ACIS 2116 exam 1

which of the following statements is false?

1. manufacturing costs include direct materials, direct labor, and MOH

2. indirect labor is included in MOH

3. Raw materials include direct materials and exclude indirect materials

4. direct labor can be easily traced to indvidiual units of product

3. raw materials include direct materials and exclude indirect materials

cost classifications used for preparing financial statements include

1. variable cost and fixed cost

2. direct cost and indirect cost

3. product cost and period cost

4. relevant cost and irrleveant cost

3. product cost and period cost

cost classifcations used for decision making include

1. variable cost and fixed cost

2. direct cost and indirect cost

3. product cost and period cost

4. relevenat and irrelevant cost

4. relevant and irrelevant cost

Which of the following statements is true with respect to a contribution format income statement?

it subtracts varaibale expenses from sales to deribe a contribution margin

which of the following statments is true with respect to the cost of goods sold equation

cost of goods sold= behinning merchandise inventory+ purchases- ending merchandise inventory

Which of the following statments is false?

1. conversion costs include MOH

2. prime costs include direct labor

3. conversion costs include direct labor

4. prime costs include MOH

4. prime costs include MOH

Which of the following statements is true?

• Product costs and variable costs are synonyms.

• Product costs are excluded from the calculation of gross margin.

• Product costs are included in inventory as reported on the balance sheet.

• Product costs include sales commissions and advertising.

3. product costs are included in inventory as reported on the balance sheet

If sales are $100,000, fixed expenses are $30,000, and variable expenses are $50,000, then the contribution margin must be:

50,000

If sales are $100,000, fixed expenses are $30,000, and the contribution margin is $40,000, then the net operating income must be:

10,000

If the conversion costs are $70,000, direct labor costs are $20,000, and direct material costs are $40,000, then the manufacturing overhead must be:

50,000

Assume that a company purchased a piece of equipment five years ago for $250,000. Now the company is deciding whether to replace this piece of equipment with a newer model. In this "keep or replace" decision, the purchase price of the old piece of equipment is an example of a:

sunk cost

Assume the following information for a merchandising company:

Sales	$ 500,000
Variable selling expenses	$ 25,000
Cost of goods sold	$ 350,000
Fixed administrative expenses	$ 50,000
Fixed selling expenses	$ 40,000
Variable administrative expenses	$ 5,000

What is the company's gross margin?

150,000 bc sales-cogs

Which of the following statements is false when considering cost behavior within the relevant range?

• A variable cost varies, in total, in direct proportion to changes in the level of activity.

• The variable cost per unit varies inversely with changes in the level of activity.

• A fixed cost remains constant, in total, regardless of changes in the level of activity.

• The average fixed cost per unit varies inversely with changes in the level of activity.

2. the variable cost per unit varies inversley with changed in the level of activity

Which of the following statements is false when considering cost behavior within the relevant range?

• The total amount of a variable cost will change as the level of activity changes.

• A variable cost is constant if expressed on a per unit basis.

• A fixed cost varies, in total, in direct proportion to changes in the level of activity.

• The average fixed cost per unit varies inversely with changes in the level of activity.

3. A fixed cost varies, in total, in direct proportion to changes in the level of activity.

Assume the following information for a merchandising company:

Number of units sold	20,000
Selling price per unit	$ 30
Variable selling expense per unit	$ 3
Variable administrative expense per unit	$ 2
Fixed selling expenses	$ 30,000
Fixed administrative expenses	$ 50,000
Beginning merchandise inventory	$ 24,000
Ending merchandise inventory	$ 19,000
Merchandise purchases	$ 340,000

What is the net operating income?

75,000 bc

sales: 20,000 X 30= 600,000

COGS: 24,000+340000-19000= 345,000

variable expense: 20,000 x (3 +2) = 100,000

fixed expenses: 30,000 + 50,000= 80,000

so net opp: 600,000-345000-100000-80000=75000

A company's relevant range of production is 10,000 to 15,000 units. When it produces and sells 12,000 units, its unit costs are as follows:

	Amount per Unit
Direct materials	$ 7.00
Direct labor	$ 4.00
Variable manufacturing overhead	$ 1.50
Fixed manufacturing overhead	$ 5.00
Fixed selling expense	$ 3.50
Fixed administrative expense	$ 2.00
Sales commissions	$ 1.00
Variable administrative expense	$ 0.50

If 11,000 units are produced, what is the total amount of indirect manufacturing costs incurred to support this level of production?

76500 because indirect= variable MOH + fixed MOH

variable= 11000 X 1.50= 16500

Fixed= 12000 X $5= 60000

16500 +60000=76500

A company's relevant range of production is 10,000 to 15,000 units. When it produces and sells 12,000 units, its unit costs are as follows:

	Amount per Unit
Direct materials	$ 7.00
Direct labor	$ 4.00
Variable manufacturing overhead	$ 1.50
Fixed manufacturing overhead	$ 5.00
Fixed selling expense	$ 3.50
Fixed administrative expense	$ 2.00
Sales commissions	$ 1.00
Variable administrative expense	$ 0.50

What is the incremental cost incurred if the company increases production from 12,000 to 12,001 units?

$14 because 7+4+1.50=12.50

Assume the following information:

Direct materials		$ 70,000
Direct labor		$ 48,000
Variable manufacturing overhead	$ 13,000
Fixed manufacturing overhead	25,000
Total manufacturing overhead		$ 38,000
Variable selling expense	$ 15,000
Fixed selling expense	20,000
Total selling expense		$ 35,000
Variable administrative expense	$ 8,000
Fixed administrative expense	12,000
Total administrative expense		$ 20,000

What is the total variable manufacturing cost?

131,000 bc 70,000+48,000+13,000

Assume that a manufacturing company incurred the following costs:

Direct labor	$ 90,000
Advertising	$ 40,000
Factory supervision	$ 35,000
Sales commissions	$ 15,000
Depreciation, office equipment	$ 4,000
Indirect materials	$ 5,000
Depreciation, factory building	$ 20,000
Administrative office salaries	$ 1,000
Utilities, factory equipment	$ 2,500
Direct materials	$ 105,000
Insurance, factory	$ 6,000
Property taxes, factory	$ 7,000

What is the total variable cost pertaining to the units produced and sold?

217,500 because 90,000+105,000+5,000+2,500+15,000

Assume that a manufacturing company incurred the following costs:

Direct labor	$ 90,000
Advertising	$ 40,000
Factory supervision	$ 35,000
Sales commissions	$ 15,000
Depreciation, office equipment	$ 4,000
Indirect materials	$ 5,000
Depreciation, factory building	$ 20,000
Administrative office salaries	$ 1,000
Utilities, factory	$ 2,500
Direct materials	$ 105,000
Insurance, factory	$ 6,000
Property taxes, factory	$ 7,000

If the information above pertains to 1,000 units of production, what is its average manufacturing cost per unit?

270.50 per unit bc 90,000+35,000+5,000+20,000+2,500+105,000+6,000+7,000= 270500

then 270500/1000 units

Which of the following statements is false regarding job-order costing?

• It is used in situations where many different products, each with unique features, are produced each period.

• It is used for manufacturing companies, but not service companies.

• It accumulates each job’s costs on a job cost sheet.

• It can be used to calculate a job’s unit product cost.

2. it is used for manufacturing companies, but not service companies

Which of the following statements is true regarding job-order costing?

• It is used in situations where many different products, each with unique features, are produced each period.

• It is used for manufacturing companies, but not service companies.

• It relies on a predetermined overhead rate to apply direct material cost to units of product.

• It relies on a predetermined overhead rate to apply direct labor cost to units of product.

1. it is used in situations where many different products, each with unique features, are produced each period.

Which of the following statements is true regarding absorption costing?

It assigns all manufacturing costs, both fixed and variable, to units of product.

A predetermined overhead rate includes:

• estimated total manufacturing overhead cost in the numerator.

Which of the following statements is true regarding the formula used in normal costing for applying overhead cost to a specific job?

• The predetermined overhead rate is multiplied by the actual amount of the allocation base used by the job.

Which of the following statements is true regarding the formula Y = a + bx?

• Y = The estimated total manufacturing overhead cost.

A job-order costing system that relies on normal costing will:

Assign actual direct materials and direct labor costs to jobs.

A unit product cost includes:

actual direct labor cost used by the job

Assume the following:

1. Estimated fixed manufacturing overhead for the coming period of $200,000

2. Estimated variable manufacturing overhead of $2.00 per direct labor hour

3. Estimated direct labor-hours to be worked in the coming period of 55,000 hours.

The predetermined plantwide overhead rate for the period is closest to:

$5.64 because (200000/55000)+2

Assume the following:

1. Estimated fixed manufacturing overhead for the coming period of $200,000

2. Estimated variable manufacturing overhead of $2.00 per direct labor hour

3. Actual manufacturing overhead for the period of $320,000

4. Actual direct labor-hours worked of 54,000 hours

5. Estimated direct labor-hours to be worked in the coming period of 55,000 hours.

The amount of overhead applied to production during the period is closest to:

304,560 because 5.64 (from previous question) X 54000

Assume the following:

1. Actual machine-hours worked during the period of 54,000 hours

2. Estimated machine-hours to be worked during the coming period of 55,000 hours

3. Manufacturing overhead applied to production during the period of $432,000

4. Estimated fixed manufacturing overhead of $330,000.

The estimated variable manufacturing overhead cost per machine-hour is closest to:

2.00 because

applied OH= 432000/ 54000=8

fixed OH= 330000/55000=6

varaible OH= 8-6=2

Assume the following:

1. Actual machine-hours worked during the period of 54,000 hours

2. Manufacturing overhead applied to production during the period of $432,000

3. Estimated fixed manufacturing overhead of $330,000

4. Estimated variable manufacturing overhead cost per machine-hour of $2.00.

The estimated amount of the allocation base (machine-hours) is closest to:

55,000 because 330000/6 (from previous question) =55,000

Assume the following:

1. Actual machine-hours worked during the period of 54,000 hours

2. Estimated machine-hours to be worked during the coming period of 55,000 hours

3. Manufacturing overhead applied to production during the period of $432,000

4. Estimated fixed manufacturing overhead of $330,000.

The estimated total variable manufacturing overhead cost is closest to:

110,000 bc variable MOH= 2 (from previous question) so 2(55,000)

Assume the following:

1. A company’s plantwide predetermined overhead rate is $13.00 per direct labor-hour

2. Its job cost sheet for Job X shows that this job incurred direct materials and direct labor charges of $500 and $360, respectively.

If Job X’s total job cost is $1,094, how many direct labor-hours were worked on this job?

18 bc

1094-500-360=234

234/13=18

Assume that a company pays a 5% sales commission. Also, assume the job cost sheet for Job X:

1. It used 18 direct labor-hours and incurred direct materials and direct labor charges of $500 and $360

2. Its unit product cost is $27.35.

If Job X contained 40 units, then what is the plantwide predetermined overhead rate per direct labor-hour?

13 bc

40 X 27.35= 1094 total job cost

1095-500DM-360DL=234 overhead

234/18= 13 per direct labor hour

Assume that a company pays a 5% sales commission. Also, assume the job cost sheet for Job X:

1. It used 18 direct labor-hours and incurred direct materials and direct labor charges of $500 and $360

2. Its total job cost is $1,094.

What is the plantwide predetermined overhead rate per direct labor-hour?

13

At the beginning of the year, a company estimated that 20,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $140,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $1.50 per direct labor-hour. The company incurred actual manufacturing overhead costs of $180,000 and it actually worked 20,000 direct labor-hours during the period.

Assume that Job X used 16 direct labor-hours. How much manufacturing overhead would be applied to Job X?

$136 bc

140,000/20,000= $7 fixed overhead per hour

$7+1.50 varaible OH= 8.50 DLH

8.50X16=136

At the beginning of the year, a company estimated that 20,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $140,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $1.50 per direct labor-hour.

Assume that Job X used $200 in direct materials, $288 of direct labor, and 16 direct labor-hours. What is the total job cost for Job X?

624 bc

overhead applied= 16 X 8.50 (previous question)=136

total job cost= 200DM + 288 DL +136OH = 624

At the beginning of the year, a company estimated a predetermined plantwide overhead rate of $8.50 per machine-hour. Job X used 16 machine-hours and it was charged $200 and $288 for direct materials and direct labor, respectively. What is the total job cost for Job X?

$624 (goes with previous question)

Assume a company had no jobs in progress at the beginning of July and no beginning inventories. It started and completed only two jobs during July—Job Y and Job Z. The company uses a plantwide predetermined overhead rate based on direct labor-hours. The following additional information from the month of July is available for the company as a whole and for Jobs Y and Z:

Estimated total fixed manufacturing overhead	$ 13,000
Estimated variable manufacturing overhead per direct labor-hour	$ 1.00
Estimated total direct labor hours to be worked	2,000
Total actual manufacturing overhead costs incurred	$ 12,800

	Job Y	Job Z
Direct materials	$ 13,000	$ 8,000
Direct labor cost	$ 21,000	$ 7,500
Actual direct labor hours worked	1,400	500

How much manufacturing overhead was applied to Job Y?

10500 bc

13,000/2000=6.50 fixed OH/hour

6.50+1.00= variable OH= 7.50 per DLH

Job y: 1400 hours X 7.50= 10500

Assume a company had no jobs in progress at the beginning of July and no beginning inventories. It started and completed only two jobs during July—Job Y and Job Z. The company uses a plantwide predetermined overhead rate based on direct labor-hours. The following additional information from the month of July is available for the company as a whole and for Jobs Y and Z:

Estimated total fixed manufacturing overhead	$ 13,000
Estimated variable manufacturing overhead per direct labor-hour	$ 1.00
Estimated total direct labor hours to be worked	2,000
Total actual manufacturing overhead costs incurred	$ 12,800

	Job Y	Job Z
Direct materials	$ 13,000	$ 8,000
Direct labor cost	$ 21,000	$ 7,500
Actual direct labor hours worked	1,400	500

What is the total job cost for Job Z?

19250 bv

Job Z overhead= 500 X 7.50= 3750

total job cost= 8,000+7500+3750=19,250

ssume a company started and completed numerous jobs during July—one of which was Job Z. The company uses two departmental predetermined overhead rates. The rate in the Machining Department is based on machine-hours and the rate in the Assembly Department is based on direct labor-hours. The following additional information from the month of July is available for the company as a whole and for Jobs Z:

	Machining	Assembly
Estimated total fixed manufacturing overhead	$ 48,000	$ 30,000
Estimated variable manufacturing overhead per machine-hour	$ 1.50
Estimated variable manufacturing overhead per direct labor-hour		$ 2.00
Estimated total machine-hours to be used	12,000
Estimated total direct labor hours to be worked		10,000

Job Z	Machining	Assembly
Direct materials	$ 650	$ 700
Direct labor	$ 200	$ 900
Machine-hours	40
Direct labor-hours		60

What is the total job cost for Job Z?

2970

• Machining OH rate = ($48,000 ÷ 12,000) + $1.50 = $5.50/MH

• Assembly OH rate = ($30,000 ÷ 10,000) + $2.00 = $5.00/DLH

• Applied OH = (40 × $5.50) + (60 × $5) = $520

• DM = $650 + $700 = $1,350

• DL = $200 + $900 = $1,100

Total job cost = $1,350 + $1,100 + $520 = $2,970

Assume a company has two manufacturing departments – Assembly and Fabrication. The company considers all of its manufacturing overhead costs to be fixed costs. The first set of data below is budgeted data for the company as a whole that was estimated at the beginning of the year. The second set of data below is actual data for the company as a whole that was derived at the end of the year. The third set of data relates to one particular job completed during the year– Job Z.

Budgeted Data	Assembly	Fabrication
Manufacturing overhead costs	$ 300,000	$ 400,000
Direct labor hours	25,000	15,000
Machine hours	10,000	50,000

Actual Data	Assembly	Fabrication
Manufacturing overhead costs	$ 330,000	$ 380,000
Direct labor hours	27,000	16,000
Machine hours	10,500	48,000

Job Z	Assembly		Fabrication
Direct labor hours	10	hours	2	hours
Machine hours	1	hour	7	hours

If the company uses a plantwide approach for applying overhead to production with direct labor-hours as the allocation base, how much manufacturing overhead would be applied to Job Z?

210 bc

total budgeted OH: 300,000+400,000=700,000

total budgeted Direct labor hours: 25,000 +15,000= 40,000

700,000/40,000=17.50 per DLH

Job z uses: 10+2=12 DLH

12 X 17.50= 210

Assume a company has two manufacturing departments – Assembly and Fabrication. The company considers all of its manufacturing overhead costs to be fixed costs. The first set of data below is budgeted data for the company as a whole that was estimated at the beginning of the year. The second set of data below is actual data for the company as a whole that was derived at the end of the year. The third set of data relates to one particular job completed during the year– Job Z.

Budgeted Data	Assembly	Fabrication
Manufacturing overhead costs	$ 300,000	$ 400,000
Direct labor hours	25,000	15,000
Machine hours	10,000	50,000

Actual Data	Assembly	Fabrication
Manufacturing overhead costs	$ 330,000	$ 380,000
Direct labor hours	27,000	16,000
Machine hours	10,500	48,000

Job Z	Assembly		Fabrication
Direct labor hours	10	hours	2	hours
Machine hours	1	hour	7	hours

Assume the company uses departmental predetermined overhead rates. It uses direct labor-hours as the allocation base in Assembly and machine-hours as the allocation base in Fabrication. How much manufacturing overhead would be applied from both departments to Job Z?

176

assembly: 300,000/25,000= $12/ direct labor hour

job z: 10 X 12= $120

Fabrication: 400,000/50,000=$8/ machine hours

job z: 7 X $8 = $56

total overhead applied= 120+56=176

Which of the following is not one of the three inventory accounts reported on the balance sheet?

COGS

Which of the following statements is false?

• Work in process inventory is included in the balance sheet.

• Work in process inventory includes direct materials used in production.

• Work in process inventory includes direct labor costs.

• Work in process inventory includes actual manufacturing overhead costs assigned to jobs worked on during the period.

• Work in process inventory includes actual manufacturing overhead costs assigned to jobs worked on during the period.

The cost of goods manufactured is:

the amount transferred from Work in Process to Finished Goods.

The cost of goods manufactured includes:

applied manufacturing overhead, but not actual manufacturing overhead.

The journal entry to record the purchase of raw materials includes:

• a debit to Raw Materials.

The journal entry to record the requisition of direct materials for use in production includes:

• a debit to Work in Process.

The journal entry to record indirect labor used in production includes:

• a debit to Manufacturing Overhead.

The journal entry to record manufacturing overhead applied to production includes:

• a debit to Work in Process

The journal entry to dispose of underapplied or overapplied overhead will never include which of the following accounts?

• Raw Materials

Raw materials used in production is calculated using which of the following equations?

• Beginning raw materials inventory + Purchases of raw materials − Ending raw materials inventory

The total manufacturing costs to account for within a schedule of cost of goods manufactured is calculated using which of the following equations?

• Beginning work in process inventory + Total manufacturing costs added to production

Overapplied or underapplied overhead is computed:

• at the end of the period

If a company has overapplied overhead, then the journal entry to dispose of it could possibly include:

a credit to Cost of Goods Sold

The unadjusted cost of goods sold is calculated using which of the following equations?

• Beginning finished goods inventory + Cost of goods manufactured − Ending finished goods inventory

Which of the following statements is true for a company that maintains beginning and ending work in process and finished goods inventories?

• If the company closes its underapplied overhead entirely to Cost of Goods Sold it will cause net operating income to be lower than the net operating income reported if the company had closed its underapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold.

Assume the following information from a schedule of cost of goods manufactured:

Total manufacturing costs to account for	$ 230,000
Ending work in process inventory	$ 72,000

What is the cost of goods manufactured?

158,000 bv

230000-72000

Assume the following information from a schedule of cost of goods manufactured:

Beginning work in process inventory	$ 30,000
Direct materials used in production	$ 50,000
Direct labor	$ 60,000
Total manufacturing costs to account for	$ 230,000
Ending work in process inventory	$ 72,000

What is the manufacturing overhead applied to work in process?

90,000 because

230,000-30,000 beginning wip= 200,000 manufacturing costs added

200,000-50,000DM-60,000DL= 90,000 overhead

Assume the following information from a schedule of cost of goods manufactured:

Beginning work in process inventory	$ 30,000
Direct materials used in production	$ 50,000
Manufacturing overhead applied to work in process	$ 90,000
Total manufacturing costs to account for	$ 230,000
Ending work in process inventory	$ 72,000

What is the direct labor cost?

60,000 bc

230,000-30,000-50,000-90,000= 60,000

ssume the following information from a schedule of cost of goods manufactured:

Cost of goods manufactured	$ 158,000
Beginning work in process inventory	$ 30,000
Direct materials used in production	$ 50,000
Manufacturing overhead applied to work in process	$ 90,000
Total manufacturing costs to account for	$ 230,000

What is the ending work in process inventory?

72,000 bc

230,000-158,000=72,000

Assume the following information from a schedule of cost of goods manufactured:

Beginning raw materials inventory	$ 7,000
Purchases of raw materials	$ 60,000
Raw materials used in production	$ 52,000

What is the ending raw materials inventory?

15,000 bc

7,000 + 60,000 -52,000 = 15,000

Assume the following information from a schedule of cost of goods manufactured:

Beginning raw materials inventory	$ 7,000
Purchases of raw materials	$ 60,000
Ending raw materials inventory	$ 15,000

What is the raw materials used in production?

52,000 bc

7,000 +60,000 -15,000 =52,000

If the raw materials inventory balance increased by $8,000 during the period and the raw material purchases were $60,000, then what is the raw materials used in production?

52000 bc

60,000 -8,000 =52000

If the work in process inventory balance decreased by $11,000 during the period and the total manufacturing costs added to production are $200,000, then what is the cost of goods manufactured?

211000 bc

200,000+ 11,000 decrease in WIP= 211000

Assume the following:

Sales	$ 240,000
Overapplied overhead	$ 7,000
Cost of goods manufactured	$ 180,000
Beginning finished goods inventory	$ 10,000
Ending finished goods inventory	$ 14,000
Selling and administrative expenses	$ 33,000

What is the net operating income?

38,000 bc

unadjusted cogs = 10,000 +180,000 -14,000 =176,000

overappplied OH (decreases cogs): 176000-7000= 169000

net operating income= 240000-169000-33000=38000

Assume the following:

Net operating income	$ 38,000
Overapplied overhead	$ 7,000
Cost of goods manufactured	$ 180,000
Beginning finished goods inventory	$ 10,000
Ending finished goods inventory	$ 14,000
Selling and administrative expenses	$ 33,000

What is the sales?

240000 bc

adjusted cogs= (10000+18000-14000)-7000=169000

Sales= 38000 NOI +169000 COGS + 33000 s and a

Assume the following from a schedule of cost of goods manufactured:

Purchases of raw materials	$ 38,000
Indirect materials used in production	$ 7,000
Beginning raw materials inventory	$ 10,000
Ending raw materials inventory	$ 14,000
Total manufacturing costs added to production	$ 80,000
Actual manufacturing overhead costs incurred	$ 34,000
Manufacturing overhead applied to production	$ 32,000

What is the direct labor cost?

21,000

raw materials= 10,000+38,000-14,000= 34,000

direct materials= 34,000-7,000=27000

80,000-27000DM-32000OH= 21000 dl

Assume the following from a schedule of cost of goods manufactured:

Beginning work in process inventory	$ 10,000
Ending work in process inventory	$ 14,000
Beginning raw materials inventory	$ 3,000
Ending raw materials inventory	$ 6,000
Purchases of raw materials	$ 38,000
Indirect materials used in production	$ 4,000
Direct labor	$ 17,000
Manufacturing overhead applied to production	$ 32,000

What is the cost of goods manufactured?

76,000

COGM= 10000 + 80000 (total manufacturing costs) -140000

Assume that a company uses direct labor dollars as the allocation base to compute its predetermined plantwide overhead rate of 140%. Also, assume the following information from the company’s schedule of cost of goods manufactured, schedule of cost of goods sold, and its income statement:

Direct labor	$ 65,000	Actual manufacturing overhead	$ 84,000
Cost of goods manufactured	$ 260,000	Selling and administrative expense	$ 85,000

If the beginning finished goods inventory was $10,000, the ending finished goods inventory was $2,000, and net operating income was $8,000 then what is the sales?

354000

Assume the following:

1. Estimated total manufacturing overhead cost = $100,000

2. Estimated total amount of the allocation base = 20,000 direct labor hours

3. The total direct labor hours actually worked during the period = 21,000

4. Manufacturing overhead is overapplied by $2,000.

What is the total amount of actual overhead costs incurred during the period?

103,000

POHR= 100,000/20,000=5 per DLH

Applied OH= 21,000 X 5= 105,000

overapplied by 2,000 means applied OH is 2,00 more than actual OH

105000-2000=103000 actual overhead

Assume the following:

1. Estimated direct labor hours used to calculate the predetermined overhead rate = 20,000

2. The manufacturing overhead applied to production = $105,000

3. The total direct labor hours actually worked during the period = 21,000.

What is the estimated total manufacturing overhead cost for the period?

100,000

applied OH rate= 105,000/21,000=$5 per DLH

estimated total MOH= 5 X 20,000= 100,000

Which of the following journal entries properly records the cash payment of $45,000 in direct labor wages and $12,000 of indirect labor wages?

Which of the following journal entries properly records the cost of goods manufactured for the period of $57,000?

Which of the following statements is false regarding the Manufacturing Overhead T-account?

• Actual overhead expenses are recorded on the debit side of the account.

• Applied overhead is recorded on the credit side of the account.

• At the end of each accounting period, its ending balance is reporting on the asset side of the balance sheet.

• It accumulates actual variable and fixed overhead expenses.

• At the end of each accounting period, its ending balance is reporting on the asset side of the balance sheet.

Which of the following statements is true regarding the accounting for depreciation on office equipment?

• 
  
  

  The depreciation charge increases the balance in the Accumulated Depreciation account.

If a company recorded the following transaction—closed underapplied overhead to cost of goods sold—then which of the following statements is true?

• The Retained Earnings account would decrease.

the cost of goods manufactured must be 1,680,000

Assume that a company uses direct labor dollars as the allocation base to compute its predetermined plantwide overhead rate of 130%. Also, assume the following information from the company’s schedule of cost of goods manufactured:

Direct labor	$ 60,000
Direct materials used in production	$ 160,000

What is the total manufacturing cost added to production?

298,000

applied overhead= 60,000 X 130%= 78,000

total manufacturing cost= 160,000DM+60,000DL+78,000 OH=298000

Assume the following:

Purchases of raw materials	$ 38,000
Beginning raw materials inventory	$ 10,000
Ending raw materials inventory	$ 14,000
Direct materials used in production	$ 30,000

What was the amount of indirect materials used in production?

4,000

total raw materials used= 10,000 +38,000-14,000=34,000

indirect= 34,000- 30,000 direct materials= 4000

Which of the following is not an underlying assumption of cost-volume-profit analysis?

net operating income is constant

Which of the following is not an underlying assumption of cost-volume-profit analysis?

• Selling price is constant.

• Variable cost per unit varies inversely with changes in the level of activity.

• In multiproduct companies, the mix of products sold remains constant.

• Total fixed costs are constant within the relevant range.

• 
  
  

  Variable cost per unit varies inversely with changes in the level of activity.

The contribution margin ratio equals:

• (Sales − variable expenses) ÷ sales

A cost-volume-profit (CVP) graph contains three lines. Which of the following is not explicitly depicted by one of those three lines?

• Total contribution margin

In a cost-volume-profit (CVP) graph, the intersection of the total sales line and the total expense line represents which of the following?

• The break-even point

In a cost-volume-profit (CVP) graph, the vertical distance between the total expense line and the fixed expense line represents which of the following?

• The total variable expenses

Whats the formula for net operating income

• Contribution margin − fixed expenses = net operating income

Assume the following:

1. sales = $200,000

2. unit sales = 10,000

3. the contribution margin ratio = 25%

4. net operating income = $10,000

Given these four assumptions, what is the total Contribution margin

The total contribution margin = $50,000 ✅

$200,000 × 25% = $50,000

Assume the following:

1. sales = $200,000

2. unit sales = 10,000

3. the contribution margin ratio = 25%

4. net operating income = $10,000

Given these four assumptions, what is the total fixed expense

The total fixed expenses = $40,000 ✅

CM = $200,000 × 25% = $50,000

Fixed expenses = $50,000 − $10,000 NOI = $40,000

1. variable expenses = $300,000

2. unit sales = 10,000

3. the contribution margin ratio = 25%

4. net operating income = $10,000

What is the total sales

The total sales = $400,000 ✅

Variable expense ratio = 100% − 25% = 75%

Sales = $300,000 ÷ 75% = $400,000

1. selling price per unit = $30

2. variable expense per unit = $18

3. total fixed expenses = $45,000

Given these three assumptions, the unit sales needed to achieve a target profit of $6,000 is:

4,250 units ✅

CM per unit = $30 − $18 = $12

Units needed = ($45,000 + $6,000) ÷ $12 = 4,250 units

1. Total sales = $180,000

2. the contribution margin ratio = 40%

3. total fixed expenses = $45,000

Given these three assumptions, the margin of safety is:

Margin of safety = $67,500 ✅

Break-even sales = $45,000 ÷ 40% = $112,500

Margin of safety = $180,000 − $112,500 = $67,500

1. Total sales = $200,000

2. breakeven sales = $120,000

3. total fixed expenses = $50,000

Given these three assumptions, the margin of safety percentage is:

Margin of safety percentage = 40% ✅

Margin of safety = $200,000 − $120,000 = $80,000

Margin of safety % = $80,000 ÷ $200,000 = 40%

1. contribution margin = $150,000

2. net operating income = $15,000

3. sales increase by 10%

Given these three assumptions, net operating income will increase by:

Net operating income will increase by $15,000 ✅

$150,000 contribution margin × 10% = $15,000 increase

So new NOI would be $30,000.

SO increase by 100%

Assume the following information:

	Amount	Per Unit
Sales	$ 300,000	$ 40
Variable expenses	112,500	15
Contribution margin	187,500	$ 25
Fixed expenses	40,000
Net operating income	$ 147,500

The dollar sales to break-even is:

Dollar sales to break-even = $64,000 ✅

CM ratio = $187,500 ÷ $300,000 = 62.5%

Break-even sales = $40,000 ÷ 62.5% = $64,000

Assume the following information:

	Amount	Per Unit
Sales	$ 300,000	$ 40
Variable expenses	112,500	15
Contribution margin	187,500	$ 25
Fixed expenses	40,000
Net operating income	$ 147,500

The dollar sales to attain a target profit of $200,000 is:

Dollar sales needed = $384,000 ✅

CM ratio = $187,500 ÷ $300,000 = 62.5%

Target sales = ($40,000 + $200,000) ÷ 62.5% = $384,000

Assume the following information:

	Amount	Per Unit
Sales	$ 300,000	$ 40
Variable expenses	112,500	15
Contribution margin	187,500	$ 25
Fixed expenses	40,000
Net operating income	$ 147,500

The unit sales to attain a target profit of $200,000 is:

Unit sales needed = 9,600 units ✅

CM per unit = $25

Units = ($40,000 + $200,000) ÷ $25 = 9,600 units

Assume the following information:

	Amount	Per Unit
Sales	$ 300,000	$ 40
Variable expenses	120,000	16
Contribution margin	180,000	$ 24
Fixed expenses	60,000
Net operating income	$ 120,000

If the selling price per unit increases by 10% and unit sales drop by 5%, then the best of estimate of the new net operating income is:

original units = $300,000 ÷ $40 = 7,500 units

New selling price = $40 × 1.10 = $44
New unit sales = 7,500 × 95% = 7,125 units

New sales = 7,125 × $44 = $313,500
New variable expenses = 7,125 × $16 = $114,000

New NOI = $313,500 − $114,000 − $60,000 = $139,500 ✅

Correction: the answer is $139,500.