finished Goods 3/31 $6,000

12. Compute the predetermined overhead rate for the month of March (make sure to label the units).

Est MOH/Est DL$ = 45,000/36,000 = $1.25 per DL$

13. Cost of Goods Manufactured for the month was:

Work in Process   

BB 14,500

DM 36,000

DL 38,500

MOH 48,125

COGM 121,125

EB 16,000

DM = 80% (45,000) = 36,000 DL = 38,500 (given) MOH = PdOR x DL$ 1.25 x 38,500 = 48,125

14. The actual manufacturing overhead incurred included $__________ not related to indirect labor or indirect materials.

47,000 total MOH incurred

-9,000 Indirect materials (20% of 45,000)

-9,500 Indirect labor (given)

$28,500 remaining MOH

1. Which of the following costs is considered an indirect cost to its given cost object?

a. New plumbing system for a house

b. An operation for a family pet

c. Rent in a yearly budget

d. Wax glaze for an apple

e. Cleaning services for an office

2. Toshiba adds completed transformers to their televisions during assembly. The transformers would be considered what types of cost?

a. Variable cost and product cost

b. Fixed cost and product cost

c. Fixed cost and period cost

d. Mixed cost and product cost

e. Variable cost and period cost

3. What value would be debited to the left side of the finished goods inventory T-Account?

a. Manufacturing Overhead

b. Cost of Goods Manufactured

c. Cost of Goods Sold

d. Materials Used in Production

e. Indirect Materials

4. Which of the following describes how costs behave when production activity decreases within the relevant range?

a. Variable cost per unit increases and total fixed costs remain constant

b. Fixed cost per unit increases and total variable cost decreases

c. Total cost increases and fixed cost per unit remains constant

d. Fixed cost per unit decreases and variable cost per unit remains constant

e. Total cost decreases and variable cost per unit increases

5. Quixotic Industries is considering a transition in their factory from manufacturing A-types (which they currently manufacture) to B-types, which they have not previously manufactured. What costs should be considered?

a. Lab tests conducted prior to manufacturing A-types

b. Salary to factory foreperson, who would oversee either type of production

c. Factory changes to accommodate production of B-types

d. Selling expenses for remaining A-types

e. None of the above

6. Direct Labor is considered which type(s) of cost (circle/write all that apply)?

a. Period

b. Product

c. Prime

d. Conversion

e. Non-Inventorial

7. A mixed cost, when graphed for activity, would generally have which of the following traits?

a. Straight line starting at 0

b. Curved line starting at 0

c. Straight line starting above 0

d. Curved line starting above 0

e. None of the above

8. Activity-based costing would make the most sense to use in which of the following circumstances?

a. The company makes multiple lines of products requiring different processes, and applies MOH differently in different processing departments.

b. The company makes one product and assigns MOH differently to different departments.

c. The company makes multiple products, and uses a plantwide applied MOH

d. The company makes one product and uses a plantwide MOH

e. None of the above

9. Which of the following calculations would NOT equal Contribution Margin? (FE = total Fixed Expenses, VE = total Variable Expenses, CMR= Contribution Margin Ratio)

a. Profit + FE

b. CMR x Sales

c. Breakeven Sales - FE

d. Sales - VE

e. Sales x CM per unit/Sales price per unit

10. Which one of the following could be used (by itself) to determine what percent of sales is not variable expenses?

a. Degree of Operating Leverage

b. Breakeven Sales

c. Margin of safety %

d. Contribution margin/Unit

e. None of the above

11. Goliath Incorporated applies manufacturing overhead on the basis of direct labor hours. At the beginning of 2017, the cost accountant estimated the following information for the year:

Total direct labor hours 2,000

Total direct labor cost $80,600

Total direct materials cost $150,750

Total machine hours 7,100

Total manufacturing overhead cost $50,200

At the end of 2017, the cost accountant noted that actual direct labor hours incurred was 2,300, total direct labor cost was $87,200 and actual manufacturing overhead incurred was $60,800 during the year. Was manufacturing overhead under-applied or over-applied and by how much?

PdOR = 50,200 (est MOH)/ 2000 (DLH base) = $25.10/DLH

Actual hours x PdOR = 2,300 x 25.10 = 57,730 Applied Overhead

60,800 MOH incurred – 57,730 Applied Overhead = 3,070 Underapplied

Use the following information for Questions 12-14:

Futility Utility Co. applies manufacturing overhead to jobs on the basis of direct labor cost. At the beginning of the month, the estimated manufacturing overhead was $45,000 and the estimated direct labor cost was $36,000. During March, the following transactions were recorded by the company:

Raw materials:

Purchased $41,000

Used (80% direct materials) $45,000

Labor:

Direct labor hours worked 3,500

Direct labor cost incurred $38,500

Indirect labor cost incurred $9,500

Manufacturing overhead costs incurred (total) $47,000

Inventories:

Raw materials, 3/1 $12,000

Work in process, 3/1 $14,500

Work in process 3/31 $16,000

Finished Goods 3/31 $6,000

12. Compute the predetermined overhead rate for the month of March (make sure to label the units).

Est MOH/Est DL$ = 45,000/36,000 = $1.25 per DL$

13. Cost of Goods Manufactured for the month was:

Work in Process   

BB 14,500

DM 36,000

DL 38,500

MOH 48,125

COGM 121,125

EB 16,000

DM = 80% (45,000) = 36,000 DL = 38,500 (given) MOH = PdOR x DL$ 1.25 x 38,500 = 48,125

14. The actual manufacturing overhead incurred included $__________ not related to indirect labor or indirect materials.

47,000 total MOH incurred

-9,000 Indirect materials (20% of 45,000)

-9,500 Indirect labor (given)

$28,500 remaining MOH

Answer 1

1. Which of the following costs is considered an indirect cost to its given cost object?

d. Wax glaze for an apple

2. Toshiba adds completed transformers to their televisions during assembly. The transformers would be considered what types of cost?

a. Variable cost and product cost

3. What value would be debited to the left side of the finished goods inventory T-Account?

b. Cost of Goods Manufactured

4. Which of the following describes how costs behave when production activity decreases within the relevant range?

b. Fixed cost per unit increases and total variable cost decreases

5. Quixotic Industries is considering a transition in their factory from manufacturing A-types (which they currently manufacture) to B-types, which they have not previously manufactured. What costs should be considered?

c. Factory changes to accommodate production of B-types

6. Direct Labor is considered which type(s) of cost (circle/write all that apply)?

b. Product

c. Prime

d. Conversion

7. A mixed cost, when graphed for activity, would generally have which of the following traits?

c. Straight line starting above 0

8. Activity-based costing would make the most sense to use in which of the following circumstances?

c. The company makes multiple products, and uses a plantwide applied MOH

9. Which of the following calculations would NOT equal Contribution Margin? (FE = total Fixed Expenses, VE = total Variable Expenses, CMR= Contribution Margin Ratio)

c. Breakeven Sales - FE

10. Which one of the following could be used (by itself) to determine what percent of sales is not variable expenses?

e. None of the above

11. Goliath Incorporated applies manufacturing overhead on the basis of direct labor hours. At the beginning of 2017, the cost accountant estimated the following information for the year:

Total direct labor hours 2,000

Total direct labor cost $80,600

Total direct materials cost $150,750

Total machine hours 7,100

Total manufacturing overhead cost $50,200

At the end of 2017, the cost accountant noted that actual direct labor hours incurred was 2,300, total direct labor cost was $87,200 and actual manufacturing overhead incurred was $60,800 during the year. Was manufacturing overhead under-applied or over-applied and by how much?

60,800 MOH incurred – 57,730 Applied Overhead = 3,070 Underapplied

Use the following information for Questions 12-14:

Futility Utility Co. applies manufacturing overhead to jobs on the basis of direct labor cost. At the beginning of the month, the estimated manufacturing overhead was $45,000 and the estimated direct labor cost was $36,000. During March, the following transactions were recorded by the company:

Raw materials:

Purchased $41,000

Used (80% direct materials) $45,000

Labor:

Direct labor hours worked 3,500

Direct labor cost incurred $38,500

Indirect labor cost incurred $9,500

Manufacturing overhead costs incurred (total) $47,000

Inventories:

Raw materials, 3/1 $12,000

Work in process, 3/1 $14,500

Work in process 3/31 $16,000

Finished Goods 3/31 $6,000

12. Compute the predetermined overhead rate for the month of March (make sure to label the units).

Est MOH/Est DL$ = 45,000/36,000 = $1.25 per DL$

13. Cost of Goods Manufactured for the month was:

WIP Beginning	$       14,500
Direct materials (45000*80%)	$       36,000
Direct labor	$       38,500
MOH applied (38500*125%) =	$       48,125
Total manufacturing cost	$    1,37,125
WIP ending	$       16,000
Cost of goods manufactured	$    1,21,125

14. The actual manufacturing overhead incurred included $__________ not related to indirect labor or indirect materials.

47,000 total MOH incurred

-9,000 Indirect materials (20% of 45,000)

-9,500 Indirect labor (given)

$28,500 remaining MOH