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ACCT 386 - Week 2 - Test 1

ACCT 386 - Week 2 - Test 1
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ACCT 386 - Week 2 - Test 1

1.The following costs were incurred in September:

  Direct materials

$39,100  

  Direct labor

$30,400  

  Manufacturing overhead

$18,000  

  Selling expenses

$14,500  

  Administrative expenses

$34,700  

Prime costs during the month totaled:

  • $87,500
  • $136,700
  • $48,400
  • $69,500

 

2.A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $4,770 and is paid at the beginning of the first year. Seventy percent of the premium applies to manufacturing operations and 30% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?

  • $4,770 $0
  • $3,339 $1,431
  • $2,226 $954
  • $1,113 $477

   

3.Gambarini Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $212.90 per unit.

  Sales volume (units) 

5,800  

6,940  

  Cost of sales

$452,400  

$541,320  

  Selling and administrative costs

$615,000  

$643,500  

The best estimate of the total monthly fixed cost is:

  • $1,184,820
  • $1,113,360
  • $1,067,400
  • $470,000

 

4.The following data pertains to activity and the cost of cleaning and maintenance for two recent months:

 

Month 1

Month 2

 

 

  Production volume

2,400

 units

3,200

 units

  Cleaning and maintenance costs

$1,500

 

$1,940

 

The best estimate of the total month 1 variable cost for cleaning and maintenance is: (Do not round intermediate calculations.)

  • $620
  • $820
  • $1,020
  • $1,320

 

5.At an activity level of 9,500 machine-hours in a month, Nooner Corporation's total variable production engineering cost is $779,950 and its total fixed production engineering cost is $200,970. What would be the total production engineering cost per unit, both fixed and variable, at an activity level of 9,900 machine-hours in a month? Assume that this level of activity is within the relevant range. (Do not round intermediate calculations.) 

  • $102.40
  • $102.05
  • $102.58
  • $101.51

 

6.Supply costs at Lattea Corporation's chain of gyms are listed below:

 

Client-Visits

Supply Cost

  March

11,671    

$28,585    

  April

11,467    

$28,419    

  May

11,999    

$28,843    

  June

14,400    

$28,940    

  July

11,731    

$28,646    

  August

11,217    

 $28,245    

  September

12,011    

$28,844    

  October

11,702    

$28,602    

  November

11,850    

$28,727    

Management believes that supply cost is a mixed cost that depends on client-visits. Using the high-low method to estimate the variable and fixed components of this cost, those estimates would be closest to:(Round your Variable cost per unit to 2 decimal places.)

  • $1.91 per client-visit; $28,647 per month
  • $.80 per client-visit; $18,714 per month
  • $0.26 per client-visit; $25,267 per month
  • $0.22 per client-visit; $25,772 per month

 

7.Haar Inc. is a merchandising company. Last month the company's cost of goods sold was $64,900. The company's beginning merchandise inventory was $17,400 and its ending merchandise inventory was $25,700. What was the total amount of the company's merchandise purchases for the month?

  • $108,000
  • $64,900
  • $73,200
  • $56,600

 

8.Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.

  Production volume

12,500

 units

14,000

 units

  Direct materials

$713,750

 

$799,400

 

  Direct labor

$256,250

 

$287,000

 

  Manufacturing overhead

$1,004,700

 

$1,027,350

 

The best estimate of the total cost to manufacture 13,300 units is closest to: (Do not round intermediate calculations.) 

  • $2,048,860
  • $2,025,550
  • $1,955,620
  • $2,095,480

 

9.At a sales volume of 41,000 units, Thoma Corporation's sales commissions (a cost that is variable with respect to sales volume) total $561,700.

To the nearest whole cent, what should be the average sales commission per unit at a sales volume of 44,600 units? (Assume that this sales volume is within the relevant range.)

  • $13.39
  • $14.39
  • $13.70
  • $13.07

 

10.Nikkel Corporation, a merchandising company, reported the following results for July:

  Sales

$494,000  

  Cost of goods sold (all variable)

$175,600  

  Total variable selling expense

$  23,500  

  Total fixed selling expense

$  23,000  

  Total variable administrative expense

$  10,000  

  Total fixed administrative expense

$  34,800  

The contribution margin for July is:

  • $318,400
  • $284,900
  • $436,200
  • $227,100

 

11.Salvadore Inc., a local retailer, has provided the following data for the month of September:

  Merchandise inventory, beginning balance

$  42,800 

  Merchandise inventory, ending balance

$  43,700 

  Sales

$263,300 

  Purchases of merchandise inventory

$140,600 

  Selling expense

$  16,900 

  Administrative expense

$  60,400 

The cost of goods sold for September was: 

  • $139,700
  • $140,600
  • $141,500
  • $217,900

 

12.Salvadore Inc., a local retailer, has provided the following data for the month of September:

  Merchandise inventory, beginning balance

$  49,500 

  Merchandise inventory, ending balance

$  42,900 

  Sales

$268,500 

  Purchases of merchandise inventory

$138,700 

  Selling expense

$  18,800 

  Administrative expense

$  53,800 

The net operating income for September was:

  • $129,800
  • $48,300
  • $130,800
  • $50,600

 

13.The following cost data pertain to the operations of Swestka Department Stores, Inc., for the month of July.

  Corporate headquarters building lease

$87,100 

  Cosmetics Department sales commissions--Northridge Store

$5,830 

  Corporate legal office salaries

$63,700 

  Store manager's salary-Northridge Store

$10,400 

  Heating-Northridge Store

$15,200 

  Cosmetics Department cost of sales--Northridge Store

$33,400 

  Central warehouse lease cost

$12,500 

  Store security-Northridge Store

$22,600 

  Cosmetics Department manager's salary--Northridge Store

$4,340 

The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores.

What is the total amount of the costs listed above that are NOT direct costs of the Northridge Store? 

  • $163,300
  • $54,640
  • $43,570
  • $87,100

 

14.Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing $523,000 or a new model 240 machine costing $482,000 to replace a machine that was purchased 7 years ago for $518,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old machine cannot be repaired.

Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product M25A.

Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done, instead of investing $482,000 in the new machine, the money could be invested in a project that would return a total of $497,000.

In making the decision to buy the model 240 machine rather than the model 370 machine, the differential cost was:

  • $41,000
  • $36,000
  • $-21,000
  • $5,000

 

15.Crinks Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 11,400 hours and the total estimated manufacturing overhead was $255,360. At the end of the year, actual direct labor-hours for the year were 11,100 hours and the actual manufacturing overhead for the year was $244,840. Overhead at the end of the year was: (Round your intermediate calculations to 2 decimal places.) 

  • $3,800 overapplied
  • $3,800 underapplied
  • $8,800 overapplied
  • $8,800 underapplied

 

16.Malcolm Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.

       On september 1, the estimates for the month were:         

    Manufacturing overhead

$16,560 

    Direct labor-hours

13,800 

  During september, the actual results were:

 

    Manufacturing overhead

$18,360 

    Direct labor-hours

12,600 

The cost records for September will show: (Round your intermediate calculations to 2 decimal places 

  • Under applied manufacturing overhead of $3,240
  • Under applied manufacturing overhead of $1,800
  • Overapplied manufacturing overhead of $3,240
  • Overapplied manufacturing overhead of $1,800

 

17.Hults Corporation has provided data concerning the company's Manufacturing Overhead account for the month of November. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $64,800 and the total of the credits to the account was $59,300. Which of the following statements is true? 

  • Manufacturing overhead for the month was underapplied by $5,500.
  • Actual manufacturing overhead incurred during the month was $59,300.
  • Manufacturing overhead applied to Work in Process for the month was $64,800.
  • Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $64,800.

 

18.The Donaldson Company uses a job-order costing system. The following data were recorded for July:  

            July 1  

            Work in Process          Added During July

Job Number     Inventory        Direct

Materials         Direct

Labor

475      $1,750             $720                $388   

476      $1,720             $980                $1,610   

477      $1,600             $1,600             $2,290   

478      $1,170             $1,470             $2,400   

Overhead is applied to jobs at the rate of 70% of direct materials cost. Jobs 475, 477, and 478 were completed during July and transferred to finished goods. Jobs 475 and 478 have been delivered to the customer. Donaldson's Work in Process inventory balance on July 31 was: 

  • $4,996
  • $4,436
  • $9,116
  • $5,156

 

19.Jurper Corporation used $221,000 of direct materials during April. At the end of April, Jurper's direct materials inventory was $30,400 more than it was at the beginning of the month. Direct materials purchases during the April amounted to:

  • $190,600
  • $0
  • $251,400
  • $250,500

 

20.Gest Inc. has provided the following data for the month of November. The balance in the Finished Goods inventory account at the beginning of the month was $54,000 and at the end of the month was $40,400. The cost of goods manufactured for the month was $269,000. The actual manufacturing overhead cost incurred was $145,100 and the manufacturing overhead cost applied to Work in Process was $133,000. The adjusted cost of goods sold that would appear on the income statement for November is:

  • $255,400
  • $282,600
  • $294,700
  • $270,500

 

21.Lyster Inc. has provided the following data for the month of August. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. 

 

 

 

 

 

 

 

 

 

 

Goods

Cost of Goods Sold

Process Finished

Work in

Total

  Direct materials

$3,100 

$16,790 

$44,620 

$64,510 

  Direct labor

2,220 

16,980 

42,160 

61,360 

  Manufacturing overhead applied

2,240 

10,490 

32,070 

44,800 

  Total

$7,560 

$44,260 

$118,850 

$170,670 

Manufacturing overhead for the month was underapplied by $1,000.

The company allocates under applied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

The work in process inventory at the end of August after allocation of under applied manufacturing overhead for the month is:

  • $7,605
  • $7,535
  • $7,530
  • $7,610

 

22.Snappy Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor hours were estimated at $77,000 and 35,000 hours, respectively, for the year. In July, Job #334 was completed at a cost of $4,500 in direct materials and $3,000 in direct labor. The labor rate is $6 per hour. By the end of the year, Snappy had worked a total of 40,500 direct labor-hours and had incurred $88,200 actual manufacturing overhead cost.

If Job #334 contained 200 units, the unit product cost on the completed job cost sheet would be: (Round intermediate calculations to 2 decimal places.)

  • $38.00
  • $43.00
  • $40.50
  • $42.90

 

23.Snappy Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor hours were estimated at $112,500 and 45,000 hours, respectively, for the year. In July, Job #334 was completed at a cost of $5,250 in direct materials and $3,500 in direct labor. The labor rate is $7 per hour. By the end of the year, Snappy had worked a total of 50,000 direct labor-hours and had incurred $120,220 actual manufacturing overhead cost.

Snappy's manufacturing overhead for the year was: (Round intermediate calculations to 2 decimal places.)

  • $4,780 underapplied
  • $6,280 overapplied
  • $6,280 underapplied
  • $4,780 overapplied

 

24.During October, Crusan Corporation incurred $67,000 of direct labor costs and $12,900 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

  • credit to Work in Process of $79,900
  • debit to Work in Process of $79,900
  • credit to Work in Process of $67,000
  • debit to Work in Process of $67,000

 

25.Bakker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $73,140 and 2,300 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $75,290 and actual direct labor-hours were 2,200.

The predetermined overhead rate for the year was: (Round your answer to 2 decimal places.)

  • $33.82
  • $30.56
  • $32.50
  • $31.80