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Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page
break, so be sure that you have seen the entire question and all the answers before choosing an answer.
Use the following information to answer this question.
Sanker Inc. has provided the following data for the month of August. There were no beginning inventories;
consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for
the current month.
Manufacturing overhead for the month was overapplied by $5,000. The company allocates any
underapplied or overapplied overhead among work in process, finished goods, and cost of goods sold at the
end of the month on the basis of the overhead applied during the month in those accounts.
Work In
Process
Finished
Goods
Cost of
Goods Sold Total
Direct materials $2,790 $7,680 $18,240 $28,710
Direct labor 9,700 19,200 45,600 74,500
Manufacturing
overhead applied 5,440 8,000 18,560 32,000
Total $17,930 $34,880 $82,400 $135,210
1. The journal entry to record the allocation of any underapplied or overapplied overhead for August would
include
A. credit to finished goods of $1,250.
B. debit to finished goods of $1,250.
C. credit to finished goods of $34,880.
D. debit to finished goods of $34,880.
2. Malaviya Corporation uses the FIFO method in its process-costing system. Operating data for the
Casting Department for the month of September appear below:
Units
Percent Complete
with Respect to
Conversion
Beginning work in process inventory 17,000 40%
Transferred in from the prior department
during September 72,000
Ending work in process inventory 18,000 30%According to the company’s records, the conversion cost in the beginning work-in-process inventory was
$63,104 at the beginning of September. Additional conversion costs of $654,240 were incurred in the
department during the month. What would be the cost per equivalent unit for conversion costs for
September? (Round off to three decimal places.)
A. $9.280
B. $9.087
C. $8.060
D. $9.400
Use the following information to answer this question.
Sanker Inc. has provided the following data for the month of August. There were no beginning inventories;
consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for
the current month.
Manufacturing overhead for the month was overapplied by $5,000. The company allocates any
underapplied or overapplied overhead among work in process, finished goods, and cost of goods sold at the
end of the month on the basis of the overhead applied during the month in those accounts.
Work In
Process
Finished
Goods
Cost of
Goods Sold Total
Direct materials $2,790 $7,680 $18,240 $28,710
Direct labor 9,700 19,200 45,600 74,500
Manufacturing
overhead applied 5,440 8,000 18,560 32,000
Total $17,930 $34,880 $82,400 $135,210
3. The work-in-process inventory at the end of August after allocation of any underapplied or overapplied
overhead for the month is closest to
A. $17,080.
B. $18,593.
C. $18,780.
D. $17,267.
Use the following information to answer this question.
The following data (in thousands of dollars) have been taken from the accounting records of Karlana
Corporation for the just-completed year.
Sales $910
Raw materials, inventory, beginning $80
Raw materials, inventory, ending $20
Purchases of raw materials $100
Direct labor $130
Manufacturing overhead $200
Administrative expenses $160Selling expenses $140
Work in process inventory, beginning $40
Work in process inventory, ending $10
Finished goods inventory, beginning $130
Finished goods inventory, ending $150
4. The net operating income for the year (in thousands of dollars) was
A. $180.
B. $40.
C. $410.
D. $110.
Use the following information to answer this question.
The following cost data pertain to the operations of Lefthand Department Stores, Inc., for the month of
December.
Corporate legal office salaries $74,000
Shoe Department cost of sales,
Brentwood Store
$35,000
Corporate headquarters building lease $78,000
Store manager’s salary
Brentwood Store
$14,000
Shoe Department sales commissions,
Brentwood Store
$5,000
Store utilities,
Brentwood Store
$14,000
Shoe Department manager’s salary,
Brentwood Store
$3,000
Central warehouse lease cost $10,000
Janitorial costs, Brentwood Store $8,000
The Brentwood Store is just one of many stores owned and operated by the company. The Shoe
Department is one of many departments at the Brentwood Store. The central warehouse serves all
of the company’s stores.
5. What is the total amount of the costs listed above that are direct costs of the Shoe Department?
A. $35,000
B. $43,000
C. $79,000
D. $40,000
6. Assume there’s no beginning work-in-process inventory and the ending work-in-process inventory is
70% complete with respect to conversion costs. Under the weighted-average method, the number of
equivalent units of production with respect to conversion costs would be
A. the same as the units started during the period.B. the same as the units completed.
C. less than the units completed.
D. less than the units started during the period.
Use the following information to answer this question.
The Lee Company uses a job-order costing system. The following data were recorded for June:
Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were
completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to
customers.
Added During June—-
Job
Number
June 1
Work in
Process
Inventory
Direct
Materials
Direct
Labor
235 $2,500 $600 $400
236 $1,500 $800 $1,000
237 $1,000 $1,200 $1,750
238 $800 $1,500 $2,250
7. Lee Company’s cost of goods sold for June was
A. $10,170.
B. $14,640.
C. $15,520.
D. $9,730.
8. Becky works on the assembly line of a manufacturing company where she installs a component part
for one of the company’s products. She’s paid $16 per hour for regular time, and time and a half for all
work in excess of 40 hours per week. Becky’s employer offers fringe benefits that cost the company $3
for each hour of employee time (both regular and overtime). During a given week, Becky works 42 hours
but is idle for 3 hours due to material shortages. The company treats all fringe benefits relating to direct
labor as added direct labor cost and the remainder as part of manufacturing overhead. The allocation of
Becky’s wages and fringe benefits for the week between direct labor cost and manufacturing overhead
would be which of the following?
A. Direct Labor: $672 / Manufacturing Overhead: $142
B. Direct Labor: $688 / Manufacturing Overhead: $126
C. Direct Labor: $741 / Manufacturing Overhead: $73
D. Direct Labor: $624 / Manufacturing Overhead: $190
9. When would the direct method and the step-down method of service department cost allocation result
in identical allocations being made to the operating departments?
A. The only time is when all costs in the service departments are fixed costs.
B. That can happen if there is only one service department or, if the company has more than one service department, if all the
costs in those departments are fixed costs.C. The only time is when there is just one service department.
D. That can happen only if there’s an equal amount of service departments and operating departments.
10. Dewey Company uses the weighted-average method in its process-costing system. The first
processing department, the Welding Department, started the month with 15,000 units in its beginning
work-in-process inventory that were 20% complete with respect to conversion costs. The conversion cost
in this beginning work-in-process inventory was $19,200. An additional 86,000 units were started into
production during the month. There were 13,000 units in the ending work-in-process inventory of the
Welding Department that were 60% complete with respect to conversion costs. A total of $575,360 in
conversion costs were incurred in the department during the month.
The cost per equivalent unit for conversion costs is closest to
A. $6.400.
B. $5.812.
C. $6.690.
D. $6.206.
11. Melillo Corporation has provided data concerning the company’s manufacturing overhead account for
the month of October. Prior to the closing of the overapplied or underapplied balance to cost of goods
sold, the total of the debits to the manufacturing overhead account was $67,000, and the total of the
credits to the account was $57,000.
Which statement is true?
A. Actual manufacturing overhead for the month was $67,000.
B. Manufacturing overhead transferred from finished goods to cost of goods sold during the month was $57,000.
C. Manufacturing overhead applied to work in process for the month was $67,000.
D. Manufacturing overhead for the month was overapplied by $10,000.
Use the following information to answer this question.
Abis Corporation uses the weighted-average method in its process-costing system. This month, the
beginning inventory in the first processing department consisted of 800 units. The costs and percentage
completion of these units in beginning inventory were
A total of 9,200 units were started, and 8,200 units were transferred to the second processing department
during the month. The following costs were incurred in the first processing department during the month:
The ending inventory was 80% complete with respect to materials and 20% complete with respect to
conversion costs.
Cost Percent Complete
Material costs $6,000 50%
Conversion costs $9,900 30%
Cost
Material costs $113,900
Conversion costs $322,500Note: Your answers may differ from those offered below due to rounding error. In all cases, select the
answer that’s the closest to the answer you computed. To reduce rounding error, carry out all
computations to at least three decimal places.
12. The total cost transferred from the first processing department to the next processing department
during the month is closest to
A. $452,300.
B. $420,414.
C. $512,700.
D. $436,400.
Use the following information to answer this question.
The following data (in thousands of dollars) have been taken from the accounting records of Karlana
Corporation for the just-completed year.
Sales $910
Raw materials, inventory, beginning $80
Raw materials, inventory, ending $20
Purchases of raw materials $100
Direct labor $130
Manufacturing overhead $200
Administrative expenses $160
Selling expenses $140
Work in process inventory, beginning $40
Work in process inventory, ending $10
Finished goods inventory, beginning $130
Finished goods inventory, ending $150
13. The cost of goods manufactured (finished) for the year (in thousands of dollars) was
A. $460.
B. $530.
C. $500.
D. $520.
Use the following information to answer this question.
Abis Corporation uses the weighted-average method in its process-costing system. This month, the
beginning inventory in the first processing department consisted of 800 units. The costs and percentage
completion of these units in beginning inventory were
A total of 9,200 units were started, and 8,200 units were transferred to the second processing
Cost Percent Complete
Material costs $6,000 50%
Conversion costs $9,900 30%department during the month. The following costs were incurred in the first processing department
during the month:
The ending inventory was 80% complete with respect to materials and 20% complete with respect to
conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the
answer that’s the closest to the answer you computed. To reduce rounding error, carry out all
computations to at least three decimal places.
Cost
Material costs $113,900
Conversion costs $322,500
14. The cost per equivalent unit for conversion costs for the first department for the month is closest to
A. $33.24.
B. $38.83.
C. $37.68.
D. $40.77.
Use the following information to answer this question.
The Lee Company uses a job-order costing system. The following data were recorded for June:
Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were
completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to
customers.
Added During June—-
Job
Number
June 1
Work in
Process
Inventory
Direct
Materials
Direct
Labor
235 $2,500 $600 $400
236 $1,500 $800 $1,000
237 $1,000 $1,200 $1,750
238 $800 $1,500 $2,250
15. Lee Company’s work-in-process inventory balance on June 30 was
A. $4,100.
B. $9,450.
C. $3,940.
D. $3,300.
Use the following information to answer this question.
Abis Corporation uses the weighted-average method in its process-costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage
completion of these units in beginning inventory were
A total of 9,200 units were started, and 8,200 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing department
during the month:
The ending inventory was 80% complete with respect to materials and 20% complete with respect to
conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the
answer that’s the closest to the answer you computed. To reduce rounding error, carry out all
computations to at least three decimal places.
Cost Percent Complete
Material costs $6,000 50%
Conversion costs $9,900 30%
Cost
Material costs $113,900
Conversion costs $322,500
16. The cost per equivalent unit for materials for the month in the first processing department is closest
to
A. $11.82.
B. $11.99.
C. $11.39.
D. $12.44.
17. Which of the following is not one of the five steps in the lean-thinking model discussed in the text?
A. Identify the business process that delivers value.
B. Automate the business process.
C. Create a pull system that responds to customer orders.
D. Organize work arrangements around the flow of the business process.
Use the following information to answer this question.
The following data (in thousands of dollars) have been taken from the accounting records of Karlana
Corporation for the just-completed year.
Sales $910
Raw materials, inventory, beginning $80
Raw materials, inventory, ending $20
Purchases of raw materials $100
Direct labor $130
Manufacturing overhead $200Administrative expenses $160
Selling expenses $140
Work in process inventory, beginning $40
Work in process inventory, ending $10
Finished goods inventory, beginning $130
Finished goods inventory, ending $150
18. The cost of the raw materials used in production during the year (in thousands of dollars) was
A. $120.
B. $180.
C. $40.
D. $160.
Use the following information to answer this question.
The following data (in thousands of dollars) have been taken from the accounting records of Karlana
Corporation for the just-completed year.
Sales $910
Raw materials, inventory, beginning $80
Raw materials, inventory, ending $20
Purchases of raw materials $100
Direct labor $130
Manufacturing overhead $200
Administrative expenses $160
Selling expenses $140
Work in process inventory, beginning $40
Work in process inventory, ending $10
Finished goods inventory, beginning $130
Finished goods inventory, ending $150
19. The cost of goods sold for the year (in thousands of dollars) was
A. $670.
B. $650.
C. $540.
D. $500.
20. Which situation always results in underapplied overhead?
A. Estimated overhead is greater than actual overhead.
B. Actual overhead is greater than applied overhead.
C. Estimated overhead is less than actual overhead.
D. Actual overhead is less than applied overhead.
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