cost accounting test bank.docx

CHAPTER 8 QUIZ1. Which of the following pertains primarily to the planning of fixed overhead costs?a. A standard rate per output unit is developed.b. Only essential activities are to be undertaken.c. Activities are to be undertaken in the most efficient method.d. Key decisions are made at the start of the budget period determining the level of costs. 2. In selecting a cost allocation base for variable overhead, what criteria for the base is preferred?a. Ease of acquiring reliable information for accurate allocationsb. A cause-and-effect relationship between the cost and the activity levelc. A single base that will simplify the allocation processd. One that has been used in the pastThe following data apply to questions 39. Sebastian Company, which manufactures electrical switches, uses a standard cost system and carries all inventories at standard. The standard manufacturing overhead costs per switch are based on direct labor hours and are shown below:Variable overhead (5 hours $12 per direct manufacturing labor hour) $ 60Fixed overhead (5 hours $15* per direct manufacturing labor hour) 75 Total overhead per switch $135 *Based on capacity of 200,000 direct manufacturing labor hours per month.The following information is available for the month of December: 46,000 switches were produced although 40,000 switches were scheduled to be produced. 225,000 direct manufacturing labor hours were worked at a total cost of $5,625,000. Variable manufacturing overhead costs were $2,750,000. Fixed manufacturing overhead costs were $3,050,000.3. CMA Adapted The variable overhead spending variance for December wasa.$50,000 U.b.$350,000 U.c.$10,000 F.d.$60,000 F.4. CMA Adapted The variable manufacturing overhead efficiency variance for December wasa.$50,000 U.b.$350,000 U.c.$10,000 F.d.$60,000 F.5. The total variable manufacturing overhead variance wasa. $10.000 F.b. $10,000 U.c. $110,000 U.d. $110,000 F.6. CMA Adapted The fixed manufacturing overhead spending variance for December wasa.$450,000 F.b.$400,000 F.c.$50,000 U.d.$775,000 F.7. The fixed overhead production volume variance for December wasa.$450,000 F.b.$400,000 F.c.$50,000 U.d.$775,000 F.8. What amount should be credited to the Allocated Manufacturing Overhead Control account for the month of December?a.$6,210,000b.$5,800,000c.$5,760,000d.$5,700,0009. Under the 2-variance method, the flexible-budget variance for December wasa.$10,000 F.b.$40,000 U.c.$50,000 U.d.$100,000 U.10. Under the 3-variance method, the spending variance for December wasa. $10,000 F.b.$40,000 U.c.$50,000 U.d.$100,000 U.11. Which of the following statements is true about overhead cost variance analysis using activity-based costing?a. Overhead cost variances are calculated for output-unit level costs only.b. Overhead cost variances are calculated for variable manufacturing overhead costs only.c. A 4-variance analysis can be conducted.d. Activity-based costing uses input measures for all activities, resulting in the inability to do flexible budgets needed for variance analysis.CHAPTER 8 QUIZ SOLUTIONS1.d2.b3.a4.d5.a6.c7.a8.a9.b10.d11.cQuiz Question Calculations3.Standard 225,000 DLH $12=$2,700,000Actual 2,750,000VOH Spending variance$ 50,000 U4.Standard 46,000 switches 5 DLH/switch=230,000Actual DLH225,000VOH Efficiency variance 5,000 $12 = $60,000 F5.Total variable overhead variance = $50,000 U + $60,000 F = $10,000 F6.Budgeted fixed OH 200,000 DLH $15/DLH =$3,000,000Actual fixed OH 3,050,000FOH Spending variance 50,000 U7.Budgeted DLH200,000 Allocated 46,000 5230,000 30,000 15 = 450,000 F230,000 (15 + 12) = $6,210,00050,000 U 60,000 F + 50,000 U = 40,000 U50,000 U + 50,000 U = 100,000 UCHAPTER 15 QUIZ1. The use of a dual-rate cost-allocation method recognizesa. the improvements in technology allowing for use of multiple cost pools.b. the need to use both budgeted and actual cost rates when allocating.c. the need to use both budgeted and actual usage of quantities when allocating.d.the behavior aspect of costs.2. Managers are affected by risks they have to take and would prefer to usea. actual rates for cost allocation because the rates are calculated from real amounts.b. actual rates for cost allocation because actual rates are easier to justify to users.c. budgeted rates for cost allocation because the rates are known in advance.d. budgeted rates for cost allocation because any variances are transferred to users.The following data apply to questions 35. Billy Stone, Inc. budgets the following amounts for its Buildings & Grounds and Computer Services Departments in servicing each other and the two manufacturing divisions of Signs and Mailers:Used BySupplied ByBuilding & GroundsComputer ServicesSignsMailers Buildings & Grounds 0.200.600.20Computer Services0.15 0.300.55The actual results for the time period were as follows:Used BySupplied ByBuilding & GroundsComputer ServicesSignsMailers Buildings & Grounds0.100.600.30Computer Services0.25 0.350.40Actual cost data for each department are:FixedVariableBuildings & Grounds$ 50,000$90,000Computer Services$100,000$21,0003. Total fixed costs allocated from Buildings & Grounds to the Signs Department, using the preferred allocation basis, by the direct allocation method area.$37,500.b.$33,333.c. $30,000.d.$25,000.4. Total variable costs allocated from Computer Services to Mailers Department, using the preferred allocation basis, by the step-down allocation method (begin with Building & Grounds) area.$8,400.b.$12,000.c.$16,000.d.$25,235.5. The equation to determine the total variable costs of Computer Services using the preferred allocation basis for the reciprocal allocation method isa. CS = $21,000 + 0.25 B&G.b. CS = $21,000 + 0.20 B&G.c. CS = $21,000 + 0.15 B&G.d. CS = $21,000 + 0.10 B&G.6. If a cost is incurred for more than one user, that cost is considered a(n)a. homogeneous cost.b. common cost.c. stand-alone cost.d. incremental cost.7. Which of the following is often the most basic cause of contract disputes?a. Allowable costsb. Cost-allocation issuesc. Use of common costsd. Writing into the contract “rules of the game”8. Bundling of products creates the need for revenue allocation for each of the following except whena. selling prices for the bundle are set to recoup the stand-alone prices of each product in the bundle.b. the manager is responsible for profitability on a product-by-product basis.c. the managers bonus is based upon product profitability.d. persons involved with product development are compensated by percentage of revenues realized.Use the following information for questions 9 and 10.Trio Company sells three products, Do, Ra, and Mi, for prices of $8, $7, and $5, respectively. They also offer combinations of the products for reduced overall prices. The following packages are available: (1) a package containing Do and Ra sells for $13.50, (2) a package of Do and Mi sells for $11.50, (3) a package containing Ra and Mi sells for $10.50, and (4) a package of all three products, Do, Ra, and Mi, sells for $17.00.9. If Trio Company uses the stand-alone method (based on selling prices) to allocate revenues to products, the amount of revenues to be allocated to Do from a package of all three products, as described in (4) above, sold would bea.$8.00.b.$6.80.c.$5.95.d.$4.25.10. If Trio Company uses the incremental-revenues allocation method and has designated Ra as the primary product, the amount of revenues from a bundled package of all three products to be allocated to Ra would bea.$7.00.b.$6.80.c.$5.95.d.$4.25.CHAPTER 16 QUIZThe following data apply to questions 15. Brant Corporation manufactures two products out of a joint processScout and Andro. The joint (common) costs incurred are $400,000 for a standard production run that generates 70,000 pounds of Scout and 30,000 pounds of Andro. Scout sells for $9.00 per pound whereas Andro sells for $7.00 per pound.1. CMA Adapted If there are no additional processing costs incurred after the splitoff point, the amount of joint cost of each production run allocated to Scout on a physical-quantity basis isa. $300,000.b.$280,000.c. $120,000.d.$100,000.2. CMA Adapted If there are no additional processing costs incurred after the splitoff point, the amount of joint cost of each production run allocated to Andro on a sales value at splitoff basis isa.$300,000.b.$225,000.c. $175,000.d.$100,000.3. CMA Adapted If additional processing costs beyond the splitoff point are $1.00 per pound for Scout and $2.333 per pound for Andro, the amount of joint cost of each production run allocated to Andro on a physical quantity basis isa.$300,000.b.$280,000.c. $120,000.d.$100,000.4. CMA Adapted If additional processing costs beyond the splitoff point are $1.00 per pound for Scout and $2.333 per pound for Andro, the amount of joint cost of each production run allocated to Andro on an estimated net realizable value basis isa.$80,000.b.$147,350.c.$175,000.d.$320,000.5. Assume the same cost information as in question 4. The amount of joint cost of each production run allocated to Scout using the constant gross-margin percentage NRV method isa.$224,910.b.$260,120.c.$335,090.d. $405,090.6. CPA Adapted For purposes of allocating joint costs to joint products, the sales value at splitoff method could be used in which of the following situations?No costsCost beyond beyondsplitoffsplitoffa.YesNob.YesYesc.NoYesd.NoNo7. Products G and H are joint products developed from the same process with each being processed further. Joint costs are incurred until splitoff, the separable costs are incurred in further refining each product. Sales values of G and H at splitoff are used to allocate joint costs. If the sales value of G at splitoff increases and all other costs and selling prices remain unchanged, joint costs allocated to: G Ha.increasesincreasesb.increasesdecreasesc.decreasesdecreasesd.decreasesincreases8. CPA Adapted Tanner Company manufactures products Katran and Klare from a joint process. Product Katran has been allocated $7,500 of total joint costs of $30,000 for the 1,500 units produced. Katran can be sold at the splitoff point for $4 per unit, or it can be processed further with additional costs of $2,000 and sold for $7 per unit. If Katran is processed further and sold, the result would bea. a breakeven situation.b. an overall loss of $1,500.c. a gain of $2,500 from further processing.d. a gain of $1,000 from further processing.9. CPA Adapted In accounting for byproducts, the value of the byproduct may be recognized at the time ofProductionSalea.YesNob.YesYesc.NoNod.NoYes10. CPA Adapted Mohler Corporation manufactures a product that yields the byproduct Jep. The only costs associated with Jep are selling costs of $0.10 for each unit sold. Mohler accounts for sales of Jep by deducting Jeps separable costs from Jeps sales and then deducting this net amount from the major products cost of goods sold. Jeps sales were 200,000 units at $1.00 each. If Mohler changes its method of accounting for Jeps sales of showing the net amount as additional sales revenue, the Mohlers gross margin woulda. increase by $180,000.b. increase by $200,000.c. increase by $220,000.d. be unaffected.CHAPTER 16 QUIZ SOLUTIONS1.b 2.d3.c4.a5.c6.b7.b8.c9.b10.dQuiz Question Calculations1. Scout $400,000 70,000 lbs /100,000 lbs = $280,000Andro$400,000 30,000 lbs / 100,000 lbs = $120,0002. Scout 70,000 lbs $9=$630,000Andro 30,000lbs $7 = 210,000$840,000Scout 630,000/840,000 $400,000 = $300,000Andro 210,000/840,000 $400,000 = #100,0003. See answer to #14. ScoutRevenues$630,000Additional Proc $1 70,000 (70,000)$560,000AndroRevenues$210,000Additional Proc $2.33 30,000 (70,000) 140,000NRV$700,000Scout 560,000/700,000 $400,000 = $320,000Andro140,000/700,000 $400,000 = $ 80,0005. ScoutAndroTotalSales$630,000$210,000$840,000Separable Costs (70,000) (70,000) (140,000)$560,000$140,000$700,000Joint Costs (335,090) (65,010) (400,000)Gross Profit 224,910 74,970* 300,00035.7%*Adjusted for rounding*300,000/840,000 1. Katran splitoff value $4 x 11500 = $6,000Process further $7 1500 = 10,500 less separable costs of $2,000 = $8,500$8,500 $6,000 = $2,000 gain from further processing10.Sales of Jep200,000 $1 = $200,000Separable costs 20,000 $.10 = 20,000Jeb Gross Margin$180,000However, this amount is currently being deducted from the cost of the main product, so gross margin remains unchanged.CHAPTER 17 QUIZUse the following information for questions 110.Top That manufactures baseball-style hats. Material is introduced at the beginning of the process in the Cutting Department. Conversion costs are incurred (and allocated) uniformly throughout the process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Data for the Cutting Department for the month of February 2009 follow: Work in process, January 31 50,000 units100% complete for direct materials; 40% completed for conversion costsactual costs of direct materials, $70,500; actual costs of conversion, $34,050Units started during February, 225,000Units completed during February 200,000Work in process, February 28 75,000 units100% complete for direct materials; 20% completed for conversion costsDirect materials added during February actual costs$342,000Conversion costs added during February actual costs$352,950 1. Assuming Top That uses the weighted-average method to account for inventories, the equivalent units of work for the month of February are Direct Materials Conversion Costsa.225,000225,000b.200,000200,000c.275,000215,000d.225,000200,0002. Assuming Top That used the weighted-average method to account for inventories, the cost per equivalent whole unit produced during February isa.$3.30.b.$3.55.c.$3.77.d.$4.00.3. Assuming Top That uses the weighted-average method to account for inventories, the assignment of costs to work in process at the end of February isa.$300,000.b.$266,250.c$166,525.d.$139,500. 4. If Top That uses the first-in, first-out (FIFO) method to account for inventories, the equivalent units of work for the month of February areDirect Materials Conversion Costsa.225,000225,000b.225,000195,000c.275,000200,000d.200,000195,0005. If Top That uses the FIFO method to account for inventories, the costs per equivalent unit for February areDirect MaterialsConversion Costsa. $1.50 $1.76b. $1.83 $1.72c. $1.71 $1.81d. $1.52 $1.816. Assuming Top That uses the first-in, first-out (FIFO) method to account for inventories, the assignment of costs to units completed and transferred to the Sewing Department during February isa.$658,350.b.$636,450.c.$666,000.d.$652,000.The following additional data apply to questions 79.Standard costs for the Cutting Department: Direct materials: $1.50 per unit; Conversion costs $1.75 per unit7. The standard costs of units completed and transferred from the Cutting Department during February isa.$731,250.b.$650,000.c.$678,750.d.$600,000.8. The conversion costs variance for the month of February isa.$40,800 favorable.b.$94,250 favorable.c.$11,700 unfavorable.d.$29,750 unfavorable. 9. The journal entry to record inventory costs and direct-material variances for the month of February isa.Cutting Department Control342,000Direct Material Variances 4,500Work in ProcessCutting Department337,500b.Work in ProcessCutting Department337,500Direct Material Variances 4,500Cutting Department Control342,000c.Work in ProcessCutting Department342,000Direct Material Variances 4,500Cutting Department Control337,500d.Work in ProcessCutting Department341,250Direct Material Variances 750Cutting Department Control342,00010. In the Sewing Department, additional direct materials are added to the product at the end of production. Without prejudice to your answer for questions 19, assume that 200,000 units were transferred from the Cutting Department and that the weighted-average method is used. Data for February follow:Work in process, January 3170,000 units (30% complete as to conversion)Units completed during February240,000 unitsWork in process, February 2830,000 units (80% complete as to conversion) For the Sewing Department, t