Cloudy Comfort Company's accounting records reflect the following inventories: - 32940

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ACCT212-04 FALL 2013 MIDTERM EXAM TWO
Name: __________________________ Date: TAKE-HOME DUE 11/19/2013
___ 1. Cloudy Comfort Company's accounting records reflect the following inventories:
During 2012, $400,000 of raw materials were purchased, direct labor costs amounted to $500,000, and
manufacturing overhead incurred was $480,000.
If Cloudy Comfort Company's cost of goods manufactured for 2012 amounted to $1,190,000, its cost of
goods sold for the year is
A) $1,230,000. B) $1,150,000. C) $1,300,000. D) $1,050,000.
___ 2. Managerial accounting is applicable to
A) manufacturing entities. B) not-for-profit entities. C) service entities. D) all of these.
___ 3. Which one of the following is not a direct material?
A) Steel used in the manufacturing of steel-radial tires
B) Lubricant for a ball-bearing joint for a large crane
C) Plastic used in the covered case for a home PC
D) A tire used for a lawn mower
___ 4. Managerial accounting information is generally prepared for
A) managers. B) regulatory agencies. C) creditors. D) stockholders.
___ 5. A manufacturing process requires small amounts of glue. The glue used in the production process is
classified as a(n)
A) direct material. B) miscellaneous expense. C) indirect material. D) period cost.
___ 6. Given the following data for Map Company, compute (A) total manufacturing costs and (B) cost of
goods manufactured:
A) $555,000 $540,000 C) $570,000 $585,000
B) $555,000 $570,000 D) $540,000 $570,000
Cal State San Bernardino, College of Business, Dept of Acct & Finance, PROF M. HENRY Page 1
300,000 160,000
Direct materials used $180,000 Beginning work in process $30,000
Direct labor 150,000 Ending work in process 15,000
Manufacturing overhead 225,000 Beginning finished goods 38,000
Operating expenses 263,000 Ending finished goods 23,000
(A) (B)
Finished goods inventory 190,000 150,000
Dec. 31, 2012 Dec. 31, 2011
Raw materials inventory $310,000 $260,000
Work in process inventory
ACCT212-04 FALL 2013 MIDTERM EXAM TWO
___ 7. For a manufacturing company, which of the following is an example of a period cost rather than a
product cost?
A) Insurance on factory equipment C) Wages of salespersons
B) Depreciation on factory equipment D) Wages of machine operators
___ 8. Cloudy Comfort Company's accounting records reflect the following inventories:
During 2012, $400,000 of raw materials were purchased, direct labor costs amounted to $500,000, and
manufacturing overhead incurred was $480,000.
The total raw materials available for use during 2012 for Cloudy Comfort is
A) $350,000. B) $660,000. C) $260,000. D) $710,000.
___ 9. Anchor Manufacturing Company reported the following year-end information: beginning work in
process inventory, $80,000; cost of goods manufactured, $880,000; beginning finished goods inventory,
$50,000; ending work in process inventory, $70,000; and ending finished goods inventory, $40,000.
How much is Anchor's cost of goods sold for the year?
A) $900,000 B) $880,000 C) $890,000 D) $870,000
___ 10. Clay Tile Manufacturing Inc.'s accounting records reflect the following inventories:
During 2012, Clay Tile Manufacturing purchased $860,000 of raw materials, incurred direct labor costs
of $200,000, and incurred manufacturing overhead totaling $128,000. How much is total manufacturing
costs incurred during 2012 for Clay Tile?
A) $1,200,000 B) $1,192,000 C) $1,204,000 D) $1,188,000
___ 11. Records of individual items of raw materials would not be maintained
A) in the Raw Materials Inventory account. C) electronically.
B) on stores ledger cards. D) manually.
___ 12. A company assigned overhead to work in process. At year end, what does the amount of overapplied
overhead mean?
A) The overhead assigned to work in process is less than the actual overhead.
B) The overhead assigned to work in process is greater than the overhead incurred.
C) The overhead assigned to work in process is less than the estimated overhead costs.
D) The overhead assigned to work in process is greater than the estimated overhead costs.
Cal State San Bernardino, College of Business, Dept of Acct & Finance, PROF M. HENRY Page 2
Dec. 31, 2011
Raw materials inventory $310,000 $260,000
Work in process inventory 300,000 160,000
Finished goods inventory
Dec. 31, 2011 Dec. 31, 2012
Raw materials inventory $ 80,000 $ 64,000
Work in process inventory 104,000 116,000
Finished goods inventory 100,000 92,000
190,000 150,000
Dec. 31, 2012
ACCT212-04 FALL 2013 MIDTERM EXAM TWO
___ 13. Which of the following is not a control account?
A) Raw Materials Inventory C) Factory Labor
B) Manufacturing Overhead D) Accounts Receivable
___ 14. At the beginning of the year, Scaled Manufacturing estimates annual overhead costs to be $1,200,000
and that 300,000 machine hours will be operated. Using machine hours as a base, the amount of
overhead applied during the year if actual machine hours for the year was 315,000 hours is
A) $840,000. B) $1,260,000. C) $1,142,857. D) $1,200,000.
___ 15. Sparky Inc. uses job order costing for its brand new line of sewing machines. The cost incurred for
production during 2012 totaled $18,000 of materials, $9,000 of direct labor costs, and $6,000 of
manufacturing overhead applied. The company ships all goods as soon as they are completed which
results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled
$15,000, and the ending balance is $9,000. During the year, the company completed 40 machines. How
much is the cost per machine?
A) $1,200 B) $825 C) $675 D) $975
___ 16. Sofa Manufacturers applies overhead on the basis of machine hours. Given the following data, compute
overhead applied and the under- or overapplication of overhead for the period:
A) $1,470,000 applied and neither under- nor overapplied
B) $1,450,000 applied and $20,000 overapplied
C) $1,500,000 applied and $20,000 overapplied
D) $1,450,000 applied and $20,000 underapplied
___ 17. When the company assigns factory labor costs to jobs, the direct labor cost is debited to
A) Work in Process Inventory. C) Factory Labor.
B) Direct Labor. D) Manufacturing Overhead.
___ 18. Sun Screen Manufacturers applies overhead on the basis of 120% of direct labor cost. Job No. 190 is
charged with $80,000 of direct materials costs and $120,000 of manufacturing overhead. The total
manufacturing costs for Job No. 190 is
A) $344,000. B) $300,000. C) $200,000. D) $216,000.
___ 19. As of December 31, 2012, Leaf Manufacturing had $2,000 of raw materials inventory. At the beginning
of 2012, there was $1,600 of materials on hand. During the year, the company purchased $274,000 of
materials; however it paid for only $264,000. How much inventory was requisitioned for use on jobs
during 2012?
A) $264,400 B) $273,600 C) $274,400 D) $263,600
Cal State San Bernardino, College of Business, Dept of Acct & Finance, PROF M. HENRY Page 3
300,000
Actual machine hours 290,000
Estimated annual overhead cost $1,500,000
Actual annual overhead cost $1,470,000
Estimated machine hours
ACCT212-04 FALL 2013 MIDTERM EXAM TWO
___ 20. As of December 31, 2012, Grey Manufacturing had $2,500 of raw materials inventory. At the beginning
of 2012, there was $2,000 of materials on hand. During the year, the company purchased $305,000 of
materials; however, it paid for only $292,500. How much inventory was requisitioned for use on jobs
during 2012?
A) $304,500 B) $293,000 C) $292,000 D) $305,500
___ 21. Activity-based costing has been found to be useful in each of the following service industries except
A) ABC has been useful in any of these industries.
B) banks.
C) hospitals.
D) telephone companies.
___ 22. For its inspecting cost pool, Davidson, Inc. expected overhead cost of $200,000 and 4,000 inspections.
The actual overhead cost for that cost pool was $240,000 for 5,000 inspections. The activity-based
overhead rate used to assign the costs of the inspecting cost pool to products is
A) $50 per inspection. B) $60 per inspection. C) $48 per inspection. D) $40 per inspection.
___ 23. In the pull approach
A) the manufacturing process begins with a customer placing an order.
B) subassembly parts are manufactured and stored just in case they are needed later in the
manufacturing process.
C) Finished goods are completed and stored just in case unexpected and rush customer orders are
received.
D) None of the above.
___ 24. Estimated costs for activity cost pools and other item(s) are as follows:
Total estimated overhead is
A) $1,325,000. B) $700,000. C) $875,000. D) $1,150,000.
___ 25. Which of the following is not a batch-level activity?
A) Inspection B) Assembling C) Equipment setups D) Purchase ordering
___ 26. Which of the following is not a unit-level activity?
A) Sanding B) Inspecting C) Cutting D) Drilling
Cal State San Bernardino, College of Business, Dept of Acct & Finance, PROF M. HENRY Page 4
Inspecting and testing 175,000
Machining $500,000
Assembling 200,000
Advertising 450,000
ACCT212-04 FALL 2013 MIDTERM EXAM TWO
___ 27. Sofa Manufacturing manufactures two models of its couch, the Mini and the Maxi. The Mini model
requires 10,000 direct labor hours and the Maxi model requires 40,000 direct labor hours. The company
produces 4,000 units of the Mini model and 1,000 units of the Maxi model each year. The company
produces the Mini model in batch sizes of 200, while it produces the Maxi model in batch sizes of 100.
The company expects to incur $180,000 of total setup costs this year. How much of the setup costs are
allocated to the Mini model using ABC costing?
A) $90,000 B) $36,000 C) $150,000 D) $120,000
___ 28. Which of the following is not typical of traditional costing systems?
A) Use of direct labor hours or direct labor cost to assign overhead.
B) Assumption of correlation between direct labor and incurrence of overhead cost.
C) Use of multiple cost drivers to allocate overhead.
D) Use of a single predetermined overhead rate.
___ 29. The costs that are easiest to trace directly to products are
A) direct labor and overhead.
B) direct materials and overhead.
C) direct materials and direct labor.
D) none of the above; all three costs are equally easy to trace to the product.
___ 30. Activity-based costing is used by
A) consulting firms. B) accounting firms. C) law firms. D) all of the above.
31. Mike Greer is studying for his accounting mid-term examination. Summarize for Mike what he should
know about management functions.
Cal State San Bernardino, College of Business, Dept of Acct & Finance, PROF M. HENRY Page 5
ACCT212-04 FALL 2013 MIDTERM EXAM TWO
32. The following costs and inventory data were taken from the accounts of Skillet Company for 2012:
Instructions
33. Seasonal Delights manufactures a wide variety of holiday and seasonal decorative items. Seasonal's
activity-based costing overhead rates are:
The Snow Man project involved three purchase orders, 4,000 square feet/days, 60 machine hours, and
30 direct labor hours. The cost of direct materials on the job was $19,000 and the direct labor rate is $30
per hour.
Instructions
Determine the total cost of the Snow Man project.
Cal State San Bernardino, College of Business, Dept of Acct & Finance, PROF M. HENRY Page 6
Raw materials $ 8,000 $ 7,000
Work in process 15,000 13,000
Finished goods 16,000 12,000
Costs incurred:
Raw materials purchases $83,000
Direct labor 42,000
Factory rent 8,000
Factory utilities 10,000
Indirect materials 4,000
Indirect labor 6,000
Operating expenses 17,000
a. Prepare a schedule showing the amount of direct materials used in production during the year.
b. Compute the amount of manufacturing overhead incurred during the year.
c. Prepare a schedule of Cost of Goods Manufactured for Skillet Company for the year ended
December 31, 2012 in good form.
d. Prepare the Cost of Goods Sold section of the Income Statement for Skillet Company for the
year ended December 31, 2012 in good form.
January 1, 2012 December 31, 2012
Purchasing $350 per order
Storing $2 per square foot/days
Machining $100 per machine hour
Supervision $5 per direct labor hour
Inventories:
ACCT212-04 FALL 2013 MIDTERM EXAM TWO
34. Instant Access Services Inc. leases access to high-speed computers to small businesses. It provides the
following information for the year:
Overhead is applied on the basis of computer hours.
Instructions
a. Compute the predetermined overhead rate.
b. Determine the amount of overhead applied for the year.
35. Gourmet Company begins the month of March with $17,000 of work in process costs from Job 324.
Information from job cost sheets shows the following additional costs assigned during March, April, and
May of 2012:
Job 324 was completed in March. Jobs 325 and 327 were completed in May, and Job 326 was completed
in April. Jobs are sold during the month after completion. Total revenue for jobs sold during the 3-
month period is $145,000.
Instructions
Calculate the balances of the work in process and finished goods inventory accounts at the end of May.
Cal State San Bernardino, College of Business, Dept of Acct & Finance, PROF M. HENRY Page 7
100,000 90,000
Direct labor hours 200,000 180,000
Budgeted Actual
Manufacturing Costs Assigned
Job No. March April May
324 $26,000
325 20,000 $23,000 $15,000
326 41,000 11,000
327 16,000 34,000
328 29,000 46,000
Overhead cost $2,000,000 $1,900,000
Computer hours
ACCT212-04 FALL 2013 MIDTERM EXAM TWO
36. Heart Manufacturing Company makes specialty tools. In January, Heart incurs manufacturing costs of
$10,000,000 for direct materials, direct labor, and overhead. 20% of the total costs represents overhead
applied. The overhead rate is $1 for every $2 of direct labor costs incurred. Inventory balances were:
At the end of January, there was $1,000 of overapplied overhead.
Instructions
Cal State San Bernardino, College of Business, Dept of Acct & Finance, PROF M. HENRY Page 8
$300,000 $500,000
Work in process 600,000 400,000
Finished goods 400,000 200,000
(a) Determine the cost of raw materials purchased in January.
(b) Prepare a cost of goods manufactured schedule for January 2012.
(c) Compute the cost of goods sold for January.
January 1 January 31
Raw materials

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