BUSINESS

 

TCO 1) On December 31, 2015, ABC Inc. has a balance in the Finished Goods Inventory account of $20,000. On January 1, 2015, the balance in the Finished Goods Inventory account was $45,000. On December 31, 2015, the balance in the Work-in-Process inventory account is $5,000. On January 1,  2015, the balance in the Work-in-Process inventory account is $12,000. Cost of goods manufactured is $290,000. How much is cost of goods sold? (Points : 7)

 

(TCO 2) Which of the companies below would be most likely to use job-order costing? (Points : 7)

 

(TCO 2) Cindy Company applies manufacturing overhead based on labor hours. Information concerning manufacturing overhead cost and hours for August follows.

Estimated                             Actual
Overhead cost                         $300,000                        $200,000
Direct labor hours                       25,000                             30,000
Machine hours                             15,000                             20,000

How much is the predetermined overhead rate? (Points : 7)

 

(TCO 2) During 2015, Kim Company applied overhead using a job-order costing system at a rate of $12 per direct labor hour. Estimated direct labor hours for the year were 125,000, and estimated overhead for the year was $1,500,000. Actual direct labor hours for 2015 were 130,000, and actual overhead was $1,650,000. What is the amount of under- or over-applied overhead for the year? (Points : 7)

 

2. (TCO 3) James Company uses process costing to track its costs in two sequential production departments: Forming and Finishing. The following information is provided regarding the Forming Department:

Forming Department
Month Ended June 30

Unit information
Beginning work in process, June 1 — 4,000
Started into production during June — 22,000
Completed and transferred to Finished Department during June — 20,000
Ending work in process, June 30 (20% complete as to direct materials and 50% complete as to conversion costs) — 6,000

Cost information:
Beginning work in process as of June 1 (consists of $1,000 of direct materials costs and $4,500 of conversion costs) — $5,500
Direct materials used in June — $7,268
Conversion costs incurred in June — $32,990

Required:

(a) Calculate the equivalent units for conversion costs. (Show your work)

(b) Calculate the cost per equivalent unit for conversion costs. (Show your work) (Points : 30)

 

 

(TCO 3) James Company uses process costing to track its costs in two sequential production departments: Forming and Finishing. The following information is provided regarding the Forming Department:

Forming Department
Month Ended June 30

Unit information
Beginning work in process, June 1 — 4,000
Started into production during June — 22,000
Completed and transferred to Finished Department during June — 20,000
Ending work in process, June 30 (20% complete as to direct materials and 50% complete as to conversion costs) — 6,000

Cost information:
Beginning work in process as of June 1 (consists of $1,000 of direct materials costs and $4,500 of conversion costs) — $5,500
Direct materials used in June — $7,268
Conversion costs incurred in June — $32,990

Required:

(a) Calculate the equivalent units for conversion costs. (Show your work)

(b) Calculate the cost per equivalent unit for conversion costs. (Show your work) (Points : 30)

 

(TCO 6) Classify each of the costs below within the ABC costing hierarchy as either unit-level, batch-level, product-level, or facility-level.
(a) Cost to inspect each product as it is finished
(b) Factory depreciation
(c) Machine setup
(d) Costs to hire human resource personnel
(e) Salary for a product-line manager
(f)  Receiving raw materials from vendors (Points : 30)

 

(TCO 2) Drake Company incurred costs of $77,000 for direct materials (raw) purchased. Direct labor was $45,000 and factory overhead was $22,000 for March.

Inventories were as follows:
Raw materials beginning $10,000; raw materials ending $14,000
Work-in-process beginning $36,000; work-in-process ending $24,000
Finished goods beginning $5,000; finished goods ending $10,000
Required: Calculate the cost of goods manufactured for March for Drake Company. Show your work. (Points : 30)

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