Acc202 exam 1 review PDF

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Exam 1 review using definitions, formulas, and examples from quizzes...

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Contribution margin: sum of direct materials,direct labor, variable manufacturing overhead, sales commission, variable administrative expense & then subtract from selling price per unit Ex. activity level of 9,400 machine hrs in 1 mo. The total variable production engineering cost is $828,140 and total fixed production engineering cost is $222,300. What would be the total production engineering cost per machine hr, both fixed and variable, at an activity level of 9,500 machine hrs in 1 mo? Assume that this level of activity is within the relevant range. - 828140/9400=88.10; 222300/9500=23.40; 88.1023.40=11.50 Direct costs:costs that can be easily traced to a unit of product(direct material&direct labor); Indirect costs:costs that cant be easily traced to a unit of product(manufacturing overhead); common costs:indirect costs incurred to support a # of cost objects, costs can’t be traced to cost object Direct materials:raw materials that are part of the product & can be traced (a radio in car); direct labor:costs are those labor costs that can be easily traced to individual units of product(wages paid to assembly workers); manufacturing overhead:all manufacturing costs except direct material&direct labor, cannot be easily traced(indirect materials&indirect costs)(depreciation of equipment,utility costs,property taxes, insurance) Ex.relevant range of activity is 2,600 units to 7,000 units. When it produces & sells 4,800 units, its avg costs per unit are as follows; If 6,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to: fixed manufacturing overhead per unit X # of units produced(the avg. fixed manufacturing overhead cost per unit is / total fixed manufacturing overhead cost by 4800 units) Ex.relevant range of activity is 8,400 units to 16,000 units. When it produces & sells 12,200 units, its avg. costs per unit are as follows; If 9,800 units are produced, the total amt of manufacturing overhead cost is closest to: total variable manufacturing overhead(variable manufacturing overhead X 9800)+total fixed manufacturing overhead cost(fixed manufacturing overhead X 12200)(the avg. fixed manufacturing overhead cost per unit is / total fixed manufacturing overhead cost by 12200 units) Ex.The incremental manufacturing cost that the company will incur if it increases production from 9,500 to 9,501 units is closest to (assume that the increase is within the relevant range): sum of direct materials,direct labor,variable manufacturing overhead Conversion cost=direct labor+manufacturing overhead Ex.A manufacturing company prepays its insurance coverage for a 3 yr period. The premium for the 3 yrs is $3,330 and is paid at the beginning of the 1st yr. 90% of the premium applies to manufacturing operations and 10% applies to selling and administrative activities. What amts should be considered product and period costs respectively for the 1st yr of coverage?: annual insurance expense=3330/3=1110;portion of prod. cost=.90X1110=999;portion of period cost=.10X1110=111 Gross margin=sales-cost of goods sold Ex.The company based its predetermined overhead rate for the current yr on total fixed manufacturing overhead cost of $288,600, variable manufacturing overhead of $2.60 per machine hr, and 39,000 machine hrs. The company has provided the following data concerning Job A496 which was recently completed;The unit product cost for Job A496 is closest to: est. total manufacturing overhead cost=est. Total fixed manufacturing cost+Est. variable overhead cost per unit of the allocation base × Est. total amt of the allocation base) = $288,600 + ($2.60 per machine hr × 39,000 machine hrs) = $288,600 + $101,400 = $390,000; Predetermined overhead rate = Est. total manufacturing overhead cost ÷ Est. total amt of the allocation base = $390,000 ÷ 39,000 machine hrs = $10.00 per machine hr; Overhead applied to a particular job = Predetermined overhead rate × Amt of the allocation base incurred by the job = $10.00 per machine hr × 80 machine hrs = $800; sum of direct materials, direct labor, manufacturing overhead applied=total cost of job; total cost of job/number of units=unit product cost Ex.The Corporation applies manufacturing overhead on the basis of machine hrs. The predetermined overhead rate is $20 per machine hr. The total cost that would be recorded on the job cost sheet for Job 910 would be:direct materials+direct labor(labor hrsXper labor hr) +overhead(machine hrsXper machine hr)= total manufacturing cost Ex.Sargent Corporation applies overhead cost to jobs on the basis of 90% of direct labor cost. If Job 210 shows $8,100 of manufacturing overhead cost applied, how much was the direct labor cost on the job?: Manufacturing overhead applied = Predetermined overhead rate×Amt of the allocation base incurred;$8,100 = 0.90×Direct labor cost;Direct labor cost = $8,100 ÷ 0.90 =$9,000 Ex.Brothern Corporation bases its predetermined overhead rate on the est machine hrs for the upcoming yr. Data for the most recently completed yr appear below,The predetermined overhead rate for the recently completed yr was closest to: Est. total manufacturing overhead = $1,159,637 + ($6.32 per machine hr × 39,700 machine hrs) = $1,410,54; Predetermined overhead rate = Est total manufacturing overhead ÷ Est total amt of the allocation base = $1,410,541 ÷ 39,700 machine hrs = $35.53 per machine hr Ex. Eisentrout Corporation has 2 production depts, Machining and Customizing. The company uses a job-order costing system & computes a predetermined overhead rate in each production dept. The Machining Dept’s predetermined overhead rate is based on machine hrs and the Customizing Dep’s predetermined overhead rate is based on direct labor hrs. At the beginning of the current yr, the company had made the following estimates, The est total manufacturing overhead for the Machining Dept is closest to:Machining Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department);= $82,800 + ($1.30 per machine-hour × 23,000 machine-hours);= $82,800 + $29,900 = $112,700 Ex.Longobardi Corporation bases its predetermined overhead rate on the est. labor hrs for the upcoming yr. At the beginning of the most recently completed yr, the Corporation est. the labor hrs for the upcoming yr at 36,000 labor hrs. The est variable manufacturing overhead was $5.80 per labor hr and the est total fixed manufacturing overhead was $775,800. The actual labor hrs for the yr turned out to be 32,200 labor hrs. The predetermined overhead rate for the recently completed yr was closest to: Est total manufacturing overhead = $775,800 + ($5.80 per labor-hour × 36,000 labor hrs) = $984,600; Predetermined overhead rate = Est total manufacturing overhead ÷ Est total amt of the allocation base = $984,600 ÷ 36,000 labor hrs = $27.35 per labor hr Ex. Mahon Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department’s predetermined overhead rate is based on machine-hours and the Customizing Department’s predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates; The amount of overhead applied in the Customizing Department to Job T138 is closest to: Customizing Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department); = $49,770 + ($3.10 per direct labor-hour × 6,300 direct labor-hours); = $49,770 + $19,530 = $69,300; Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $69,300 ÷ 6,300 direct labor-hours = $11.00 per direct labor-hour; Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $11.00 per direct laborhour × 80 direct labor-hours = $880 Ex. Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below,

The predetermined overhead rate for the recently completed year was closest to: Estimated total manufacturing overhead = $838,760 + ($3.10 per machine-hour × 72,800 machine-hours) = $1,064,440; Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $1,064,440 ÷ 72,800 machine-hours = $14.62 per machine-hour Ex. Bottum Corporation, a manufacturing Corporation, has provided data concerning its operations for May. The beginning balance in the raw materials account was $23,000 and the ending balance was $42,000. Raw materials purchases during the month totaled $69,000. Manufacturing overhead cost incurred during the month was $114,000, of which $2,600 consisted of raw materials classified as indirect materials. The direct materials cost for May was: Direct materials cost = Beginning raw materials inventory + Raw materials purchases − Ending raw materials − Indirect material; = $23,000 + $69,000 − $42,000 − $2,600= $47,400 Ex. Rediger Incorporated a manufacturing Corporation, has provided the following data for the month of June. The balance in the Work in Process inventory account was $33,000 at the beginning of the month and $22,500 at the end of the month. During the month, the Corporation incurred direct materials cost of $57,200 and direct labor cost of $31,300. The actual manufacturing overhead cost incurred was $54,100. The manufacturing overhead cost applied to Work in Process was $53,200. The cost of goods manufactured for June was:COGS manufactured=direct materials+direct labor+manufacturing overhead applied+beginning work in process inventory-ending work in process inventory = $57,200 + $31,300 + $53,200 + $33,000 − $22,500 = $152,200 Ex.Acheson Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations,The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year,The predetermined overhead rate is closest to:predetermined overhead rate= est total manufacturing overhead/est total amt of the allocation base= = $157,850 ÷ 4,660 machine hrs = $33.87 per machine hr Ex. sharp uses a job order costing & applied manufacturing overhead to jobs based on direct labor costs. What is the amt of direct materials used for the yr?Direct materials are debited to raw materials, indirect materials are debited to manufacturing overhead EX.Weatherhead Incorporated has provided the following data for the month of March. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month,Manufacturing overhead for the month was overapplied by $3,600The Corporation allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the manufacturing overhead applied during the month in those accounts.The work in process inventory at the end of March after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to: Ending work in process inventory after allocation of overapplied manufacturing overhead = $20,350 − [($5,830/$52,460) × $3,600] = $20,350 − (11% × $3,600) = $19,954 Ex. Luebke Incorporated 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 $70,000 and at the end of the month was $31,800. The cost of goods manufactured for the month was $221,000. The actual manufacturing overhead cost incurred was $60,400 and the manufacturing overhead cost applied to Work in Process was $65,200. The company closes out any underapplied or overapplied manufacturing overhead to cost of goods sold. The adjusted cost of goods sold that would appear on the income statement for November is:Manufacturing overhead underapplied (overapplied) = Actual manufacturing overhead incurred − Manufacturing overhead applied; = $60,400 − $65,200 = $4,800 overapplied; Adjusted cost of goods sold = Beginning finished goods inventory + Cost of goods manufactured − Ending finished goods inventory − Manufacturing overhead overapplied; = $70,000 + $221,000 − $31,800 − $4,80= $254,400 Ex.Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold., The cost of goods manufactured for May is: sum of direct materials, direct labor, manufacturing overhead=total manufacturing costs added to production + beginning work in process=total manufacturing costs to account for-ending work in process=cost of goods manufactured EX.Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the manufacturing overhead overapplied or underapplied for the year?:the manufacturing overhead is overapplied by 6400 bc manufacturing overhead applied of 212000 exceeds the manufacturing overhead by 6400 Ex.Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the amount of cost of goods manufactured for the year?COGS manufactured is the debit to finished goods & the credit to work in process=514000 cogs manufactured Job order costing: a costing system used in situations where many diff products,jobs,or services are produced each period Absorption costing: a costing method that includes all manufacturing costs-direct materials,direct labor,& both variable & fixed manufacturing overhead-in the cost of a product Allocation base:A measure of activity such as direct labor hrs or machine hrs that is used to assign costs to cost objects Predetermined overhead rate:a rate used to charge manufacturing overhead cost to jobs that is established in advance for each periodpredetermined overhead rate=estimated total manufacturing costs/estimated total amt of the allocation base Overhead application: the process of assigning overhead costs to specific jobs using the following formula: overhead applied to a particular job=predetermined overhead rate X amt of allocation base incurred by the job Normal costing:a costing system in which overhead costs are applied to a job by multiplying a predetermined overhead rate by the actual amt of the allocation base incurred by the job Job cost sheet: a form that records the direct materials, direct labor, & manufacturing overhead cost charged to a job Raw materials:any materials that go into final products; work in process: units of production that are only partially complete & will require further work before they can be sold; finished goods:completed units of product that havent been sold; cost of goods manufactured: manufacturing costs associated w the goods that were finished during the period Underapplied overhead: when the amt of overhead applied to jobs during the period is less than the total amt of overhead actually incurred Overapplied overhead: when the amt of overhead applied to jobs during the period is greater than the total amt of overhead actually incurred...