BUSINESS

15.    What were the equivalent units for conversion costs during February?

A. 79,500              B. 75,000               C. 83,500              D. 85,000

 

Answer the following questions using the information below:

 

The Morgan Models company manufactures replica plastic airplane and motorized vehicle models. During October, the firm’s Assembly Department started production of 60,000 models. During the month, the firm completed 66,000 models, and transferred them to the Finishing Department. The firm ended the month with 22,000 models in ending inventory. There were 28,000 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Morgan. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs.

 

Beginning inventory:

Direct materials costs               $39,200

Conversion costs                        $30,800

 

Manufacturing costs added during the accounting period:

Direct materials costs               $90,000

Conversion costs                      $280,000

 

16.    What is the cost of the goods transferred out during October?

A. $375,000         B. $340,000          C. $363,000          D. $330,000

 

 

17.    Luke employs 25 professional cleaners. Budgeted costs total $1,800,000 of which $1,050,000 is direct costs. Budgeted indirect costs are $750,000 and actual indirect costs were $793,800. Budgeted professional labor-hours are 1,000,000 and actual hours were 1,008,000. What is the budgeted direct cost-allocation rate?

 

A. $1.80 per hour               B. $1.7857 per hour

C. $1.05 per hour               D. $0.75 per hour

 

18.    Annual cost rates are preferred over actual cost rates for all of the following reasons EXCEPT:

A. budgeted costs allow managers to have cost information on a timely basis

B. budgeted-cost rates can be used to allocate direct or indirect costs

C. budgeted costs may be subject to short-run fluctuations

D. budgeted indirect-cost rates are known prior to the inception of a new job

 

Answer the following questions using the information below:

 

Gibson Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Winfield High School band jacket job.

 

                                                                              Company         Winfield High School Job

Direct materials                                          $40,000                           $1,000

Direct labor                                                  $10,000                               $200

Manufacturing overhead costs              $30,000

Machine-hours                                           100,000  mh                         900mh

 

19.    What is the bid price for the Winfield High School job if the company uses a 40% markup of total manufacturing costs?

 

A. $2,310              B. $2,058               C. $588 D. $1,680

 

20.    What is the appropriate journal entry if $100,000 of materials were purchased on account for the month of August?

 

A. Materials Control                                          100,000

Accounts Payable Control                                                      100,000

B. Manufacturing Allocated                           100,000

Accounts Receivable Control                                                 100,000

C. Manufacturing Overhead Control           100,000

Accounts Receivable Control                                                 100,000

D. Work-in-Process Control                            100,000

Accounts Payable Control                                                       100,000

 

Answer the following questions using the information below:

 

Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are:

                                                                                        Department A    Department B

Direct materials                                                $700,000               $100,000

Direct manufacturing labor                          $200,000               $800,000

Manufacturing overhead                              $600,000               $400,000

 

The actual material and labor costs charged to Job #432 were as follows:

                                                                                                   Total

Direct materials:                                                 $25,000

Direct labor:

Department A                                               $ 8,000

Department B                                              $12,000

$20,000

 

Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year.

 

21.    For Department B, the manufacturing overhead allocation rate is:

A. 200%                B. 50%   C. 100%                D. 300%

 

Answer the following questions using the information below:

 

Presented below are the production data for the first six months of the year for the mixed costs incurred by Gallup Company.

                                Month                          Cost             Units

January                    $4,890              4,100

February                    4,024              3,200

March                         6,480              5,300

April                           8,840              7,500

May                             5,800              4,800

June                             7,336              6,600

 

Gallup Company uses the high-low method to analyze mixed costs.

 

22.    How would the cost function be stated?

A. y = $440 + $1.12X         B. y = $7,850 + $0.132X

C. y = $3,562.30 + $0.144X              D. y = $107.20 + $1.12

 

23.    The cost function y = 150 + 10X:   46

A. has an intercept of 150               B. has a slope coefficient of 150

C. represents a fixed cost                D. is a nonlinear

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