Managerial accounting, cost accounting, manufacturing and production exam questions

28) Under the first-in, first-out (FIFO) method, the current period equivalent units of production for	28)
transferred in units in beginning inventory are zero because ________.

1. these units are transferred back to the previous department for further processing in the current period
2. no additional costs for these units were incurred in the current period

 

1. these units are expected to be sold by the receiving department without subjecting them to further processing
2. costs involved in inter-departmental transfers are accounted for only once when sales are made to customers

 

29)	Happy Trails, Inc. manufactures railway coaches and uses the FIFO method of process costing to				29)
	record costs. The Work-in-Process Inventory of the Heating Department on October 1 was 75%
	complete for materials and 24% complete for conversion costs. On October 31, its ending
	Work-in-Process Inventory was 80% complete for materials and 44% complete for conversion
	costs. This means that for the ending inventory, ________% of the materials and ________% of the
	conversion costs were added during October.
	A) 44; 80	B) 75; 44	C) 80; 44	D) 25; 24
30)	During August, the Filtering Department of Rudbeckia, Inc. had beginning Work-in-Process				30)
	inventory of 140 units with costs of $50,000. 560 units were transferred in during the month. It had

• units in ending Work-in-Process Inventory. Under the first-in, first-out (FIFO) method, current period equivalent units of production for transferred in units in beginning Work-in-Process Inventory of the Filtering Department is ________.

 

A) 70 units	B) 140 units	C) 0 units	D) 560 units
31) Companies that manufacture identical items through a series of uniform production steps use				31)
________ to determine the cost per unit produced.

 

1. a process costing system

 

1. both of the above systems

1. a job order costing system

 

1. neither of the above systems

 

 

32) In a production cost report using the weighted-average method for a second department, the total

32)

units to account for is calculated as ________.

 

1. A) ending work-in-process plus transferred in

 

1. B) beginning work-in-process plus transferred in

 

1. C) ending work-in-process plus started and completed

 

1. D) beginning work-in-process plus started and completed

 

33) Zucchero Sugar, Inc. has six processing departments for refining sugar  Affination, Carbonation,		33)
Decolorization, Boiling, Recovery, and Packaging. Conversion costs are added evenly throughout
each process. Data from the month of August for the Recovery Department are as follows:
	Metric Tons
Beginning Work-in-Process Inventory	0
Transferred in	22,000
Ending Work-in-Process Inventory	6000
	Costs
Beginning Work-in-Process Inventory	$0
Costs added during August :
Direct materials	530,000
Direct labor	220,000
Manufacturing overhead	110,000
Total costs added during August	$860,000

 

The ending Work-in- Process Inventory is 100% and 95% complete with respect to direct materials and conversion costs, respectively. The weighted-average method is used. How many metric tons of sugar were refined and transferred to the Packaging Department in August?

 

A) 16,000 metric tons	B) 6000 metric tons
C) 22,000 metric tons	D) 28,000 metric tons
34) Four steps are necessary in preparing a production cost report:		34)

 

1. Compute output in terms of equivalent units of production

 

2. Assign costs to units completed and units in process

 

3. Summarize the flow of physical units

 

4. Compute the cost per equivalent unit of production

 

Place these steps in the correct order.

 

A)3,1,4,2	B)4,2,1,3		C)2,1,4,3	D)1,3,2,4
35) At the end of the month, Michael Company calculated equivalent units of production in the					35)
Packaging Department as shown below:
UNITS			Equivalent Units	Equivalent Units
Units accounted for			Direct Materials Costs	Conversion Costs
Completed and transferred	55,000		55,000	55,000
out
Ending work-in-process			4000	2400
		4000
	59,000		59,000	57,400

 

The cost per equivalent unit of production using the weighted-average method is $5 for direct material costs and $6 for conversion costs. What is the cost of ending work-in-process and the cost of units completed and transferred out?

1. A) $34,400 and $605,000 B) $6430 and $605,000

 

1. C) $605,000 and $24,000 D) $34,400 and $550,000

 

36) The Mixing Department of Jackson Bottling, Inc. had 55,000 pounds of materials (liquid drink) to					36)
account for in December. Of the 55,000 pounds, 47,000 pounds were completed and transferred to
the Packaging Department, and the remaining 8000 pounds were 30% complete. The materials
required for production are added at the beginning of the process. Conversion costs are added
evenly throughout the mixing process. The weighted-average method is used. Calculate the total
equivalent units of production for conversion costs.
A) 2400 pounds	B) 47,000 pounds		C) 49,400 pounds	D) 55,000 pounds
37) On September 30, the Sorting Department of Java Works had ending Work-in-Process Inventory of					37)
30,000 units that was 48% complete for materials and 35% complete for conversion costs. The
company uses the FIFO method. This means that for the beginning Work-in-Process Inventory,
________% of the materials and ________% of conversion costs were added during October.
A) 35; 48	B) 52; 65		C) 48; 35	D) 65; 52
38) ________ occurs when the actual manufacturing overhead costs are more than the allocated					38)
manufacturing overhead costs.
A) Overallocated overhead			B) Underallocated overhead
C) Pre-determined overhead			D) Applied overhead
39) Forsyth, Inc. uses estimated direct labor hours of 250,000 and estimated manufacturing overhead					39)
costs of $1,100,000 in establishing its predetermined overhead allocation rate for the year. Actual
results showed the following:
Actual manufacturing overhead		$700,000
Allocated manufacturing overhead		$900,000
The number of direct labor hours worked during the period was ________. (Round any
intermediate calculations to two decimal places, and your final answer to the nearest whole
number.)
A) 204,545 hours	B) 194,444 hours		C) 159,091 hours	D) 250,000 hours
40) During September, the Filtering Department of Tithonia, Inc. had a beginning Work-in-Process					40)
Inventory of 600 units with costs of $135,000. During the month, it started and completed 800 units.
It had 240 units in the ending Work-in-Process Inventory. What is the number of equivalent units
of production for transferred in units in the Filtering Department in September under the first-in,
first-out (FIFO) method?
A) 360 units	B) 1640 units		C) 600 units	D) 1040 units
41) On January 1, Feldstein Manufacturing had a beginning balance in Work-in-Process Inventory of					41)
$83,300 and a beginning balance in Finished Goods Inventory of $23,900. During the year, Feldstein
incurred manufacturing costs of $352,100.

 

During the year, the following transactions occurred:

 

Job A-12 was completed for a total cost of $120,700 and was sold for $125,700.

 

Job A-13 was completed for a total cost of $200,100 and was sold for $212,100.

 

Job A-15 was completed for a total cost $68,000 but was not sold as of year-end.

 

What was the balance in Finished Goods Inventory at the end of the year?

 

1. A) $91,900 debit balance B) $388,800 debit balance

 

1. C) $91,900 credit balance D) $412,700 debit balance

 

 

42) Service firms have ________.					42)
	A) inventory costs only			B) non-inventorial costs only
	C) labor costs only			D) non-inventorial costs and inventory costs
43) Adelphia Manufacturing issued $75,000 of direct materials and $10,000 of indirect materials for					43)
	production. Which of the following journal entries would correctly record the transaction?
	A)	Work-in-Process Inventory		75,000
		Manufacturing Overhead		10,000
		Raw Materials Inventory		85,000
	B)	Manufacturing Overhead		85,000
		Raw Materials Inventory		85,000
	C)	Raw Materials Inventory		85,000
		Finished Goods Inventory		75,000
		Work-in-Process Inventory		10,000
	D)	Work-in-Process Inventory		85,000
		Raw Materials Inventory		85,000
44) At the beginning of the year, Berkshire Manufacturing had the following account balances:					44)
	Work-in-Process Inventory
		2,000

 

 

 

Finished Goods Inventory

 

8,000

 

 

 

 

Manufacturing Overhead

 

0

 

 

 

 

Cost of Goods Sold

 

0

 

 

 

 

Sales Revenue

 

0

 

 

 

 

The following additional details are provided for the year:

 

 

 

 

8

 

Direct materials placed in production	$81,000
Direct labor incurred	190,000
Manufacturing overhead incurred	300,000
Manufacturing overhead allocated to production	290,000
Cost of jobs completed and transferred	500,000
Sales revenue	750,000
Cost of goods sold (before adjustment)	446,100

 

Calculate the gross profit Berkshire will report for the year.

 

A) $456,100	B) $303,900	C) $250,000	D) $293,900
45) The journal entry to record $1600 of direct labor and $200 of indirect labor incurred will include				45)
debit(s) to the ________.

1. Work-in-Process Inventory account for $1600 and Finished Goods Inventory account for $200

 

1. Manufacturing Overhead account for $1800

 

1. Finished Goods Inventory account for $1800

 

1. Work-in-Process Inventory account for $1600 and Manufacturing Overhead account for $200

 

46) Smith Manufacturing purchased on account $53,000 of direct materials and $3000 of indirect					46)
materials. Which of the following journal entries would correctly record the transaction?
A)	Raw Materials Inventory			56,000
	Accounts Payable			56,000
B)	Raw Materials Inventory			56,000
	Finished Goods Inventory			53,000
	Work-in-Process Inventory			3000
C)	Work-in-Process Inventory			53,000
	Manufacturing Overhead			3000
	Raw Materials Inventory			56,000
D)	Accounts Payable			56,000
	Raw Materials Inventory			56,000
47) The Polishing Department of Gaura, Inc. had 15,000 units in process on June 1 and received 29,000					47)
units from the Machining Department. What is the number of units to account for by the Polishing
Department for June? The company uses the FIFO costing method.
A) 15,000 units		B) 29,000 units	C) 44,000 units	D) 14,000 units
48) The Assembling Department of Patchwork, Inc. had 10,600 units in process on December 1 and					48)
received 30,400 units from the Sewing Department. During the month, it completed 20,500 units
and transferred them to the Packaging Department. Calculate the number of units accounted for by
the Assembling Department for December. The company uses the FIFO method.
A) 30,400 units		B) 20,500 units	C) 41,000 units	D) 10,600 units

 

 

 

 

 

 

 

 

 

9

 

49) During August, the Filtering Department of Rudbeckia, Inc. had beginning Work-in-Process	49)
inventory of 200 units with costs of $50,000. 580 units were transferred in during the month. It had

• units in ending Work-in-Process Inventory. Under the first-in, first-out (FIFO) method, current period equivalent units of production for transferred in units in beginning Work-in-Process Inventory of the Filtering Department is ________.

 

A) 580 units	B) 200 units	C) 60 units	D) 0 units
50) Candace’s Candies, Inc. produces gummy bears. The company purchases raw materials, stores				50)
them in a warehouse, and then runs them through two processes: production and packaging.
During September, the production process incurred the following costs in processing:
Wages of workers operating production equipment			$50,300
Manufacturing overhead allocated to the production department			1000
Direct materials			250,000

 

Equivalent units of production was 26,000 units for materials and 25,500 units for conversion. Use the FIFO method to compute the September cost per equivalent unit of production for direct materials.

1. A) $1.97 B) $9.62 C) $9.80                                 D) $2.01