ACC3000 Topic 7 Mastery Assessments PDF

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Topic 7 MyEducator Mastery Assessments for Fall 2019 ACC-3000 with Max Cannon....

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ACC-3000 Topic 7 Mastery Assessments Table of Contents Topic 7 -- Mastery Assessment A

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Topic 7 -- Mastery Assessment B

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Topic 7 -- Mastery Assessment C

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2 Topic 7 -- Mastery Assessment A 1. Which ONE of the following is NOT one of the three general categories of product costs? a. Manufacturing overhead b. CEO and other executive salaries c. Direct labor d. Direct materials 2. Which ONE of the following is the most common sequence of the FLOW of costs through a job order cost system? Answer: First, purchase raw materials; then transfer raw materials to production; then add direct labor and manufacturing overhead costs; then transfer the cost of completed goods to finished goods inventory; finally, sell goods and transfer cost to cost of goods sold 3. The Smith Company manufactures insulated windows. Costs for March were as follows. Direct labor

$53,000

Indirect labor

18,000

Salary of corporate vice president for advertising

25,000

Direct materials

48,000

Indirect materials

4,000

Interest expense

7,500

Salary of factory supervisor

3,000

Insurance on manufacturing equipment

2,000

What is Smith Company's actual manufacturing overhead for March? a. $75,000 b. $9,000 c. $5,000 d. $27,000 Indirect labor

$18,000

Indirect materials

$4,000

Salary of factory supervisor

$3,000

Insurance on manufacturing equipment

$2,000

(+)-----------------------------------------------------------------Manufacturing Overhead

$27,000

3 4. INDIRECT materials costing $1,000 were transferred from the materials warehouse to be used in production. At this point, how are these INDIRECT materials reported in the production cost records? a. Direct Labor b. Manufacturing Overhead Indirect materials and supplies are miscellaneous materials used in the factory in support of the production process. It is generally more work than it is worth to trace such miscellaneous items to a particular job. These miscellaneous items are treated as indirect materials costs and recorded in the manufacturing overhead account. These costs are then systematically assigned to specific jobs or orders, along with other overhead costs, using a predetermined overhead rate. c. Cost of Goods Sold d. Period Cost 5. Todd Company APPLIED manufacturing overhead totaling $75,000 to various customer orders during the year. This $75,000 in applied manufacturing overhead was added directly to a. Cost of Goods Sold b. Raw Materials Inventory c. Finished Goods Inventory d. Work-in-Process Inventory The account "Work-in-Process Inventory" represents the accumulated production cost of all products currently being made in the production facility. Three different production costs are added directly to Work-in-Process Inventory: Direct Materials, Direct Labor, and APPLIED Manufacturing Overhead. 6. Sophie Company has decided that direct labor hours is a good basis on which to apply overhead to production. The following data are for the most recent year. ●

Budgeted number of direct labor hours worked = 20,000 hours

●

Budgeted amount of manufacturing overhead = $100,000

●

Actual number of direct labor hours worked = 25,000 hours

●

Actual amount of manufacturing overhead = $115,000

What is Sophie Company’s PREDETERMINED OVERHEAD RATE? a. $4.60 per hour b. $5.00 per hour Predetermined Overhead Rate = Budgeted Overhead / Budgeted Labor Hours

4 Predetermined Overhead Rate = $100,000 / 20,000 hours = $5.00 per hour c. $5.75 per hour d. $4.00 per hour e. $4.50 per hour 7. Derrald Company manufactures snowboards. Costs for January were as follows. Indirect labor

11,000

Direct materials

36,000

Income tax expense

14,000

Indirect materials

5,000

Property taxes on the factory building

18,000

Direct labor

31,000

Salespersons commissions

9,000

Interest expense

17,000

Insurance on manufacturing equipment

12,000

What is Derrald Company's actual manufacturing overhead for January? a. $55,000 b. $77,000 c. $16,000 d. $34,000 e. $86,000 f.

$46,000 Indirect labor

$11,000

Indirect materials

$5,000

Property taxes on the factory building

$18,000

Insurance on manufacturing equipment

$12,000

(+)-----------------------------------------------------------------Actual Manufacturing Overhead

$46,000

g. $60,000 8. Rent of $13,000 on the factory building was paid in cash. Immediately upon payment of this $13,000 in cash, where should this factory rent amount be recorded? a. As part of Manufacturing Overhead b. As part of Raw Materials Inventory c. As part of Finished Goods Inventory

5 d. As part of Cost of Goods Sold 9. Dotsero Technology Inc. has a job-order costing system. The company uses predetermined overhead rates in applying manufacturing overhead cost to individual jobs. The predetermined overhead rate is based on machine-hours. At the beginning of the most recent year, the company's management made the following estimates for the year.

Direct labor-hours

20,000

Manufacturing overhead cost

$600,000

Job 243 entered into production on April 1 and was completed on May 12. The company's actual cost records show the following information about the job. Direct labor-hours

120

Direct materials cost

$1,100

Direct labor cost

$880

Compute the total manufacturing cost of Job 243. Note: “Total manufacturing cost” is the sum of direct materials, direct labor, and applied manufacturing overhead cost. a. $5,580 Predetermined Overhead Rate = Budgeted Overhead / Budgeted Hours Predetermined Overhead Rate = $600,000 / 20,000 hours = $30 per hour

Manufacturing Overhead = $30 per hour * 120 Actual Hours = $3,600

Manufacturing cost: Direct materials cost

$1,100

Direct labor cost

$880

Manufacturing Overhead

$3,600

(+)--------------------------------------------Manufacturing Cost

b. $10,630 c. $10,530 d. $4,950

$5,580

6 e. $11,170 f.

$10,240

g. $7,770 h. $7,100 10. Norm’s Furniture Company manufactures custom furniture only and uses a job order costing system to accumulate costs. Actual direct materials and direct labor costs are accumulated for each job, but a predetermined overhead rate is used to apply manufacturing overhead costs to individual jobs. Manufacturing overhead is applied on the basis of direct labor hours. In computing a predetermined overhead rate, the controller estimated that manufacturing overhead costs for the year would be $200,000 and direct labor hours would be 20,000. The following summary information is available for the year. Note: This summary information represents cost data related to hundreds of different job orders started or completed during the year.

a. Raw materials purchased during the year were $250,000. b. Raw materials used in production during the year were $230,000. c. Wages paid to the furniture craftsmen during the year totaled $440,000 (22,000 hours). d. Wages paid to factory maintenance workers during the year totaled $65,000. e. Depreciation on machinery and equipment during the year was $100,000. f.

Rent and utilities for the factory building during the year totaled $30,000.

g. Manufacturing overhead was applied to Work-in-Process Inventory using the predetermined overhead rate. h. Work-in-Process Inventory costing $800,000 was completed and transferred to Finished Goods Inventory. i.

Goods costing $750,000 were sold.

Assume that the beginning balance in the Work-in-Process Inventory account was $0. What is the ENDING balance in the Raw Materials Inventory account? a. $890,000 b. $115,000 c. $70,000 d. $65,000 e. $50,000 f.

$800,000

7 g. $20,000 h. $90,000 Beginning balance

$0

Raw Materials Purchased

$250,000

Raw materials used

($230,000)

(+)------------------------------------------------Ending balance

$20,000

Topic 7 -- Mastery Assessment B 1. Which ONE of the following is a PRODUCT cost? a. Supplies used in corporate headquarters b. Wages paid to factory workers c. Wages paid to company accounts receivable clerk d. Salary paid to sales manager e. Depreciation on salesperson's automobiles 2. Lorien Company manufactures baby car seats. Which ONE of the following is NOT a PRODUCT cost? a. Wages of the janitors in the executive office building b. Cost of plastic used in the construction of the car seats c. Salary of the manufacturing production supervisor d. Wages of the janitors in the car seat manufacturing building e. Property taxes on the car seat manufacturing building f.

Salary of the factory quality control inspector

g. Cost of the electricity used in the car seat manufacturing building 3. The Smith Company manufactures insulated windows. Costs for March were as follows. Indirect materials

$4,000

Interest expense

7,500

Salary of factory supervisors

25,000

Insurance on manufacturing equipment

2,000

Direct labor

53,000

Indirect labor

18,000

Salary of corporate vice president for advertising

3,000

Direct materials

48,000

8 What is Smith Company's actual manufacturing overhead for March? a. $49,000 Indirect materials

$4,000

Salary of factory supervisors

$25,000

Insurance on manufacturing equipment

$2,000

Indirect labor

$18,000

(+)-----------------------------------------------------------------Manufacturing Overhead

$49,000

Manufacturing overhead is defined as the costs incurred in the manufacturing process other than direct materials and direct labor. b. $5,000 c. $97,000 d. $9,000 4. Sophie Company has decided that direct labor hours is a good basis on which to apply overhead to production. Budgeted manufacturing overhead for the coming year is $500,000. Budgeted direct materials purchases is $400,000. Budgeted direct labor cost is $720,000. Budgeted direct labor hours for the coming year is 20,000 hours. What is Sophie Company’s PREDETERMINED OVERHEAD RATE? a. $25 per hour The predetermined overhead rate is based on budgeted data. Predetermined Overhead Rate = Budgeted Manufacturing Overhead / Budgeted Labor Hours Predetermined Overhead Rate = $500,000 / 20,000 hours = $25 per hour b. $56 per hour c. $20 per hour d. $61 per hour e. $36 per hour 5. For the year, Jay Bug Company had actual manufacturing overhead of $117,000. Based on its estimated predetermined overhead rate, Jay Bug Company applied a total of $100,000 in manufacturing overhead cost to its customer orders during the year. Which ONE of the following statements is MOST LIKELY to be TRUE?

9 a. Jay Bug Company spent $17,000 MORE on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too HIGH. b. Jay Bug Company spent $17,000 MORE on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too LOW. c. Jay Bug Company spent $17,000 LESS on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too HIGH. d. Jay Bug Company spent $17,000 LESS on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too LOW. 6. For the year, Jay Bug Company had actual manufacturing overhead of $100,000. Based on its estimated predetermined overhead rate, Jay Bug Company applied a total of $117,000 in manufacturing overhead cost to its customer orders during the year. Which ONE of the following statements is MOST LIKELY to be TRUE? a. Jay Bug Company spent $17,000 MORE on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too HIGH. b. Jay Bug Company spent $17,000 MORE on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too LOW. c. Jay Bug Company spent $17,000 LESS on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too HIGH. d. Jay Bug Company spent $17,000 LESS on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too LOW. 7. Sophie Company has decided that direct labor hours is a good basis on which to apply overhead to production. The following data are for the most recent year. ●

Budgeted number of direct labor hours worked = 20,000 hours

●

Budgeted amount of manufacturing overhead = $100,000

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Actual number of direct labor hours worked = 25,000 hours

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Actual amount of manufacturing overhead = $115,000

How much manufacturing overhead is APPLIED during the year? a. $125,000 The predetermined overhead rate is based on budgeted data. Predetermined Overhead Rate = $100,000 Budgeted Overhead / 20,000 Budgeted Hours Predetermined Overhead Rate = $5.00 per hour

Applied Overhead: $5.00 per hour * 25,000 Actual Hours = $125,000 b. $80,000 c. $100,000 d. $115,000 8. Derrald Company manufactures snowboards. Estimated costs for Year 1 were as follows: Direct labor

$31,000

Bonuses paid to factory supervisors

9,000

Interest expense

32,000

Depreciation on manufacturing equipment.

18,000

Indirect labor

11,000

Direct materials

36,000

Income tax expense

26,000

Indirect materials

14,000

Property taxes on the corporate office building

18,000

Estimated direct labor hours were 40,000. Actual data for Year 1 are as follows: Total manufacturing overhead: $120,000 Direct labor hours: 60,000 hours The predetermined manufacturing overhead rate is determined on the basis of direct labor hours. Which ONE of the following statements is TRUE? a. Applied overhead was MORE than actual overhead by $22,000 b. Applied overhead was LESS than actual overhead by $68,000 c. Applied overhead was LESS than actual overhead by $42,000 Total Estimated Manufacturing Overhead Bonuses paid to factory supervisors

$9,000

11 Depreciation on manufacturing equipment

$18,000

Indirect labor

$11,000

Indirect materials

$14,000

(+)-----------------------------------------------------------------Total estimated manufacturing overhead

$52,000

Predetermined Manufacturing Overhead Rate = Budgeted Manufacturing Costs / Estimated Direct Labor Hours Predetermined Manufacturing Overhead Rate = $52,000 / 40,000 hours = $1.3 per hour

Applied Overhead = $1.3 per hour * 60,000 hours = $78,000

Under-/Over-Applied: Actual Overhead

$120,000

(-) Applied Overhead

$78,000

-----------------------------------------Underapplied

$42,000

d. Applied overhead was LESS than actual overhead by $52,000 e. Applied overhead was MORE than actual overhead by $52,000 f.

Applied overhead was MORE than actual overhead by $68,000

g. Applied overhead was LESS than actual overhead by $22,000 h. Applied overhead was MORE than actual overhead by $42,000 9. Estimated data for Lorien Company for Year 1 are as follows. Total manufacturing overhead

$650,000

Direct labor hours

130,000 hours

Actual data for Lorien Company for Year 1 are as follows. Total manufacturing overhead

$500,000

Direct labor hours

110,000 hours

The manufacturing overhead rate is determined on the basis of direct labor hours. Which ONE of the following statements is TRUE? a. Applied overhead was MORE than actual overhead by $10,000

12 b. Applied overhead was MORE than actual overhead by $50,000 Predetermined Overhead Rate = $650,000 / 130,000 hours = $5.00 per hour Applied Overhead = $5.00 * 110,000 hours = $550,000

To find the amount of over- or under-applied overhead, we compare the actual overhead to the applied overhead. If the actual overhead is greater than the applied overhead, then we underapplied overhead for the year. If the actual overhead is less than the applied overhead, then we overapplied overhead for the year.

Under-/Over-Applied Actual Overhead

$500,000

(-) Applied Overhead

$550,000

-----------------------------------------Overapplied

-$50,000

Lorien Company overapplied overhead by $50,000. c. Applied overhead was MORE than actual overhead by $150,000 d. Applied overhead was LESS than actual overhead by $10,000 e. Applied overhead was LESS than actual overhead by $50,000 f.

Applied overhead was LESS than actual overhead by $150,000

10. Dotsero Technology Inc. has a job-order costing system. The company uses predetermined overhead rates in applying manufacturing overhead cost to individual jobs. The predetermined overhead rate is based on machine-hours. At the beginning of the most recent year, the company's management made the following estimates for the year.

Machine-hours

30,000

Manufacturing overhead cost

$420,000

Job 243 entered into production on April 1 and was completed on May 12. The company's actual cost records show the following information about the job. Dept. A Machine-hours

250

Direct materials cost

$840

13 Direct labor cost

$610

Compute the total manufacturing cost of Job 243. Note: “Total manufacturing cost” is the sum of direct materials, direct labor, and applied manufacturing overhead cost. a. $7,770 b. $4,950 Predetermined Overhead Rate = $420,000 / 30,000 hours = $14 per machine hour Manufacturing Overhead = $14 per machine hour * 250 machine hours = $3,500 Manufacturing Cost: Direct Materials Cost

$840

Direct Labor Cost

$610

Manufacturing Overhead

$3,500

(+)---------------------------------------------Total Manufacturing Cost

$4,950

c. $5,580 d. $7,100 e. $10,530 f.

$10,630

g. $10,240 h. $11,170 11. Norm’s Furniture Company manufactures custom furniture only and uses a job order costing system to accumulate costs. Actual direct materials and direct labor costs are accumulated for each job, but a predetermined overhead rate is used to apply manufacturing overhead costs to individual jobs. Manufacturing overhead is applied on the basis of direct labor hours. In computing a predetermined overhead rate, the con...