Midterm Examination II - Theory

Question 1

1 / 1 pts

Indirect labor and indirect materials are charged to factory overhead.

Correct!

True

False

Question 2

1 / 1 pts

The sum of direct materials and factory overhead in prime cost

True

Correct!

False

Question 3

1 / 1 pts

Cost accounting systems are accounting information system used by manufacturers to tract the costs
incurred to produce and sell their diverse product lines.

Correct!

True

False

Question 4

1 / 1 pts
The institute of management accountants is the smallest organization of accountants in industry in the
world.

True

Correct!

False

Question 5

0 / 1 pts

All selling and administrative costs are period costs.

Correct Answer

True

You Answered

False

Question 6

1 / 1 pts

Cost accounting provides historical cost information that is used as the basis for planning and control.

Correct!

True

False

Question 7

1 / 1 pts

In a job order cost system, each entry to the Work In Process Inventory account should be accompanied
by a posting to one or more job cost sheets.
Correct!

True

False

Question 8

1 / 1 pts

Cleaning solvent for the factory floor may be classified as manufacturing overhead, product cost and
prime cost.

True

Correct!

False

Question 9

1 / 1 pts

When indirect labor is recorded for a job in process, the work in process account is debited.

True

Correct!

False

Question 10

1 / 1 pts

Overapplied factory overhead that is immaterial in amount is closed to cost of goods sold at year end.

Correct!

True

False
Question 11

1 / 1 pts

Overapplied overhead that is material in amount is allocated between Finished Goods Inventory, Work
in Process, and Cost of Goods Sold at year end

Correct!

True

False

Question 12

0 / 1 pts

Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a
specific job.

You Answered

True

Correct Answer

False

Question 13

0 / 1 pts

A basic principle established in comparing the two cost systems is that in a job order cost system, all
costs of manufacturing are charged to production department, either directly or indirectly.

You Answered

True

Correct Answer

False

Question 14
1 / 1 pts

The process cost system maybe used when goods are produced in lots of predetermined quantity
usually based on customers specifications.

True

Correct!

False

Question 15

1 / 1 pts

In a process cost system, overhead costs are accumulated from the various journals in the same manner
as in a job order cost system.

Correct!

True

False

Question 16

1 / 1 pts

In a three-variance method of factory overhead analysis, the variance that measures the difference
between the factory overhead applied and the actual hours worked multiplied by the standard rate is
the spending variance.

True

Correct!

False

Question 17

1 / 1 pts
An unfavorable labor efficiency variance is the number of actual hours worked in excess of the standard
hours allowed multiplied by the actual labor rate.

True

Correct!

False

Question 18

1 / 1 pts

In setting materials standards, the trend of prices of raw materials and historical cost are considered.

Correct!

True

False

Question 19

1 / 1 pts

Spencer Company had overapplied factory overhead of $5,000 last year. Assuming the amount is not
material enough to distort net income, Cost of Goods Sold should be increased by this amount.

True

Correct!

False

Question 20

0 / 1 pts

If an error was made in the computation of the stage of completion of the current year's ending work in
process inventory and the error resulted in assigning a lower stage of completion to each component of
the inventory than actually was the case. This error will result to an understated cost per equivalent
unit.
You Answered

True

Correct Answer

False

Question 21

1 / 1 pts

All of the following are characteristics of hourly wage plans except:

They are easy to apply.

They establish a definite rate per hour for each employee.

Correct!

They encourage employees to sacrifice quality in order to maximize earnings.

They provide no extra recognition for doing more than the minimum required.

Question 22

1 / 1 pts

The payroll summary for EVB Inc. for the period August 3 - 10 is as follows:

Sales and
Factory Employee Admin. Employee Total
s s

Gross Earnings $80,000 $25,000 $105,000

Withholding and
     
deductions:

     FICA 6,400 2,000 8,400

     Income taxes 10,600 5,000 15,600

     Union dues    400    -      400

     Total 17,400 7,000 24,400

Net earnings $62,600 $18,000 $80,600

Sales and
Admin. Employee Total
Factory Employees
s

Gross Earnings $80,000 $25,000 $105,000

Withholding and
     
deductions:

     FICA 6,400 2,000 8,400

     Income taxes 10,600 5,000 15,600

     Union dues    400    -      400

     Total 17,400 7,000 24,400

Net earnings $62,600 $18,000 $80,600

These wages were paid on August 15.

The entry to record the payment of earnings to the employees would include:

A debit to payroll for $105,000.

Correct!

A debit to wages payable for $80,600.

 A credit to cash of $105,000.

A credit to wages payable for $80,600.

Question 23

0 / 1 pts

Which of the following would not be included on a payroll record?

The employees’ gross earnings.

Correct Answer

Which jobs should be charged for the employees’ time.

The amount of overtime paid to the employees.

You Answered

Amounts withheld from the employees’ earnings.

Question 24

1 / 1 pts

The payroll summary for EVB Inc. for the period August 3 - 10 is as follows:

Sales and
Factory Employee Admin. Employee Total
s s

Gross Earnings $80,000 $25,000 $105,000

Withholding and
     
deductions:

     FICA 6,400 2,000 8,400

     Income taxes 10,600 5,000 15,600

     Union dues    400    -      400

     Total 17,400 7,000 24,400

Net earnings $62,600 $18,000 $80,600

The entry to record payroll will include:

A credit to Wages Payable for $105,000

Correct!

A credit to Wages Payable for $80,600

A debit to Work in process for 80,000

A credit to payroll for $105,000

Question 25

0 / 1 pts

The journal entry to record the incurrence and payment of overhead costs for factory insurance requires
a debit to

Work in Process Inventory and a credit to Cash.

You Answered

Manufacturing Overhead and a credit to Accounts Payable.

Correct Answer

Manufacturing Overhead and a credit to Cash.

Cash and a credit to Manufacturing Overhead.

Question 26

1 / 1 pts

Which of the following costs would not be included in factory overhead in the manufacture of a
student’s desk?

Correct!
 The wood used to form the top of the desk.

The wages of personnel who perform inspections of incoming materials.

The oil used to maintain the machinery.

The salary of the supervisor of the Assembly department.

Question 27

1 / 1 pts

A cost object in a process cost system is usually a:

Correct!

Department

Employee

Specific product

Job

Question 28

0 / 1 pts

In a company that uses process costing, the cost of goods manufactured is equal to:

total production costs added during the period.

You Answered

the cost of ending work in process at the end of the period.

Correct Answer

the cost of goods completed in the period.

total production costs accounted for.

Question 29

1 / 1 pts
In the three-variance method of factory overhead analysis, what standard cost variance represents the
difference between actual factory overhead incurred and budgeted factory overhead based on actual
hours worked?

Correct!

Spending variance

Efficiency variance

Production-volume variance

Quantity variance

Question 30

1 / 1 pts

Standard costing will produce the same income before extraordinary items as actual costing when
standard cost variances are assigned to:

Cost of goods sold.

Work in process and finished goods inventories.

Correct!

Cost of goods sold and inventories.

An income or expense account.

Question 31

0 / 1 pts

The inventory method which results in the most recent cost being assigned to cost of goods sold is:

Correct Answer

Last-in, first-out.

Moving average.

Last-in, last-out.

You Answered
 First-in, first-out.

Question 32

1 / 1 pts

Expense A is a fixed cost; expense B is a variable cost. During the current year the activity level has
increased, but is still within the relevant range. In terms of cost per unit of activity, we would expect
that:

expense A has remained unchanged.

Expense B has increased

Correct!

expense A has decreased

expense B has decreased.

Question 33

1 / 1 pts

Which of the following is most likely to be considered a service department in a manufacturing plant?

Correct!

Janitorial

Assembly

Finishing

Fabrication

Question 34

1 / 1 pts

The number of whole units that could have been completed during a period, using the production costs
incurred during that period is called:

Manufactured units.
 Total units.

Standard production.

Correct!

Equivalent production.

Question 35

1 / 1 pts

Which of the following journal entries records the accrual of the cost of indirect labor used in
production?

debit Manufacturing Overhead, credit Work in Process Inventory

Correct!

debit Manufacturing Overhead, credit Wages Payable

debit Work in Process Inventory, credit Manufacturing Overhead

debit Work in Process Inventory, credit Wages Payable

Question 36

1 / 1 pts

Consider the following costs:

I. The cost of electricity which is used to power machinery and light the plant.

II. Depreciation on the building which houses both the factory and the sales office.

Which of the following statements is true?

Only statement II is an example of a semivariable cost.

Neither statement I nor II is an example of a semivariable cost.

Both statements I and I are examples of semivariable costs.

Correct!

Only statement I is an example of a semivariable cost.

Question 37

1 / 1 pts

Which of the following are drawbacks to applying actual overhead to production?

A delay occurs in assigning costs to jobs or products.

Seasonality of overhead costs may cause distortions in job or product costs.

Fluctuations in quantities produced during a period could cause varying per-unit charges for fixed
overhead.

Correct!

all answers are correct.

Question 38

1 / 1 pts

The wages of which of the following employees would not be included in the product cost for a
manufacturer of custom-built home cooking appliances?

factory janitor

appliance body welder

shop floor supervisor

Correct!

shipping clerk

Question 39

1 / 1 pts

In a backflush accounting system, a single account is used for the following:

Work in process and finished goods inventories

Correct!
 Labor and overhead

Factory overhead and raw materials.

Finished goods inventories and cost of goods sold.

Question 40

1 / 1 pts

In a period of rising prices, the use of which of the following cost flow methods would result in the
lowest gross margin?

FIFO

Weighted average cost

Moving average cost

Correct!

LIFO

Problems

Question 1

0 / 2 pts

A factory worker earns $500 per week and will receive a $1,000 bonus at year-end, a 2-week paid
vacation, and 5 paid holidays. The combined amount of the accruals for bonus, vacation, and holiday
pay in the weekly payroll would be:

$70.00

$40.00

You Answered

$20.00

Correct Answer

$50.00
Question 2

2 / 2 pts

Tyler Jacob is paid $15 per hour for a 40-hour work week with time-and-a-half for overtime, which is not
charged to specific jobs. For the week of March 4 - 10, Tyler’s labor time record was as follows:

  Mon Tues Wed Thur Fri Sat Total

Job B280 8 5 8 10 10 2 43

Machine
   4 2       1   7
maintenance

Total 8 9 10 10 10 3 50

Calculate Tyler's gross pay.

$750.00

Correct!

$825.00

$1,125.00

$780.00

Question 3

2 / 2 pts

Western Industries pays employees on a weekly basis on Tuesday for the week ended the previous
Friday. Employees’ compensation is earned evenly each day over a 5-day work week. This year, April 30
fell on Thursday. Payroll costs for the week ended May 1 follow:

Non Factory:
 
   Sales $ 5,000
 
  Administrative 10,000
  $15,000
Factory:
 
  
Direct labor $25,000
   Overtime premium 2,500
   Indirect labor 15,000
 
$42,500
 
$57,500

Excluding payroll taxes, how much of the accrued payroll at April 30 should be charged to Factory
Overhead?

$26,000

Correct!

$14,000

$34,000

$17,500

Question 4

2 / 2 pts
Western Industries pays employees on a weekly basis on Tuesday for the week ended the previous
Friday. Employees’ compensation is earned evenly each day over a 5-day work week. This year, April 30
fell on Thursday. Payroll costs for the week ended May 1 follow:

Non Factory:
 
   Sales $ 5,000
 
  Administrative 10,000
  $15,000
Factory:
 
  
Direct labor $25,000
   Overtime premium 2,500
   Indirect labor 15,000
 
$42,500
 
$57,500

Excluding payroll taxes, how much of the accrued payroll at April 30 should be charged to Work in
process assuming that the overtime premium should be charged to specific job?

$17,500

$14,000

$34,000

Correct!

$26,000
Question 5

2 / 2 pts

B & B Company pays time and a half for hours in excess of 40 hours per week.An individual is paid
$56.25 per hour and worked 45 hours a week. The weekly earnings of the employee will amount to

$2,250

Correct!

$2,671.88

$2,812.50

$2,531.25

Question 6

0 / 2 pts

If the direct labor hour method is used in applying factory overhead and the predetermined rate is $10
an hour, what amount should be charged to Job 2010 for factory overhead? Assume that the direct
materials used totaled $5,000, the direct labor cost totaled $3,200, and the number of direct labor hours
totaled 250.

You Answered

$10,700

$5,000

Correct Answer

$2,500

$3,200

Question 7

2 / 2 pts

If the direct labor cost method is used in applying factory overhead and the predetermined rate is 100%,
compute the total job cost assuming that the direct materials used totaled $5,000, the direct labor cost
totaled $3,200.
 $2,500

$10,700

Correct!

$11,400

$3,200

Question 8

0 / 2 pts

The general ledger of Lawson Lumber Co. contains the following control account:

                           Work in Process

Dr Cr

Materials      15,000  Finished Goods40,000

Labor      16,000

Factory overhead       16,000

If the materials charged to the one uncompleted job still in process amounted to $3,400, what amount
of labor and factory overhead must have been charged to the job if the factory overhead rate is 100% of
direct labor cost?

Correct Answer

$1,800

You Answered

$3,600

can not be determined

$1,700

Question 9

2 / 2 pts
Venus Company has developed the following flexible budget formula for annual indirect labor cost:

Total annual cost = $12,000 + $.25 per unit

Operating budgets for the current month are based on 6,000 units. Indirect labor costs included in this
monthly planning budget are:

$13,500.

$1,500.

$12,000.

Correct!

$2,500.

Question 10

2 / 2 pts

The books of Moon Products Co. revealed that the following general journal entry had been made at the
end of the current accounting period:

Factory overhead $2,000

Under- and overapplied factory overhead $2,000

The total direct material cost for the period was $40,000. The total direct labor cost, at an average rate
of $10 per hour for direct labor, was one and one-half times the direct materials cost. Factory overhead
was applied on the basis of $4 per direct labor hour. What was the total actual factory overhead
incurred for the period?
 $20,000

$40,000

Correct!

$22,000

$24,000

Question 11

2 / 2 pts

Factory overhead for the Praeger Company has been estimated as follows:

Fixed overhead $122,500

    Variable overhead $90,000

   

    Budgeted direct labor hours 42,500

Production for the month was 90 percent of the budget, and actual factory overhead totaled $175,000.

Calculate the under-or overapplied factory overhead.

$16,250 underapplied

Correct!

$16,250 overapplied

$37,500 overapplied

$37,500 underapplied
Question 12

2 / 2 pts

At the beginning of the year, manufacturing overhead for the year was estimated to be $702,450. At the
end of the year, actual direct labor-hours for the year were 33,100 hours, the actual manufacturing
overhead for the year was $697,450, and manufacturing overhead for the year was overapplied by
$40,680. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct
labor-hours at the beginning of the year used in the predetermined overhead rate must have been:

31,276 direct labor-hours

33,100 direct labor-hours

Correct!

31,500 direct labor-hour

29,452 direct labor-hours

Question 13

2 / 2 pts

Dale Company, which applies overhead at the rate of 190% of direct labor cost, began work on job no.
101 during June. The job was completed in July and sold during August, having accumulated direct
material and labor charges of $27,000 and $15,000, respectively. On the basis of this information, the
total overhead applied to job no. 101 amounted to:

Correct!

$28,500

$51,300

$79,800

$0

Question 14

2 / 2 pts

The Lorenzo Printing Company has two production departments (printing and binding) and three service
departments (power generation, factory maintenance, and human resources). A summary of costs and
other data for each department, prior to allocation of service department costs for the year ended April
30, appears below.

The costs of the power generation department, factory maintenance department, and human resources
are allocated on the basis of kilowatt hours, square footage occupied, and number of employees,
respectively.

Power Factory Human

Binding Gen. Maint. Res.
Printing

Direct labor
  $475,000   $438,000      
costs:

Direct material
  $632,000   $527,000  
costs:

Factory overhead
  $750,000   $832,000 $75,000 $50,000 $30,000
costs:

Direct labor
   262,000    254,000      
hours:

Number of
        40         35       5      20       5
employees:

Sq. footage
    36,000     24,000   5,000   3,000   1,000
occupied:
Assuming that Lucas elects to distribute service department costs to production departments using the
direct distribution method, the amount of human resources department costs that would be allocated
to the printing department would be (round all final calculations to the nearest dollar):

Correct!
 $16,000.

$18,000.

$15,000.

$12,000.

Question 15

0 / 2 pts

MC Company has two departments, Mixing and Curing. The following information is available for
September:

Cost
Number of per equivalent
Mixing Department:
units unit

  Transferred to the
9,000 $2.00
curing department

  Ending work in
process inventory
4,000 $2.00
      70 % complete

   
Curing Department:

   Completed and
8,000 $3.00
transferred out

   Ending work in
process inventory
5,000 $3.00
      30% complete

The cost of the inventory transferred from Curing to the warehouse is:

Correct Answer
 $24,000

$42,000

$40,000

You Answered

$18,000

Question 16

0 / 2 pts

The production report for Marck Company included the following information for August:

Completion
Number of Units

Units started in
44,500  
production

Units transferred to
47,200  
finished goods

Ending units in process 3,000 60%

How many units were in process at the beginning of the month?

You Answered

4,700

1,000

4,800

Correct Answer

5,700

Question 17
2 / 2 pts

The production report for Phillips Industries, with beginning inventory of 15,000 units at the beginning
of the month, included the following information for the month:

Completio
Number of Units n

Units started in
80,000  
production

Ending units in 1/4

10,000
process completed

Calculate the equivalent units of production:

87,000

95,000

Correct!

87,500

85,000

Question 18

2 / 2 pts

Norma Company had 10,000 units in work in process at January 1 that were 50 percent complete.
During January, 25,000 units were completed. At January 31, 6,000 units remained in work in process
that were 80 percent complete. Using the average cost method, the equivalent units for January were:

Correct!

29,800.

35,000.

36,000.
 31,000.

Question 19

2 / 2 pts

Daniel LLC incurred cost of $45,000 for material, $25,000 for labor, and $24,000 for factory overhead.
There was no beginning or ending work in process. 5,000 units were completed and transferred out.
The unit cost for labor is:

$18.80

Correct!

$5.00

$9.00

$4.80

Question 20

2 / 2 pts

The records of Jordan Company reflect the following data:

Work in process, beginning of the month - 4,500 units; 30% completed at a cost of $16,700 for
materials, $7,600 for labor, and $10,400 for overhead.

Production costs for the month - materials - $54,300 labor; - $25,400; overhead - $34,600

Units completed and transferred to finished goods - 18,000

Work in process, end of month - 5,000 units; 40% completed

Calculate the total unit cost for the month.

$7.10
Correct!

$7.45

$6.50

$6.35

Question 21

2 / 2 pts

The records of Andrews Company reflect the following data:

Work in process, beginning of the month - 4,500 units; 1 / 3 completed at a cost of $2,900 for materials,
$825 for labor, and $5,000 for overhead.

Production costs for the month - materials - $20,695; labor - $13,050; overhead - $41,500

Units completed and transferred to finished goods - 35,000

Work in process, end of month - 3,000 units; 1 / 4 completed

What is the unit cost for material?

Correct!

$.66

$.62

$.56

$.59

Question 22

2 / 2 pts

Information relating to direct labor for Brussels, Inc. follow:

Actual direct labor hours 8,200

Standard direct labor hours 8,100

Total direct labor per payroll $101,000

Standard labor rate per hour $41.00

The labor efficiency variance is:

$4,050 unfavorable

$1,100 unfavorable

$5,300 unfavorable

Correct!

$4,100 unfavorable

Question 23

2 / 2 pts

The following information is available from the Arugula Company:

Actual factory overhead $16,800

Actual fixed overhead expenses $ 9,200

Budgeted fixed overhead expenses $ 9,500

Actual hours 3,600

Budgeted hours  3,800

Standard hours allowed 3,500

Standard variable overhead rate per direct labor $  2.25

hour

Assuming that Arugula uses a three-variance analysis of overhead variances, what is the efficiency
variance?

Correct!

$475 unfavorable

$500 unfavorable

$175 unfavorable

$975 unfavorable

Question 24

2 / 2 pts

Ben's Climbing Gear, Inc. has direct material costs as follows:

Actual units of direct materials used 20,000

Standard price per unit of direct materials $2.50

Materials quantity variance--favorable $5,000

What was Ben's standard quantity of material allowed?

18,000

20,000

Correct!

22,000

24,000
Question 25

2 / 2 pts

Kale Corporation's budgeted fixed factory overhead costs are $25,000 per month plus a variable factory
overhead rate of $8.00 per direct labor hour. The standard direct labor hours allowed for November
production were 10,000. An analysis of the factory overhead indicates that in November Kale had a
favorable flexible-budget variance of $1,500 and an unfavorable production-volume variance of $500.
Kale uses a two-variance analysis of overhead variances.

The actual factory overhead incurred in October is:

$104,500.

Correct!

$103,500

$106,500.

$105,500.

Question 26

2 / 2 pts

Woodside Company manufactures tables with vinyl tops. The standard material cost for the vinyl used
per Style-R table is $7.20 based on 8 square feet of vinyl at a cost of $.90 per square foot. A production
run of 1,000 tables in January resulted in usage of 8,300 square feet of vinyl at a cost of $.80 per square
foot, a total cost of $7,055. If the materials price variance was recorded when the material was issued
to production, that variance was:

$830 unfavorable.

$290 favorable.

Correct!

$830 favorable.

$290 unfavorable.

Question 27

2 / 2 pts
Yellow Co. budgets 15,000 direct labor hours for the year. The Total overhead budget is expected to
amount to $42,000. The standard cost for a unit of the company's product estimates the variable
overhead as follows:

Variable factory overhead (3 hours @ $2 per direct labor hour) - $6 per unit

The actual data for the period follow:

Actual completed units 5,500

Actual direct labor hours 15,500

Actual variable
$33,000
overhead

Actual fixed overhead 11,700

Using the four-variance method, calculate the production volume variance.

$2,000 favorable

$1,200 unfavorable

Correct!

$1,200 favorable

$2,000 unfavorable

Question 28

2 / 2 pts

Yellow Co. budgets 15,000 direct labor hours for the year. The Total overhead budget is expected to
amount to $42,000. The standard cost for a unit of the company's product estimates the variable
overhead as follows:

Variable factory overhead (3 hours @ $2 per direct labor hour) - $6 per unit

The actual data for the period follow:

Actual completed units 5,500

Actual direct labor hours 15,500

Actual variable
$33,000
overhead

Actual fixed overhead 11,700

Using the four-variance method, calculate the variable efficiency variance.

$2,000 unfavorable

Correct!

$2,000 favorable

$1,200 favorable

$1,200 unfavorable

Question 29

2 / 2 pts

Earl Company's direct labor costs for the month of January follow:

Actual direct labor hours 18,000

Standard direct labor hours 19,000

Direct labor rate variance--unfavorable $  1,800

Total payroll $117,000

What was Earl's direct labor efficiency variance?

Correct!

$6,400 favorable

$6,400 unfavorable

$1,800 favorable
 $6,500 favorable

Question 30

2 / 2 pts

The data below relate to the month of April for Monroe, Inc., which uses a standard cost system and a
two-variance analysis of factory overhead:

Actual hours used 16,500

Standard hours allowed for good output 16,250

Actual total overhead $53,200

Budgeted fixed costs $12,000

Budgeted activity in hours 16,000

Total overhead application rate per

$  3.25
standard direct labor hour

Variable overhead rate per standard

$  2.50
direct labor hour

What was Monroe's flexible-budget variance for April?

$1,100 unfavorable

$1,100 favorable

Correct!

$575 unfavorable

$575 favorable

Question 31
2 / 2 pts

Thomas Company uses a standard cost system. Information for raw materials for Product RBI for the
month of October follows:

Standard unit price $1.80  

Actual purchase price per unit $1.65  

Actual quantity purchased 4,000 units

Actual quantity used 3,900 units

Standard quantity allowed for actual

3,800 units
production
What is the materials price variance?

585 unfavorable

$600 favorable

Correct!

585 favorable

$600 unfavorable

Question 32

2 / 2 pts

Meger Manufacturing uses the direct labor cost method for applying factory overhead to production.
The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and
$800,000, respectively.

During the year, the company started and completed Job 352A, which had direct material and labor
costs of $32,000 and $45,000, respectively. What was the cost of Job 352A?

$ 77,000

$102,600
Correct!

$113,000

$ 81,000

Question 33

2 / 2 pts

The production report for Matthews, Inc. included the following information for May:

Standard unit price $1.80  

Actual purchase price per unit $1.65  

Actual quantity purchased 4,000 units

Actual quantity used 3,900 units

Standard quantity allowed for actual

3,800 units
production
How many units were started during the period?

58,700

47,500

Correct!

43,500

50,900

Question 34

2 / 2 pts

The Davis Corporation budgeted factory overhead at $250,000 for the period for the Assembly
Department based on a budgeted volume of 100,000 direct labor hours. At the end of the period, the
factory overhead control account for the Assembly Department had a balance of $252,000. The actual
(and allowed) direct labor hours were 103,000.
What was the over- or underapplied factory overhead for the period?

$3,000 underapplied

$5,500 underapplied

$3,000 overapplied

Correct!

$5,500 overapplied

Question 35

2 / 2 pts

Information relating to direct labor for the Newstead Company follow:

Completio
Number of Units n

Beginning units in
7,800 20%
process

Units transferred to
45,300  
finished goods

Ending units in process 6,000 40%

The labor rate variance is:

Correct!

$2,800 unfavorable

$4,600 unfavorable

$1,800 unfavorable

$2,700 unfavorable
Question 36

0 / 2 pts

Argo Manufacturing Co., had 500 units, three/fifths completed, in process at the beginning of the
month. During the month, 2,000 units were started in process and finished. There was no work in
process at the end of the month. Unit cost of production for the month was $1.20. Costs for materials,
labor, and factory overhead incurred in the current month totaled $2,655. How much is the unit cost for
the prior month?

$.69

$1.20

Correct Answer

$1.15

You Answered

$1.3275

Question 37

2 / 2 pts

Pay Company has two service departments, Maintenance and Human Resources, and two production
departments, Machining and Assembly. The following data have been estimated for next year’s
operations:

Direct Square Labor

Department:
Charges Footage Hours

Human
$135,000 -- --
Resources

Maintenance 100,000 -- 5,000

Machining 275,000 2,000 20,000

Assembly 225,000 3,000 25,000

The Human Resources Department services all departments. If the company used the direct distribution
method, what is the predetermined factory overhead rate for the machining department using labor
hours as the basis?

$20.00

$22.70

$15.00

Correct!

$18.75

Question 38

2 / 2 pts

Information for the month of January concerning Department A, the first stage of Cando Corporation's
production cycle, follows:

  Materials Conversion

Beginning work in process $17,200 $16,400

Current costs  50,000  34,000

Total costs $67,200 $50,400

Equivalent units using

112,000 112,000
average cost method

Average unit costs $  0.60 $  0.45

100,000
Goods completed  
units

24,000
Ending work in process  
units
The ending work in process is 50 percent complete. How would the total costs accounted for be
distributed using the average cost method?

Correct!

Goods completed $105,000; Work-in-process $12,600

Goods completed $105,000; Work-in-process $25,200

Goods completed $67,200; Work-in-process $50,400

Goods completed $105,000; Work-in-process $14,400

Question 39

2 / 2 pts

Charleston Can Inc. has 1,000 units in process in Forming at the beginning of the month with a
transferred cost of $21,200 from Blanking. During the month, 5,000 units with a total cost of $100,000
are received from Blanking; 4,000 units are finished and transferred to Finishing; and 2,000 units are in
process in Forming at the end of the month, one- half completed. How much is the adjusted unit cost
from the prior department in the Forming Department.

$16.66

$25.00

$24.24

Correct!

$20.20

Question 40

2 / 2 pts

Sun Corporation uses ABC. The factory overhead budget for the coming period is $500,000, consisting of
the following:

Budgeted
Cost Pool
Amount

Direct labor and facility support $150,000

Machine support 200,000

Machine setups 100,000

Design changes 50,000

Total $500,000

The potential allocation bases and their estimated amounts were as follows:

Budgeted
Cost Pool
Amount

Number of design changes 50

Number of setups 200

Machine hours 10,000

Direct labor hours 20,000

Job 25 required $25,000 for direct materials, $10,000 for direct labor, 500 direct labor hours, 1000
machine hours, five set ups, and three design changes. Determine the cost of Job 25.

$50,000

$65,000

$58,000

Correct!

$64,250