Union Company applies overhead based upon machine hours. Budgeted factory overhead was $266,400 and budgeted machine hours were 18,500. Actual factory overhead was $287,920 and actual machine hours were 19,050. Before disposition of under/overapplied overhead, the cost of goods sold was $560,000 and ending inventories were as follows: \[\begin{array} { l l } \text { Direct materials } & \$ 60,000 \\ \text { WIP } & 190,000 \\ \text { Finished goods } & 250,000 \\ \text { Total } & \$ 500,000 \end{array}\] Required: a. Determine the budgeted factory- overhead rate per machine hour. b. Compute the overapplied or underapplied overhead. c. Assuming the variance is immaterial, give the journal entry to dispose of the variance. d. Assuming the variance is material, give the journal entry to dispose of the variance using proration.

a. $266,400 / 18,500 hours = $14.40 per

A company has the following information for its first month of operations: $\begin{array}{lr} \text { Raw materials used } & \$ 25,000 \\ \text { Sales ( } \$ 65 \text { per unit) } & \$ 78,000 \\ \text { Direct labor } & \$ 42,000 \\ \text { Variable factory overhead } & \$ 17,000 \\ \text { Fixed factory overhead } & \text { unknown }\\\text { Variable selling and }\\ \text { administrative } & \$ 3,000 \\ \text { Fixed selling and administrative } & \$ 5,000 \\ \text { Gross profit } & \$ 30,000 \\ \text { Contribution margin } & \text { unknown }\\\text { Ending inventories: }\\ \text { Raw materials } & \$ 7,000 \\ \text { WIP } & \text { none } \\ \text { Finished goods } & 1,200 \text { units } \end{array}$ is the inventory cost per unit using variable costing.

A) $36.25 B) $35.00 C) $37.92 D) $65.00 A) $36.25 B) $35.00 C) $37.92 D) $65.00

Cleveland Company reported the following information about the production and sales of its only product during its first month of operations: \[\begin{array} { l l } \text { Sales ( } \$ 225 \text { per unit) } & \$ 360,000 \\ \text { Direct materials used } & \$ 176,000 \\ \text { Direct labor } & \$ 100,000 \\ \text { Variable factory overhead } & \$ 44,000 \\ \text { Fixed factory overhead } & \$ 80,000 \\ \text { Variable selling and administrative } & \$ 20,000 \\ \text { expenses } & \\ \text { Fixed s elling and administrative expenses } & \$ 10,000 \\ \text { Endinginventories: Direct materials } & - 0 - \\ \text { WIP } & - 0 -\\\text { Finished goods }&400 \text { units } \end{array}\] The cost of goods sold under absorption costing is:

A) $320,000 B) $256,000 C) $272,000 D) $360,000 A) $320,000 B) $256,000 C) $272,000 D) $360,000

A company has the following information for its first month of operations: $\begin{array}{ll} \text { Raw material s used } & \$ 25,000 \\ \text { Sales ( } \$ 65 \text { per unit) } & \$ 78,000 \\ \text { Direct labor } & \$ 42,000 \\ \text { Variable factory overhead } & \$ 17,000 \\ \text { Fixed factory overhead } & \text { unknown }\\\text { Variable s elling and administrative } & \$ 3,000 \\ \text { Fixed selling and adminis trative } & \$ 5,000 \\ \text { Gross profit } & \$ 30,000 \\ \text { Contribution margin } & \text { unknown } \end{array}$ The company sold half of the units it produced. of factory overhead is included in the ending inventory under absorption costing.

A) $- 0- B) $6,000 C) $8,400 D) $12,000 A) $- 0- B) $6,000 C) $8,400 D) $12,000

A company has the following information for the month of operations: $\begin{array}{ll} \text { Raw materials used } & \$ 37,500 \\ \text { Sales }(\$ 97.50 \text { p er unit) } & \$ 117,000 \\ \text { Direct labor } & \$ 63,000 \\ \text { Variable factory overhead } & \$ 25,500 \\ \text { Fixed factory overhead } & \text { unknown }\\\text { Variable s elling and administrative } & \$ 4,500 \\ \text { Fixed selling and adminis trative } & \$ 7,500 \\ \text { Gross profit } & \$ 45,000 \\ \text { Contribution margin } & \text { unknown } \end{array}$ $\begin{array}{lll} \text { Inventories: } & \text { Beginning } & \text { Ending } \\ \text { Raw materials } & 0 & \$ 10500 \\ \text { WIP } & 0 & \text { none } \\ \text { Finished goods } & 0 & 1,200 \text { units } \end{array}$ Raw materials purchased during the current period are:

A) $27,000 B) $48,000 C) $37,500 D) None of these answers is correct. A) $27,000 B) $48,000 C) $37,500 D) None of these answers is correct.

Truman Company reported the following information about the production and sales of its only product during its first month of operations: \[\begin{array} { l r } \text { Sales ( } \$ 225 \text { per unit) } & \$ 315,000 \\ \text { Direct materials used } & \$ 160,000 \\ \text { Direct labor } & \$ 100,000 \\ \text { Variable factory overhead } & \$ 60,000 \\ \text { Fixed factory overhead } & \$ 80,000 \\ \text { Variable selling and administrative expenses } & \$ 20,000 \\ \text { Fixed selling and administrative expenses } & \$ 30,000 \\ \text { Endinginventories: } & \\ \quad \text { Direct materials } & - 0 - \\ \text { WIP } & - 0 - \\ \text { Finished goods } & 600 \text { units } \end{array}\] The ending inventory under absorption costing is:

A) $96,000 B) $120,000 C) $78,000 D) $135,000 A) $96,000 B) $120,000 C) $78,000 D) $135,000

Cyclone Company had the following information: \[\begin{array} { l l } \text { Budgeted factory overhead } & \$ 85,000 \\ \text { Actual factory overhead } & \$ 105,000 \\ \text { Budgeted: Direct- labor costs } & \$ 100,000 \\ \text { Actual: Direct- labor costs } & \$ 105,000 \end{array}\] The journal entry to apply overhead to a job incurring $15,000 of direct- labor cost includes a:

A) credit to factory Overhead Control for $15,000 B) debit to Factory Overhead Control for $12,750 C) credit to WIP Inventory for $15,000 D) debit to WIP Inventory for $12,750 A) credit to factory Overhead Control for $15,000 B) debit to Factory Overhead Control for $12,750 C) credit to WIP Inventory for $15,000 D) debit to WIP Inventory for $12,750

A company has the following information for the current month of operations: $\begin{array}{ll} \text { Raw materials used } & \$ 37,500 \\ \text { Sales }(\$ 97.50 \text { p er unit) } & \$ 117,000 \\ \text { Direct labor } & \$ 63,000 \\ \text { Variable factory overhead } & \$ 25,500 \\ \text { Fixed factory overhead } & \text { unknown }\\\text { Variable s elling and administrative } & \$ 4,500 \\ \text { Fixed selling and adminis trative } & \$ 7,500 \\ \text { Gross profit } & \$ 45,000 \\ \text { Contribution margin } & \text { unknown } \end{array}$ $\begin{array}{lll} \text { Inventories: } & \text { Beginning } & \text { Ending } \\ \text { Raw materials } & 0 & \$ 10500 \\ \text { WIP } & 0 & \text { none } \\ \text { Finished goods } & 0 & 1,200 \text { units } \end{array}$ The cost of goods sold under variable costing is:

A) $144,000 B) $63,000 C) $72,000 D) $126,000 A) $144,000 B) $63,000 C) $72,000 D) $126,000

A company has the following information for its first month of operations: $\begin{array}{ll} \hline \text { Raw materials used } & \$ 25,000 \\ \text { Sales (\$65 per unit) } & \$ 78,000 \\ \text { Directlabor } & \$ 42,000\\\text { Variable factory overhead }&\$17,000\\ \text { Fixed factory overhead unknown }\\\text { Variable sellingand administrative }&\$3,000\\ \text { Fixed sellingand administrative }&\$5,000\\\text { Gross profit }&\$30,000\\ \text { Contributionmargin }&\text { unknown }\\ \end{array}$ Ending inventories: Raw materials $\quad$$ \$ 7,000 $ WIP none Finishedgoods$\quad$$\quad$$\quad$1,200units The ending inventory under variable costing is:

A) $84,000 B) $48,000 C) $96,000 D) $42,000 A) $84,000 B) $48,000 C) $96,000 D) $42,000

A company has the following information for its first month of operations: $\begin{array}{ll} \text { Raw materials used } & \$ 25,000 \\ \text { Sales (\$65 per unit) } & \$ 78,000 \\ \text { Directlabor } &\$ 42,000\\\text { Variable factory overhead }&\$17,000\\ \text { Fixed factory overheadunknown Variable sellingand }\\\text { administrative }&\$3,000\\ \text { Fixed sellingand administrative }&\$5,000\\\text { Gross profit }&\$30,000\\ \text { Contributionmargin }&\text { unknown }\\ \end{array}$ Ending inventories: Raw materials $ \$ 7,000 $ WIP none Finishedgoods$\quad$$\quad$1,200 units were produced during the period.

A) 2,400 units B) 0 units C) 3.600 units D) 1,200 units A) 2,400 units B) 0 units C) 3.600 units D) 1,200 units

Exam 13: Job-Costing

Union Company applies overhead based upon machine hours. Budgeted factory overhead was $266,400 and budgeted machine hours were 18,500. Actual factory overhead was $287,920 and actual machine hours were 19,050. Before disposition of under/overapplied overhead, the cost of goods sold was $560,000 and ending inventories were as follows: Direct materials \ 60,000 WIP 190,000 Finished goods 250,000 Total \ 500,000 Required: a. Determine the budgeted factory- overhead rate per machine hour. b. Compute the overapplied or underapplied overhead. c. Assuming the variance is immaterial, give the journal entry to dispose of the variance. d. Assuming the variance is material, give the journal entry to dispose of the variance using proration.

(Essay)

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Question 101

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 factory overhead \ 17,000 Fixed factory overhead unknown Variable selling and administrative \ 3,000 Fixed selling and administrative \ 5,000 Gross profit \ 30,000 Contribution margin unknown Ending inventories: Raw materials \ 7,000 WIP none Finished goods 1,200 units is the inventory cost per unit using variable costing.

(Multiple Choice)

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Question 102

Cleveland 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 cost of goods sold under absorption costing is:

(Multiple Choice)

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Question 103

A company has the following information for its first month of operations: Raw material s used \ 25,000 Sales ( \ 65 per unit) \ 78,000 Direct labor \ 42,000 Variable factory overhead \ 17,000 Fixed factory overhead unknown Variable s elling and administrative \ 3,000 Fixed selling and adminis trative \ 5,000 Gross profit \ 30,000 Contribution margin unknown The company sold half of the units it produced. of factory overhead is included in the ending inventory under absorption costing.

(Multiple Choice)

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Question 104

In an absorption- costing statement, revenue less variable manufacturing cost is the gross margin.

(True/False)

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Question 105

The difference between sales revenue and manufacturing cost

(Short Answer)

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Question 106

If the overhead control account has a debit balance at the end of the period, then:

(Multiple Choice)

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Question 107

Bones Company gathered the following information for the year ended December 31, 20X5: Required: a. What is the ending finished- goods inventory cost under absorption costing? b. What is the ending finished- goods inventory cost under variable costing?

(Essay)

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Question 108

A company has the following information for the month of operations: Raw materials used \ 37,500 Sales (\ 97.50 p er unit) \ 117,000 Direct labor \ 63,000 Variable factory overhead \ 25,500 Fixed factory overhead unknown Variable s elling and administrative \ 4,500 Fixed selling and adminis trative \ 7,500 Gross profit \ 45,000 Contribution margin unknown Inventories: Beginning Ending Raw materials 0 \ 10500 WIP 0 none Finished goods 0 1,200 units Raw materials purchased during the current period are:

(Multiple Choice)

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Question 109

Truman Company reported the following information about the production and sales of its only product during its first month of operations: Sales ( \ 225 per unit) \ 315,000 Direct materials used \ 160,000 Direct labor \ 100,000 Variable factory overhead \ 60,000 Fixed factory overhead \ 80,000 Variable selling and administrative expenses \ 20,000 Fixed selling and administrative expenses \ 30,000 Endinginventories: Direct materials -0- WIP -0- Finished goods 600 units The ending inventory under absorption costing is:

(Multiple Choice)

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Question 110

Cyclone Company had the following information: Budgeted factory overhead \ 85,000 Actual factory overhead \ 105,000 Budgeted: Direct- labor costs \ 100,000 Actual: Direct- labor costs \ 105,000 The journal entry to apply overhead to a job incurring $15,000 of direct- labor cost includes a:

(Multiple Choice)

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Question 111

Oklahoma State Company produced 125,000 units and sold 112,500 units during its first year of operations. Actual fixed costs came in right on budget, and variable selling costs were $1.50 per unit sold. Additional data follow: Sales \2 ,868,750 manuf acturing costs: Material and lab or \ 1,125,000 Variable overhead \ 431,250 Fixed overhead \ 656,250 Selling expenses: Variable \3 37,500 Fixed \1 31,250 Required: a. Prepare an income statement for the year assuming variable costing. b. Prepare an income statement for the year assuming absorption costing. c.

(Essay)

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Question 112

All variances other than the production- volume variance are essentially flexible- budget variances.

(True/False)

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Question 113

Absorption- costing income is not affected by production volume.

(True/False)

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Question 114

A company has the following information for the current month of operations: Raw materials used \ 37,500 Sales (\ 97.50 p er unit) \ 117,000 Direct labor \ 63,000 Variable factory overhead \ 25,500 Fixed factory overhead unknown Variable s elling and administrative \ 4,500 Fixed selling and adminis trative \ 7,500 Gross profit \ 45,000 Contribution margin unknown Inventories: Beginning Ending Raw materials 0 \ 10500 WIP 0 none Finished goods 0 1,200 units The cost of goods sold under variable costing is:

(Multiple Choice)

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Question 115

The most widely used approach to disposing of overhead variances is:

(Multiple Choice)

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Question 116

A company has the following information for its first month of operations: Raw materials used \ 25,000 Sales ( \6 5 per unit) \ 78,000 Directlabor \ 42,000 Variable factory overhead \1 7,000 Fixed factory overhead unknown Variable sellingand administrative \3 ,000 Fixed sellingand administrative \5 ,000 Gross profit \3 0,000 Contributionmargin unknown Ending inventories: Raw materials $\quad$ $\$ 7,000$ WIP none Finishedgoods $\quad$ $\quad$ $\quad$ 1,200units The ending inventory under variable costing is:

(Multiple Choice)

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Question 117

There is no production- volume variance only when expected production volume equals actual production volume.

(True/False)

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Question 118

There is no difference between variable- costing and absorption- costing income if there is:

(Multiple Choice)

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Question 119

A company has the following information for its first month of operations: Raw materials used \ 25,000 Sales ( \6 5 per unit) \ 78,000 Directlabor \ 42,000 Variable factory overhead \1 7,000 Fixed factory overheadunknown Variable sellingand administrative \3 ,000 Fixed sellingand administrative \5 ,000 Gross profit \3 0,000 Contributionmargin unknown Ending inventories: Raw materials $\$ 7,000$ WIP none Finishedgoods $\quad$ $\quad$ 1,200 units were produced during the period.

(Multiple Choice)

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Question 120

In an absorption- costing statement, revenue less variable manufacturing cost is the gross margin.

The difference between sales revenue and manufacturing cost

If the overhead control account has a debit balance at the end of the period, then:

Bones Company gathered the following information for the year ended December 31, 20X5: Required: a. What is the ending finished- goods inventory cost under absorption costing? b. What is the ending finished- goods inventory cost under variable costing?

Cyclone Company had the following information: Budgeted factory overhead \ 85,000 Actual factory overhead \ 105,000 Budgeted: Direct- labor costs \ 100,000 Actual: Direct- labor costs \ 105,000 The journal entry to apply overhead to a job incurring $15,000 of direct- labor cost includes a:

All variances other than the production- volume variance are essentially flexible- budget variances.

Absorption- costing income is not affected by production volume.

The most widely used approach to disposing of overhead variances is:

There is no production- volume variance only when expected production volume equals actual production volume.

There is no difference between variable- costing and absorption- costing income if there is:

Managerial Accounting and the Business Organization

Introduction to Cost Behavior and Cost Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information and Decision-Making: Marketing Decisions

Relevant Information and Decision-Making: Product Decisions

The Master Budget

Flexible Budget and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Process-Costing Systems

Overhead Application: Variable and Absorbtion Costing

Basic Accounting Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

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