Exam 13: Job-Costing

Most companies consider production- volume variances to be beyond immediate control.

The following information was gathered for Wolverines Company: Budgeted direct- labor hours 7,750 Actual direct-labor hours 8,100 Budgeted factory overhead \2 20,875 Actual factory overhead \2 24,970 Assume the cost driver is direct- labor hours. The budgeted factory- overhead rate is:

The following data are available for Cavaliers Company for the year: Sales: 38,000 units at $\$ 50$ each Expected and actualproduction: $\quad \mathbf { 4 0 , 0 0 0 }$ units Manufacturingcosts incurred: Variable: $\quad \$ 1,400,000$ Fixed: $\$ 228,000$ Nonmanufacturingcosts incurred: Variable: $\quad \$ 76 , 0 0 0$ Fixed: $\$ 135,000$ Beginninginventories: none Required a. Determine operating income using the variable- costing approach. b. Determine operating income using the absorption- costing approach. c. Explain why operating income is not the same under the two approaches.

A company has the following information for the current month of operations: Raw materials used \ 37,500 Sales ( \ 97.50 per unit) \ 117,000 Direct labor \ 63,000 Variable factory overhead \ 25,500 Fixed factory overhead unknown Variable selling and administrative \ 4,500 Fixed selling and adminis trative \ 7,500 Gross profit \ 45,000 Contribution margin unknown Inventories: Beginning Ending Raw materials 0 \ 10,500 WIP 0 none Finished goods 0 1,200 units is the inventory cost per unit using variable costing.

is not a difference between the standard absorption- costing format and the variable- costing format.

The production- volume variance is the difference between:

The cost system which computes the cost of a manufactured product as the sum of actual direct materials, actual direct labor, and normal applied overhead

The costing method which separates costs into major categories of fixed and variable

A company has the following information for its first month of operations: Raw materials used \ 25,000 Sales ( \ 65 per unit) \ 78,000 Direct labor \ 42,000 Variable factoryoverhead \ 17,000 Fixed factory overhead unknown unknown Variable sellingand administrative \3 ,000 Fixed sellingand administrative \ 5,000 Grossprofit \ 30,000 Contributiormargin unknown Ending inventories: Raw materials \ 7,000 WIP none Finished goods 1,200 units were sold during the period.

The following information was gathered for Nittany Lions Company: Budgeted direct-labor hours 34,000 Actual direct-lab or hours 32,400 Budgeted f actory overhead \ 144,500 Actual factory ov erhead \ 149,980 Assume the cost driver is direct- labor hours. The budgeted factory- overhead rate is:

In absorption costing, costs are separated into the major categories of:

Browns Company reported the following information about the production and sales of its only product during its first month of operations: Sales ( \ 225 per unit) \ 360,000 Direct materials used \ 176,000 Direct labor \ 100,000 Variable factory overhead \ 44,000 Fixed factory overhead \ 80,000 Variable selling and administrative \ 20,000 expenses Fixed s elling and administrative expenses \ 10,000 Endinginventories: Direct materials -0- WIP -0- Finished goods 400 units The ending inventory under variable costing is:

Wildcats Company had the following information: Budgeted variable factory overhead \ 66,000 Budgeted fixed factory overhead \ 46,500 Actual variable factory overhead \ 67,500 Actual fixed factory overhead \ 52,500 Budgeted cost driver activity levels: Direct-labor hours 30,000 Direct-labor costs \ 150,000 Machine hours 60,000 Production setups 15,000 Actual cost driver activity levels: Direct-lab or hours 31,500 Direct-lab or costs \ 165,600 Machine hours 56,190 Production setups 14,280 The budgeted factory- overhead rate using direct- labor costs as the cost driver is:

There should be a strong cause- and- effect relationship between the factory overhead incurred and the cost driver chosen for its application.

Direct- labor hours rather than direct- labor cost usually drive fringe- benefit costs such as pensions and payroll taxes.

Actual product cost may be distorted by fluctuations in production volume.

Ducks Company had the following information: Budgeted factory overhead \ 75,000 Actual factory overhead \ 80,000 Budgeted: Direct-1abor hours 20,000 Actual: Direct-1abor hours 21,000 The amount of overhead applied to a company that uses 2,000 direct- labor hours is:

The entry to record the application of overhead includes a:

The proration method assigns underapplied overhead and overapplied overhead amounts based on the beginning- of- year account balances of WIP, Finished Goods, and Cost of Goods Sold.

Absorption costing assigns _ to the product.