BUSINESS

Exam: 061400RR – Cost Concepts and Types of Costing

Questions 1 to 20:

1. Given the cost formula, Y = $7,000 + $1.80X, what would be the total cost for an activity level of 4,000 units?

A.  $7,200

B.   $7,000

C.   $200

D.  $14,200

2. In describing the cost equation, Y = a + bX, what is “a”?

A.  The variable cost per unit of activity

B.   The dependent variable cost

C.   The independent variable level of activity

D.  The total fixed cost

3. Which of the following is classified as a direct labor cost?

A.  Neither wages of assembly-line workers nor a factory supervisor

B.   Wages of assembly-line workers but not a factory supervisor

C.   Wages of a factory supervisor but not assembly line workers

D.  Both wages of assembly-line workers and a factory supervisor

4. Tarten Corporation uses the FIFO method in its process costing system. Operating data for the Curing Department for the month of March appear below:

Percent Complete

with Respect lo

  Units                 Conversion

e eg inn ing work in process inventory                                                                                    ……….              9 000                10%

Transferred in from the prior deparinlent di                                                      Fh n la March                 ……….         57 000

Completed and transferred io the next departrnenldurino March              65.01:10

Ending work in process inventory  …………………………………………………………………… 000……………. 70%

According to the company’s records, the conversion cost in beginning work in process inventory was $7,470 at the beginning of March. The cost per equivalent unit for conversion costs for March was $8.20. How much conversion cost would be assigned to the units completed and transferred out of the department during March?

A.  $533,090

B.   $533,000

C.$592,040

D.$525,530

5. Electrical costs at one of Kantola Corporation’s factories are listed below:

  Machine-Hours Electrical Cost
February 3,570 $36,405
March 3,580 $36,493
April 3,553 $36,302
May 3,627 $36,833
June 3,625 $36,800
July 3,565 $36,366
August 3,548 $36,237
September 3,542 $36,213
October 3,593 $36,577

 

Management believes that electrical cost is a mixed cost that depends on machine-hours. Use the high-low method to estimate the variable and fixed components of this cost. Compute the variable component first, rounding off to the nearest whole cent. Then compute the fixed component, rounding off to the nearest whole dollar. What would these estimates be closest to?

A.  $10.19 per machine-hour; $36,470 per month

B.   $7.29 per machine-hour; $10,392 per month

C.   $7.48 per machine-hour; $9,708 per month

D.  $0.14 per machine-hour; $36,336 per month

6. In November, one of the processing departments at Goodsell Corporation had beginning work in process inventory of $36,000 and ending work in process inventory of $35,000. During the month, $427,000 of costs was added to production and the cost of units transferred out from the department was $428,000. The company uses the FIFO method in its process costing system. In the department’s cost reconciliation report for November, what would be the total cost to be accounted for?

A.$463,000

B.$71,000

C.$890,000

D.$926,000

7. Narver Corporation uses the weighted-average method in its process costing system. Operating data for the Lubricating Department for the month of October appear below:

Percent Complete with UnitS Respect ‘CO Conversion

Beginning viOrli Ii process iriventory                       . ……       ……. ……. .       6.600                          CO%

Transferred in from the prior deparIrnent during October                   r.                                                 40.100

Cdrripleted and transferred Lo the next department during October…. 37,100

Ending work in procesS invenIory                                                                                                       9.1500                                                     80%

What were the equivalent units for conversion costs in the Lubricating Department for October?

A.37,100

B.43,100

C.44,780

D.47,780

8. Oaklis Company has provided the following data for maintenance cost:

Prior Year Current Year Machine Hours        10,000  12,000

Maintenance cost $24,000$27,600

Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to what amounts?

A.     $6,000 per year; $2.30 per machine hour

B.     $6,000 per year; $1.80 per machine hour

C.     $24,000 per year; $2.30 per machine hour

D.     $24,000 per year; $1.80 per machine hour

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