ACT 215, Spring 2021     

ACT 215, Spring 2021                                       ID:

Exam 2 (Total 68 Points)                                    Name:

                                                                                       ^{(first name,   middle name,   last name)}

01:00PM – 02:15PM, Mar. 15, 2021                            Signature:

(Questions 1 through 25 worth 1 point each – 25 points) Circle your choice of answer.

1. Work-in-process is a current-asset account.

 

1. True
2. False

 

2. Finished goods are a non-current-asset account.

 

1. True
2. False

 

3. Process costing provides product-cost data on mass-produced products such as paper, steel, or electronics.

 

1. True
2. False

 

4. Products for process costing are the ones that are produced in physically continuous form.

 

1. True
2. False

 

5. Job costing is generally used for custom-made products, but not for mass-produced products.

 

1. True
2. False

 

6. Components of product cost of process costing are the same as those of job order costing: direct materials, direct labor, and factory overhead.

 

1. True
2. False

 

7. In a process costing system, production cost report provides data on how much is transferred out of each work-in-process and on how much is remaining in each work-in-process.

 

1. True
2. False

 

8. Under job order costing, each job carries its job-cost data, but, at a factory level, the job-cost data for all the jobs wouldn’t be maintained on controlling accounts.

 

1. True
2. False

 

9. At a manufacturing plant, all the costs other than direct-materials cost and direct-labor cost are inventorialized as manufacturing-overhead cost first and then transferred to work-in-process.

 

1. True
2. False

 

10. In process costing, the manufacturing costs of the units that are transferred from one process to the next process follow the physical flow of the units transferred.
11. True
12. False

 

11. At the end of period, if total factory overhead account has a relatively small balance, the relatively small overhead balance can be ignored not being accounted for.

 

1. True
2. False

 

12. For the same company, their period costs and product costs can be divided into variable costs and fixed costs.

 

1. True
2. False

 

13. When costs are classified by its behavior, the fundamental elements of costs are variable costs, fixed costs, and mixed costs.

 

1. True
2. False

 

14. Total variable cost changes directly proportionately to the number of units produced, whereas total fixed cost remains unchanged regardless of the number of units produced.

 

1. True
2. False

 

15. Variable costs and fixed costs are incurred at manufacturing plants, and, also, at office buildings.

 

1. True
2. False

 

16. For a manufacturing company, direct materials and direct labor are variable costs, but manufacturing overhead (MOH) is mixed costs.

 

1. True
2. False

 

17. Variable costs per unit of activity have an inverse relationship with the change in volume of activity.

 

1. True
2. False

 

18. The following format of income statement is not accepted as GAAP.

Sales Revenue

Variable Costs

Contribution Margin

Fixed Costs

Net Income

1. True
2. False

 

 

 

 

 

 

 

 

 

19. The following format of income statement is not accepted as GAAP.

Sales Revenue

Costs of Goods Sold

Gross Profit

Operating Costs

Net Income

1. True
2. False

 

20. Depending on which income-statement format is used between Question 18 and Question 19, the net income would be different.

 

1. True
2. False

 

21. It is the contribution margin that contributes to the bottom line on income statement after covering fixed costs.

 

1. True
2. False

 

22. On the contribution-margin income statement, variable period costs (such as percentage sales commission, etc.) are not included in variable expenses.

 

1. True
2. False

 

23. Unit contribution margin ratio is necessarily the same as contribution margin ratio.

 

1. True
2. False

 

24. For any volume of sales, contribution margin ratio is not the same across.

 

1. True
2. False

 

 

 

 

25. The margin of safety is the difference between actual (or expected) sales level and break-even sales level.

 

1. True
2. False

 

26. At the end of period, total factory overhead account has $1,000 credit balance left to be accounted for. Prepare a journal entry to close the balance. (2 points)

 

 

 

 

 

 

 

 

 

 

 

27. The following information is available for mixing department at Frozen Delight, an ice cream manufacturer, for February, 2021:

 

• Beginning work-in-process (200 gallons) is $350.
• Direct materials for 500 gallons that are started during the period cost $450.
• All direct materials enter the process at the beginning.
• Direct labor cost for the period is $250.
• Factory overhead cost for the period is $150.
• There are 200 gallons left 50% complete at the end of period.

 

• Determine the total number of equivalent units that are processed and transferred out of the mixing department during the period. (2 points)

 

 

 

 

 

• Determine the number of equivalent units in ending work-in-process of mixing department. (2 points)

 

 

 

• Determine the total number of equivalent units to account for for the period. (2 points)

 

 

 

• Determine the total costs to account for for the period. (4 points)

 

 

 

 

 

 

 

• Determine the cost per equivalent unit. (2 points)

 

 

 

 

• Allocate the total costs between equivalent units completed and transferred out during the period and ending equivalent units. (3 points)

 

• Transferred out:

 

• Ending:

 

• Prepare a journal entry for the amount completed and transferred out of the mixing department during the period, naming the next department of process packaging. (2 points)

 

 

 

 

 

 

• The packaging is the final process at the manufacturing plant, and the additional cost per equivalent unit in the packaging department is $.30(30¢). If the company sells each unit of its product for $5, what is the gross profit on each unit sold? (2 points)

 

 

Use the following information for Questions 28 through 33.

• Selling price of a unit is $100.
• Unit variable costs are $60.
• Total fixed costs are $400.

 

28. Compute unit contribution margin. (2 points)

 

 

 

29. Compute the break-even point in sales units. (4 points)

 

 

 

30. Compute the break-even point in sales dollars. (2 points)

 

 

 

31. How many total units should be sold to make a target profit of $1,200? (4 points)

 

 

 

 

 

 

32. What is the total sales revenue to make a target profit of $1,200? (2 points)

 

 

 

 

 

 

 

 

 

33. If the sales level is expected at $2,000 this period, what is the margin of safety?

• In terms of sales dollars? (2 points)

 

 

 

 

• In terms of sales units? (2 points)

 

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