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ACCT 386 - Week 6 - Test 3

ACCT 386 - Week 6 - Test 3
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ACCT 386 - Week 6 - Test 3

1. Matt Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 8,000 units and of Product B is 6,000 units. There are three activity cost pools, with total cost and total activity as follows:

 

 

Total Activity

  Activity Cost Pool

Total Cost

Product A

Product B

Total

  Activity 1

$26,400  

170    

380    

550    

  Activity 2

$54,365  

950    

360    

1,310    

  Activity 3

$136,880  

900    

3,820    

4,720    

The activity-based costing cost per unit of Product A is closest to: (Round your intermediate calculations to 2 decimal places.)

  • $6.71
  • $9.21
  • $5.91
  • $14.64

 

2.The controller of Ferrence Company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below:

 

Wall Mirrors

Specialty Windows

  Total expected units produced

11,900       

1,710            

  Total expected material moves

1,190       

1,610            

  Expected direct labor-hours per unit

7       

8            

The total materials handling cost for the year is expected to be $17,148.70.

If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the Wall Mirrors? (Round your intermediate calculations to 4 decimal places.)

  • $12,894
  • $9,566
  • $7,917
  • $14,727

 

3.Andujo Company allocates materials handling cost to the company's two products using the below data:

 

Modular Homes

Prefab Barns

  Total expected units produced

5,800         

13,600        

  Total expected material moves

890         

260        

  Expected direct labor-hour per unit

1,330         

200        

The total materials handling cost for the year is expected to be $207,000.

If the materials handling cost is allocated on the basis of material moves, how much of the total materials handling cost would be allocated to the Modular Homes? (Round your intermediate calculations to 5 decimal places.)

  • $179,496
  • $117,223
  • $140,904
  • $160,200

 

4. Ollivier Corporation has an activity-based costing system with three activity cost pools-Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

  Overhead costs:

 

  Equipment expense

$132,000  

  Indirect labor

$13,700  

Distribution of Resource Consumption Across Activity
Cost Pools:

 

Activity Cost Pools

 

Processing

Supervising

Other

  Equipment expense

0.30    

0.40    

0.30    

  Indirect labor

0.30    

0.40    

0.30    

Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:

  Activity:

 

 

 

MHs (Processing)

Batches (Supervising)

  Product C4

16,800           

970             

  Product L7

1,660           

1,080             

  Total

18,460           

2,050             

The activity rate for the Supervising activity cost pool under activity-based costing is closest to: 

  • $71.07 per batch
  • $11.87 per batch
  • $23.73 per batch
  • $28.43 per batch

 

 

5. Brisky Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below:

  Overhead costs:

 

 

  Equipment depreciation

$73,000  

 

  Supervisory expense

$10,900  

 

       

Distribution of Resource Consumption Across Activity Cost Pools:

 

Activity Cost Pools

 

Machining

Order Filling

Other

  Equipment depreciation

0.60     

0.30        

0.10    

  Supervisory expense

0.60     

0.20        

0.20    

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

  Activity:

 

 

 

MHs (Machining)

Orders (Order Filling)

  Product I3

5,720            

114             

  Product U8

16,500            

980             

  Total

22,220            

1,094             

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

  Sales and Direct Cost Data:

 

 

 

Product I3

Product U8

  Sales (total)

$78,500    

$63,600   

  Direct materials (total)

$34,700    

$23,500   

  Direct labor (total)

$21,600    

$34,800   

What is the overhead cost assigned to Product I3 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

  • $12,984.00
  • $2,509.00
  • $15,494.00
  • $50,340.00

 

 

6.Capizzi Corporation has an activity-based costing system with three activity cost pools-Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

  Overhead costs:

 

 

  Equipment depreciation

$84,900  

 

  Supervisory expense

$9,500  

 

       

Distribution of Resource Consumption Across Activity Cost Pools:

 

Activity Cost Pools

 

Machining

Order Filling

Other

  Equipment depreciation

0.60     

0.20        

0.20    

  Supervisory expense

0.60     

0.10        

0.30    

Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:

  Activity:

 

 

 

MHs (Machining)

Batches (Order Filling)

  Product Y7

1,700          

1,260            

  Product V2

9,960          

1,710            

  Total

11,660          

2,970            

How much overhead cost is allocated to the Order Filling activity cost pool under activity-based costing?

  • $950
  • $17,930
  • $16,980
  • $66,970

 

7. Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 units in May and 70,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 30% of the next month's expected unit sales. Due to excessive production during March, on March 31 there were 25,000 units of Product W in the ending inventory. Given this information, Walsh Company's production of Product W for the month of April should be: 

  • 57,500 units
  • 47,250 units
  • 75,000 units
  • 60,000 units

 

8. Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.79 direct labor-hours. The direct labor rate is $11.30 per direct labor-hour. The production budget calls for producing 6,800 units in October and 6,600 units in November. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,480 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?

  • $122,627.60
  • $119,621.80
  • $120,842.20
  • $123,848.00

 

9. Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,700 direct labor-hours will be required in May. The variable overhead rate is $1.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,500 per month, which includes depreciation of $8,850. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

  • $91,650
  • $105,570
  • $13,920
  • $114,420

 

10. The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,100 direct labor-hours will be required in August. The variable overhead rate is $7.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $139,160 per month, which includes depreciation of $24,860. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be: 

  • $23.70
  • $19.60
  • $27.20
  • $7.60

 

 

11. Mosbey Inc. is working on its cash budget for June. The budgeted beginning cash balance is $13,000. 11.Budgeted cash receipts total $182,000 and budgeted cash disbursements total $181,000. The desired ending cash balance is $35,000. The excess (deficiency) of cash available over disbursements for June will be:

  • $12,000
  • $14,000
  • $1,000
  • $195,000

 

12. Sartain Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.

  

Beginning Inventory

Ending Inventory

  Finished goods (units)

19,000           

69,000      

  Raw material (grams)

49,000           

39,000      

Each unit of finished goods requires 3 grams of raw material.

  If the company plans to sell 540,000 units during the year, the number of units it would have to manufacture during the year would be:

  • 540,000 units
  • 609,000 units
  • 590,000 units
  • 491,000 units

 

13. Sartain Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. 

 

Beginning Inventory

Ending Inventory

  Finished goods (units)

26,000           

76,000      

  Raw material (grams)

56,000           

46,000      

Each unit of finished goods requires 2 grams of raw material.

  If the company plans to sell 730,000 units during the year, how much of the raw material should the company purchase during the year?

  • 1,606,000 grams
  • 1,560,000 grams
  • 1,576,000 grams
  • 1,550,000 grams

 

14. LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.6 hours of direct labor at the rate of $15.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.

  The budgeted direct labor cost per unit of Product WZ would be: 

  • $54.00
  • $31.80
  • $15.00
  • $8.20

 

15. Thomasson Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $36,320 per month plus $2,074 per flight plus $1 per passenger. The company expected its activity in April to be 92 flights and 242 passengers, but the actual activity was 91 flights and 247 passengers. The actual cost for plane operating costs in April was $225,110. The activity variance for plane operating costs in April would be closest to:

  • $2,260 U
  • $2,069 U
  • $2,260 F
  • $2,069 F

 

16. Cadavieco Detailing's cost formula for its materials and supplies is $2,000 per month plus $5 per vehicle. For the month of November, the company planned for activity of 95 vehicles, but the actual level of activity was 55 vehicles. The actual materials and supplies for the month was $2,320.

The materials and supplies in the planning budget for November would be closest to:

  • $2,320
  • $4,066
  • $2,275
  • $2,475

 

17. Gourley Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 4,100 client-visits, but its actual level of activity was 4,020 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

 

Fixed element per month

Variable element per client-visit

  Revenue

$40.80  

 

 

 

  Personnel expenses

$36,800  

$12.00  

  Medical supplies

2,800  

8.80  

  Occupancy expenses

9,800  

2.80  

  Administrative expenses

6,800  

.10  

  Total expenses

$56,200  

$23.70  

The activity variance for net operating income in August would be closest to:

  • $618 F
  • $1,368 F
  • $1,368 U
  • $618 U

 

 

18. Galante Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During May, Kennel budgeted for 3,400 tenant-days, but its actual level of activity was 3,380 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:

Data used in budgeting:

 

Fixed element
per month

Variable element per tenant-day

  Revenue

$29.90     

 

 

 

  Wages and salaries

$2,400  

$5.90     

  Expendables

600  

10.70     

  Facility expenses

7,400  

2.90     

  Administrative expenses  

7,200  

0.50     

  Total expenses

$17,600  

$20.00     

The net operating income in the flexible budget for May would be closest to:

  • $18,638
  • $16,060
  • $15,862
  • $18,544

 

19. Diskind Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 7,400 units, but its actual level of activity was 7,350 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:

 

Fixed element
per month

Variable element
per unit

  Revenue

 

$34.90       

  Direct labor

$0      

$5.50       

  Direct materials

0      

13.40       

  Manufacturing overhead

31,000      

2.40       

  Selling and administrative expenses

26,200      

.20       

  Total expenses

$ 57,200      

$21.50       

The spending variance for direct materials in October would be closest to:

  • $1,400 U
  • $730 U
  • $730 F
  • $1,400 F

 

20. Hurren Corporation makes a product with the following standard costs:

  Inputs

Standard Quantity or Hours

Standard Price or Rate

Standard Cost Per Unit

  Direct materials

  5.2 grams

$6.00 per gram

$31.20       

  Direct labor

  0.7 hours

$17.00 per hour

$11.90       

  Variable overhead

  0.7 hours

$6.00 per hour

$4.20       

The company reported the following results concerning this product in June.

  Originally budgeted output

5,800 

  units

  Actual output

5,700 

  units

  Raw materials used in production

28,460 

  grams

  Actual direct labor-hours

3,800 

  hours

  Purchases of raw materials

32,600 

  grams

  Actual price of raw materials purchased

$6.10 

  per gram

  Actual direct labor rate

$17.90 

  per hour

  Actual variable overhead rate

$5.70 

  per hour

The company applies variable overhead on the basis of direct labor-hours. The direct materials price variance is computed when the materials are purchased.

The labor rate variance for June is: (Round your intermediate calculations to 2 decimal places.)

  • $3,591 F
  • $3,420 U
  • $3,591 U
  • $3,420 F

 

21. Hurren Corporation makes a product with the following standard costs:

  Inputs

Standard Quantity or Hours

Standard Price or Rate

Standard Cost Per Unit

  Direct materials

4.9 grams

    $4.00 per gram

$19.60           

  Direct labor

0.7 hours

    $14.00 per hour

$9.80           

  Variable overhead

0.7 hours

    $9.00 per hour

$6.30           

The company reported the following results concerning this product in June.

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