Under Ricky Co.'s job order costing system, manufacturing overhead is applied to work
1.
Under Ricky Co.'s job order costing system, manufacturing overhead is applied to work in process using a predetermined annual overhead rate. During January, Ricky's transactions included the following:
Direct materials issued to production $ 90,000
Indirect materials issued to production $ 8,000
Manufacturing overhead incurred $125,000
Manufacturing overhead applied $113,000
Direct labor costs $107,000
Ricky had neither beginning nor ending work-in-process inventory. What was the cost of jobs completed in January?
a. $302,000
b. $310,000
c. $322,000
d. $330,000
2.
Quack Co. was analyzing variances for one of its operations. The initial budget forecast production of 20,000 units during the year with a variable manufacturing overhead rate of $10 per unit. Quack produced 19,000 units during the year. Actual variable manufacturing costs were $210,000. What amount would be Quack's flexible budget variance for the year?
a. $10,000 favorable
b. $20,000 favorable
c. $10,000 unfavorable
d. $20,000 unfavorable
3.
During June, Dinky Co. experienced scrap, normal spoilage, and abnormal spoilage in its manufacturing process. The cost of units produced includes
a. Scrap, but not spoilage
b. Normal spoilage, but neither scrap nor abnormal spoilage
c. Scrap and normal spoilage, but not abnormal spoilage
d. Scrap, normal spoilage, and abnormal spoilage
4.
Veggie Corp. uses a standard cost system. In May, Veggie purchased and used 17,500 pounds of materials at a cost of $70,000. The materials usage variance was $2,500 unfavorable and the standard materials allowed for May production was 17,000 pounds. What was the materials price variance for May?
a. $17,500 favorable
b. $17,500 unfavorable
c. $15,000 favorable
d. $15,000 unfavorable
5.
Kaffy Caterers quotes a price of $60 per person for a dinner party. This price includes the 6% sales tax and the 15% service charge. Sales tax is computed on the food plus the service charge. The service charge is computed on the food only. At what amount does Kaffy price the food?
a. $56.40
b. $51.00
c. $49.22
d. $47.40
6.
Product Cott has sales of $200,000, a contribution margin of 20%, and a margin of safety of $80,000. What is Cott's fixed cost?
a. $16,000
b. $24,000
c. $80,000
d. $96,000
7.
Nonfinancial measures provide information about
A. the economic effect of operations and decisions
B. aspects of operations that cannot be measured in dollars
C. the dollar value of a particular cost containment strategy
D. the operating margin
8.
Why is the evaluation of subunits and subunit managers important?
A. It helps determine whether or not to expand or contract operations.
B. It encourages manager motivation to take actions that maximize the value of the firm.
C. Both a and b.
D. They should not be evaluated separately.
9.
Which of the following is a problem with the ROI calculation?
A. Increased profits cause ROI to decrease.
B. Investment in assets is measured using current value costs.
C. An undue emphasis on ROI may lead managers to delay the purchase of modern equipment needed to stay competitive.
D. It does not hold managers responsible for assets.
10.
Beam Company currently has 100,000 shares of common stock outstanding and a price-earnings ratio of seven. Net income for the recently ended year is $375,000. Beam's board of directors declared a 15-for-2 stock split. Sunshine owned 100 shares of Beam before the split. What is the approximate value of Sunshine's investment in Beam immediately after the split?
a. $ 26
b. $ 350
c. $2,625
d. $5,250
You MUST show all calculations for problems to receive credit
Problem 1 Worth 15 points
The Frackle Department is the first of a two-stage production process. Spoilage is identified when the
units have completed the Forming process. Costs of spoiled units are assigned to units completed and
transferred to the second department in the period spoilage is identified. The following information
concerns Forming's conversion costs in May:
Units Conversion costs
Beginning work-in-process (50% complete) 2,000 $10,000
Units started during May 8,000 75,500
Spoilage—normal 500
Units completed & transferred 7,000
Ending work-in-process (80% complete) 2,500
Using the weighted average method, what was Forming's conversion cost transferred to the second production department?
Problem 2 Worth 15 points
BadBoy, Inc. makes two products, X and Y, that require allocation of indirect manufacturing costs. The following data was compiled by the accountant before making any allocations:
Product X Product Y
Quantity produced 10,000 20,000
Direct manufacturing labor hours 15,000 5,000
Setup hours 500 1,500
The total cost of setting up manufacturing processes and equipment is $400,000. The company uses a
job-costing system with a single indirect cost rate.
Under Ricky Co.'s job order costing system, manufacturing overhead is applied to work in process using a predetermined annual overhead rate. During January, Ricky's transactions included the following:
Direct materials issued to production $ 90,000
Indirect materials issued to production $ 8,000
Manufacturing overhead incurred $125,000
Manufacturing overhead applied $113,000
Direct labor costs $107,000
Ricky had neither beginning nor ending work-in-process inventory. What was the cost of jobs completed in January?
a. $302,000
b. $310,000
c. $322,000
d. $330,000
2.
Quack Co. was analyzing variances for one of its operations. The initial budget forecast production of 20,000 units during the year with a variable manufacturing overhead rate of $10 per unit. Quack produced 19,000 units during the year. Actual variable manufacturing costs were $210,000. What amount would be Quack's flexible budget variance for the year?
a. $10,000 favorable
b. $20,000 favorable
c. $10,000 unfavorable
d. $20,000 unfavorable
3.
During June, Dinky Co. experienced scrap, normal spoilage, and abnormal spoilage in its manufacturing process. The cost of units produced includes
a. Scrap, but not spoilage
b. Normal spoilage, but neither scrap nor abnormal spoilage
c. Scrap and normal spoilage, but not abnormal spoilage
d. Scrap, normal spoilage, and abnormal spoilage
4.
Veggie Corp. uses a standard cost system. In May, Veggie purchased and used 17,500 pounds of materials at a cost of $70,000. The materials usage variance was $2,500 unfavorable and the standard materials allowed for May production was 17,000 pounds. What was the materials price variance for May?
a. $17,500 favorable
b. $17,500 unfavorable
c. $15,000 favorable
d. $15,000 unfavorable
5.
Kaffy Caterers quotes a price of $60 per person for a dinner party. This price includes the 6% sales tax and the 15% service charge. Sales tax is computed on the food plus the service charge. The service charge is computed on the food only. At what amount does Kaffy price the food?
a. $56.40
b. $51.00
c. $49.22
d. $47.40
6.
Product Cott has sales of $200,000, a contribution margin of 20%, and a margin of safety of $80,000. What is Cott's fixed cost?
a. $16,000
b. $24,000
c. $80,000
d. $96,000
7.
Nonfinancial measures provide information about
A. the economic effect of operations and decisions
B. aspects of operations that cannot be measured in dollars
C. the dollar value of a particular cost containment strategy
D. the operating margin
8.
Why is the evaluation of subunits and subunit managers important?
A. It helps determine whether or not to expand or contract operations.
B. It encourages manager motivation to take actions that maximize the value of the firm.
C. Both a and b.
D. They should not be evaluated separately.
9.
Which of the following is a problem with the ROI calculation?
A. Increased profits cause ROI to decrease.
B. Investment in assets is measured using current value costs.
C. An undue emphasis on ROI may lead managers to delay the purchase of modern equipment needed to stay competitive.
D. It does not hold managers responsible for assets.
10.
Beam Company currently has 100,000 shares of common stock outstanding and a price-earnings ratio of seven. Net income for the recently ended year is $375,000. Beam's board of directors declared a 15-for-2 stock split. Sunshine owned 100 shares of Beam before the split. What is the approximate value of Sunshine's investment in Beam immediately after the split?
a. $ 26
b. $ 350
c. $2,625
d. $5,250
You MUST show all calculations for problems to receive credit
Problem 1 Worth 15 points
The Frackle Department is the first of a two-stage production process. Spoilage is identified when the
units have completed the Forming process. Costs of spoiled units are assigned to units completed and
transferred to the second department in the period spoilage is identified. The following information
concerns Forming's conversion costs in May:
Units Conversion costs
Beginning work-in-process (50% complete) 2,000 $10,000
Units started during May 8,000 75,500
Spoilage—normal 500
Units completed & transferred 7,000
Ending work-in-process (80% complete) 2,500
Using the weighted average method, what was Forming's conversion cost transferred to the second production department?
Problem 2 Worth 15 points
BadBoy, Inc. makes two products, X and Y, that require allocation of indirect manufacturing costs. The following data was compiled by the accountant before making any allocations:
Product X Product Y
Quantity produced 10,000 20,000
Direct manufacturing labor hours 15,000 5,000
Setup hours 500 1,500
The total cost of setting up manufacturing processes and equipment is $400,000. The company uses a
job-costing system with a single indirect cost rate.
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