Exam 6: Fundamentals of Product and Service Costing

The following information has been gathered for Foxmoor Industries for its fiscal year ending December 31: Estimated factory overhead costs \ 1,500,000 Actual factory overhead costs \ 1,776,400 Estimated labor hours 48,000 Actual labor hours 51,700 Estimated labor costs \ 756,000 Actual labor costs \ 840,125 Estimated machine hours 96,000 Actual machine hours 102,600 - What is the predetermined factory overhead rate per labor dollar?

Case (A) Case (B) Case (C) Beginning Balance (BB) \ 64,800 \ 59,840 ? Ending Balance (EB) 61,300 ? 13,800 Transferred In (TT) 189,100 79,530 65,200 Transferred Out (TO) ? 76,420 67,300 - For Case (B) above, what is the Ending Balance (EB)?

Describe the two-stage allocation method. When is it important to use a two-stage approach rather than a single-stage approach?

The following information is for Ogden Company for the month of November: 1. Factory overhead costs are applied to jobs at the predetermined rate of $80 per labor-hour. Job X-14 incurred 2,300 labor-hours; Job SM-4 used 1,850 labor-hours. 2. Job X-14 was shipped to customers during November. Job X-14 had a gross margin of 24 percent based on manufacturing cost. 3. Job SM-4 was still in process at the end of November. 4. Factory utilities, factory depreciation, and factory insurance incurred is summarized by these factory vouchers, invoices, and cost memos: Utilities \ 44,500 Depreciation 53,500 Insurance 38,600 5. The Company purchased the following direct materials and indirect materials: Material A \ 6,000 Material B 7,000 Indirect materials Total 6. Direct materials and indirect materials used are as follows: Job X-14 Job SM-4 Total Material A \ 5,450 \ 33,000 \ 38,450 Material B 1,650 25,500 27,150 Subtotal \ 7,100 \ 58,500 \ 65,600 Indirect materials 66,500 Total \1 32,100 7. Factory labor incurred for the two jobs and indirect labor is as follows: Job X-14 \ 32,200 Job SM-4 25,900 Indirect labor Total Required: Calculate the total manufacturing cost for Job X-14 and Job SM-4 for November.

Which of the following statements is (are) false regarding cost allocations and product costing? (A) It is easier to determine the individual product cost for a manufacturer than it is for a wholesaler. (B) In general, indirect costs are assigned, while direct costs are allocated.

When a manufacturing company has a highly automated manufacturing plant producing many different products, what is probably the most appropriate basis of applying overhead costs to work-in-process?

The predetermined manufacturing overhead rate for the year was 140% of direct labor cost; employees were paid $17.50 per hour. If the estimated direct labor hours were 15,000, what was the estimated manufacturing overhead?

Morton Inc. has provided the following data for the month of November. The balance in the Finished Goods inventory account at the beginning of the month was $49,000 and at the end of the month was $45,000. The cost of goods manufactured for the month was $226,000. The actual manufacturing overhead cost incurred was $74,000 and the manufacturing overhead cost applied to Work in Process was $70,000. The adjusted cost of goods sold that would appear on the income statement for November is:

Which of the following statements does not reflect one of the fundamental themes underlying the design of cost systems for managerial purposes?

The Bondi Company uses a predetermined overhead rate in applying overhead to production orders on a direct labor cost basis in Department A and on a machine hour basis in Department B. At the beginning of the year, the company made the following estimates: Dept. A Dept. B Direct labor cost \ 60,000 \ 40,000 Factory overhead \ 90,000 \ 45,000 Direct labor hours 6,000 9,000 Machine hours 2,000 15,000 What predetermined overhead rate would be used in Department A and Department B, respectively?

Case (A) Case (B) Case (C) Beginning Balance (BB) ? \8 ,630 \ 71,600 Ending Balance (EB) 34,360 ? 75,100 Transferred In (TI) 194,600 42,600 ? Transferred Out (TO) 192,800 46,500 181,900 - For Case (B) above, what is the Ending Balance (EB)?

The following data have been recorded for recently completed Job 674 on its job cost sheet. Direct materials cost was $2,039. A total of 32 direct labor-hours and 175 machine-hours were worked on the job. The direct labor wage rate is $14 per labor-hour. The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $15 per machine-hour. The total cost for the job on its job cost sheet would be:

Slider processes rebate requests for a large building supply firm. Slider processed 420,000 rebates in March. All rebates are processed the same day they are received. March costs were labor of $28,000 and overhead of $14,000. What is the cost to process 1,000 rebates?

Magnum Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for 2020, the company misclassified a portion of direct labor cost as indirect labor. The effect of this misclassification will be to:

When designing a cost system, what points should you consider before starting the design?

The Cost Flow Diagram for product costing includes all of the following costs except:

One of the most common decisions facing managers is determining the price at which to sell one of their products or to provide their services.

Arbor, Inc. had overhead of $310,000 during the year when $260,000 in labor costs were incurred. Estimates at the start of the year for overhead and labor costs were $300,000 for overhead and $250,000 for labor costs. The predetermined overhead rate would be:

In a labor-intensive company in which more overhead is used by the more highly skilled and paid employees, which activity base would be most appropriate for applying overhead to production?

Horton Industries Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for next year: Direct materials \1 0,000 Direct labor \3 0,000 Sales commissions \4 0,000 Salary of production supervisor \2 0,000 Indirect materials \4 ,000 Advertising expense \8 ,000 Rent on factory equipment \1 0,000 Horton estimates that 5,000 direct labor-hours and 10,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be: