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Customer Question

Which of the following companies is most likely to use a process costing system?

Answer

A.	A company that builds airplanes.
B.	A company that produces petroleum products.
C.	A hospital.
D.	A company that prints wedding invitations.

2 points

Question 4

MRC Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for July follows:

Estimated direct labor

5,200 hours @ $14.20 = $73,840

Direct labor incurred

5,300 hours @ $14.80 = $78,440

Estimated manufacturing overhead

$317,512

Actual manufacturing overhead

$329,448

How much is the predetermined overhead rate?

Answer

A.
$4.30

B.
$62.16

C.
$61.06

D.
$63.36

2 points

Question 5

Labor and overhead are often grouped together and referred to as

Answer

A.
prime costs.

B.
equivalent unit costs.

C.
conversion costs.

D.
total manufacturing costs.

2 points

Question 6

The ending Work in Process inventory in the mixing department contains 300 units that are 30% complete with respect to labor costs. How many equivalent units are in the ending inventory?

Answer

A.
90

B.
300

C.
70

D.
210

2 points

Question 7

If beginning inventory consisted of 5,500 units, ending inventory was 2,500 units, and 10,000 units were started during the period, how many units were completed and transferred out of the department?

Answer

A.
13,000

B.
7,000

C.
15,500

D.
18,000

2 points

Question 8

When the level of activity increases, total fixed costs

Answer

A.
remain the same.

B.
change, but the direction depends on the specific situation.

C.
decrease.

D.
increase.

2 points

Question 9

Werth Company produces tie racks. The estimated fixed costs for the year are $288,000, and the estimated variable costs per unit are $14. Werth expects to produce and sell 60,000 units at a price of $20 per unit. How much is the break-even point in units?

Answer

A.
48,000

B.
72,000

C.
8,471

D.
3,600

2 points

Question 10

Donough Company had the following income statement:

Sales revenue (800 units)

$80,000

Cost of goods sold:

Fixed costs

$20,000

Variable costs

18,500

38,500

Gross profit

41,500

Operating expenses:

Fixed costs

12,000

Variable costs

13,500

25,500

Operating income

$16,000

How much is Donough's total contribution margin?

Answer

A.
$48,000

B.
$28,000

C.
$41,500

D.
$61,500

2 points

Question 11

PSS Company experienced the following costs in 2011:

Direct materials

$4.00 / unit

Direct labor

$8.00 / unit

Manufacturing Overhead Costs:

Variable

$2.00 / unit

Fixed

$168,000

There are no beginning inventories. During the year the company manufactured 60,000 units and sold 55,000 units. If profit for the year was $124,000 using full costing, what amount would the profit be if the company used variable costing?

Answer

A.
$138,000

B.
More information is needed to determine the answer.

C.
$124,000

D.
$110,000

2 points

Question 12

Jamba Company makes ceramic mugs and has the following costs for 2010, 2011, and 2012:

Selling price

$8.00 / mug

Variable production cost

$2.20 / mug

Variable selling cost

$0.40 / mug

Fixed production cost

$360,000 / year

Fixed selling and administrative cost

$80,000 / year

Production and sales in units for 2010 – 2012 are as follows:

Year

Production

Sales

2010

100,000

90,000

2011

120,000

110,000

2012

90,000

110,000

Which two years would have the same income under variable costing?

Answer

A.
no two years would have the same income.

B.
2010 and 2012.

C.
2011 and 2012.

D.
2010 and 2011.

2 points

Question 13

Washington Supply Company experienced the following costs in 2010:

Direct materials

$3.50 / unit

Direct labor

$2.55 / unit

Manufacturing Overhead Costs

$1.50 / unit

Variable

Fixed

$20,000

Selling & Administrative Costs

Variable selling

$2.15 / unit

Fixed selling

$8,000

Fixed administrative

$7,000

During the year the company manufactured 95,000 units and sold 80,000 units. If the average selling price per unit was $20, how much was the company's contribution margin?

Answer

A.
$824,000

B.
$1,116,000

C.
$996,000

D.
$776,000

2 points

Question 14

T-Shirt Man is a direct marketer of popular t-shirts. Following is information about its revenue and cost structure:

Selling Price

$15.00 / t-shirt

Variable Costs:

Production (manufacturing costs)

$3.00 / t-shirt

Selling & Administration (non-mfg costs)

$1.00 / t-shirt

Fixed Costs:

Production (manufacturing costs)

$1,000,000 / year

Selling & Administration (non-mfg costs)

$2,000,000 / year

Assume 400,000 t-shirts are produced and 350,000 are sold in 2011. What is ending inventory under variable costing?

Answer

A.
$150,000

B.
$325,000

C.
$200,000

D.
$275,000

2 points

Question 15

When the number of units sold is equal to the number of units produced, how much will net income be using full costing?

Answer

A.
Greater than net income using variable costing.

B.
Equal to net income using variable costing.

C.
Less than net income using variable costing.

D.
None of the above answers is always correct.

2 points

Question 16

Sweet Products produces mint syrup used by gum and candy companies. Recently, the company has had excess capacity due to a foreign supplier entering its market. Sweet Products is currently bidding on a potential order from Red Sugar Candy for 5,000 cases of syrup. The estimated cost of each case is $27.50, as follows: direct material, $10; direct labor, $5; and manufacturing overhead, $12.50. The overhead rate of $2.50 per direct labor dollar is based on estimated annual overhead of $1,500,000 and estimated direct labor of $600,000, composed of $400,000 of variable costs and $1,100,000 of fixed costs. The largest fixed cost relates to depreciation of plant and equipment. With respect to overhead, how much is the variable cost of producing a case of syrup?

Answer

A.
$13.33

B.
$15.00

C.
$18.33

D.
$17.50

2 points

Question 17

Vivian's Flowers produces floral bouquets for commercial businesses (i.e. hotels) and uses an activity-based costing system. Data concerning overhead costs and activity pools is as follows:

Activity Cost Pool

Estimated Wages

Estimated Other

Bouquets

$48,000

$18,000

Deliveries

24,000

10,000

Other

8,000

12,000

Total

$80,000

$40,000

During the year Vivian made 60,000 bouquets and made 5,000 deliveries. Using activity-based costing what is the approximate cost per delivery?

Answer

A.
$16.00

B.
$4.80

C.
$24.00

D.
$6.80

2 points

Question 18

Mexican Spices Company makes two types of salsa, hot and mild. Information for the two flavors appears below:

Hot

Mild

Sales

$400,000

$600,000

Direct materials

$100,000

$200,000

Direct labor

$50,000

$150,000

Labor hours

5,000

10,000

Mexican Spices incurred $240,000 in overhead costs for the period.

Assume that Mexican Spices allocates overhead cost to products based on the labor hours worked on each product. What is the overhead application rate?

Answer

A.
$13.33

B.
$10.00

C.
$15.00

D.
$16.00

2 points

Question 19

Which of the following are desirable characteristics of an allocation received by a manager of a producing department from a service department for using the resources of the service department?

Answer

A.	The amount of the allocation should be based solely on the usage of the service by the producing department and not a function of the use of the service by other departments.
B.	The manager should be able to budget for the cost.
C.	The allocation should force the production manager to pay for the capacity demands the production manager is creating.
D.	All of the above are desirable characteristics of an allocation received by a manger of a producing department from a service department.

2 points

Question 20

Offshore Company makes 2 different types of boats, sail and fishing boats. The company consists of two different departments, design & engineering and production. The company has decided to allocate overhead costs in each of the two cost pools. Data on estimated overhead follows:

Estimated

Sail

Fish

Activity:

Driver

Overhead Cost

Estimate

Estimate

Design

# XXXXX designs

$180,000

22 designs

23 designs

Production

Labor hours

$994,000

4,500 hours

2,500 hours

What overhead rates will be used in each department to assign costs to the sail boats?

Design

Production

Answer

A.

$88,000

$639,000

B.

$4,000

$220.89

C.

$4,000

$142.00

D.

$8,182

$220.89

2 points

Question 21

A company is trying to decide whether to keep or drop the sporting goods department in its department store. If the segment is dropped, the manager will be fired. The manager's salary, in relation to the decision to keep or drop the sporting goods department, is

Answer

A.
the same for all alternatives and therefore not relevant.

B.
sunk and therefore not relevant.

C.
not avoidable and therefore relevant.

D.
avoidable and therefore relevant.

2 points

Question 22

Central Apparel Company owns two stores and management is considering eliminating the east store due to declining sales. Contribution income statements are as follows and common fixed costs are allocated on the basis of sales.

West

East

Total

Sales

$420,000

$90,000

$510,000

Variable costs

210,000

45,000

255,000

Direct fixed costs

50,000

25,000

75,000

Allocated fixed costs

110,000

35,000

145,000

Net Income

$ 50,000

($15,000)

$35,000

Central's management feels that if they eliminate the east store, that sales in the west store will increase by 20%. If the east store is closed, what effect will occur to the overall company net income?

Answer

A.
Increase by $12,000

B.
Increase by $22,000

C.
Increase by $15,000

D.
Increase by $25,000

2 points

Question 23

The allocation of joint costs to joint products influences:

Answer

A.
product line profitability for the joint products.

B.
overall profitability of the company.

C.
the decision to sell or process further the joint products.

D.
All of the above.

2 points

Question 24

The method of allocating joint costs that is based on the proportional sales values at the split-off point is called

Answer

A.
physical quantities method.

B.
equilateral method.

C.
joint-split method.

D.
relative sales value method.

2 points

Question 25

Meadows Company manufactures a number of products from the same raw material. Joint processing costs total $10,000 per month. Product Z could be sold at the cut-off point for $18,000 per month or it can be further processed at a cost of $9,000 per month and then sold for $26,000. Meadows Company should:

Answer

A.	sell product Z at the split-off point because its incremental costs will exceed incremental revenues by $7,000.
B.	sell product Z at the split-off point because its incremental costs will exceed incremental revenues by $1,000.
C.	further process product Z because its incremental revenues will exceed incremental costs by $17,000.
D.	further process product Z because its incremental revenues will exceed incremental costs by $7,000.

Submitted: 462 days ago.

Category: Finance

Value: $45

Status: CLOSED

Accepted Answer

Expert: BusinessTutor replied462 days ago.

Hello and welcome to JA

Please click on the following link for the solutions:

http://www.box.com/s/qb2kmy4lzxrtck990kc0

P.S. If you like my services, please feel free to direct your future posts to me specifically by typing "For BusinessTutor" at the beginning of your post. Should you choose to do this, please try to allow me 48 hours before the deadline. If you need to meet me online for a timed assignment, please advise me of the date and time (EST) you want me to meet you here and I will. Please make sure you take the length (and number) of the questions into consideration when making your offer to avoid delays in providing solutions.

Thank you

Expert Type	Tutor
Category:	Finance
Pos. Feedback:	99.8 %
Accepts:	1882
Answered:	2/11/2012

Experience: More than 5000 online tutoring sessions.

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Expert: BusinessTutor replied461 days and 23 hours ago.

Thank you for the accept, but I have posted the solution before you added the other questions. I will work on the remaining ones and post them as soon as I am done. Is this a timed assignment?

Customer replied461 days and 23 hours ago.

Yes... I need 13 to 25...

I appreciate it and will add good bonus!

Expert: BusinessTutor replied461 days and 23 hours ago.

Ok :)

Do not respond to the other post. I will post all the remaining solutions here

Expert: BusinessTutor replied461 days and 23 hours ago.

Here are the full solution:

http://www.box.com/s/qrpmuclb93l42htkdhbk

You do not need to click accept again so that you are not double charged. If you want to, you can simply add a bonus (not an obligation)

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Estimated direct labor	5,200 hours @ $14.20 = $73,840
Direct labor incurred	5,300 hours @ $14.80 = $78,440
Estimated manufacturing overhead	$317,512
Actual manufacturing overhead	$329,448

A.	prime costs.
B.	equivalent unit costs.
C.	conversion costs.
D.	total manufacturing costs.

A.	remain the same.
B.	change, but the direction depends on the specific situation.
C.	decrease.
D.	increase.

Direct materials	$4.00 / unit
Direct labor	$8.00 / unit
Manufacturing Overhead Costs:

A.	$138,000
B.	More information is needed to determine the answer.
C.	$124,000
D.	$110,000

Selling price	$8.00 / mug
Variable production cost	$2.20 / mug
Variable selling cost	$0.40 / mug
Fixed production cost	$360,000 / year
Fixed selling and administrative cost	$80,000 / year

A.	no two years would have the same income.
B.	2010 and 2012.
C.	2011 and 2012.
D.	2010 and 2011.

	Production (manufacturing costs)	$3.00 / t-shirt
	Selling & Administration (non-mfg costs)	$1.00 / t-shirt

	Production (manufacturing costs)	$1,000,000 / year
	Selling & Administration (non-mfg costs)	$2,000,000 / year

A.	Greater than net income using variable costing.
B.	Equal to net income using variable costing.
C.	Less than net income using variable costing.
D.	None of the above answers is always correct.

A.	$4.30
B.	$62.16
C.	$61.06
D.	$63.36

A.	90
B.	300
C.	70
D.	210

A.	13,000
B.	7,000
C.	15,500
D.	18,000

A.	48,000
B.	72,000
C.	8,471
D.	3,600

Bouquets	$48,000	$18,000
Deliveries	24,000	10,000
Other	8,000	12,000

	Hot	Mild
Sales	$400,000	$600,000
Direct materials	$100,000	$200,000
Direct labor	$50,000	$150,000
Labor hours	5,000	10,000

		Estimated	Sail	Fish
Activity:	Driver	Overhead Cost	Estimate	Estimate

Design	# XXXXX designs	$180,000	22 designs	23 designs
Production	Labor hours	$994,000	4,500 hours	2,500 hours

A.	the same for all alternatives and therefore not relevant.
B.	sunk and therefore not relevant.
C.	not avoidable and therefore relevant.
D.	avoidable and therefore relevant.

Sales	$420,000	$90,000	$510,000
Variable costs	210,000	45,000	255,000
Direct fixed costs	50,000	25,000	75,000
Allocated fixed costs	110,000	35,000	145,000
Net Income	$ 50,000	($15,000)	$35,000

A.	Increase by $12,000
B.	Increase by $22,000
C.	Increase by $15,000
D.	Increase by $25,000

A.	product line profitability for the joint products.
B.	overall profitability of the company.
C.	the decision to sell or process further the joint products.
D.	All of the above.

A.	physical quantities method.
B.	equilateral method.
C.	joint-split method.
D.	relative sales value method.

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