BUSA 102-Mr. Farina

Pre-quiz #1 (Ch. 16, 17 and 18)


Name

1

FILL-IN-THE-BLANK—PRINCIPLESANDTERMINOLOGY—Chapter 16

INSTRUCTIONS: Complete each of the following statements by writing the appropriate words in the Answers column.

Answers / For
Scoring
0. A type of information that management uses in conducting daily operations and in planning future operations and that includes both historical and estimated data is /
management accounting / 0.
1. A department unit that provides services, assistance, and advice to departments directly involved in the basic objectives of the organization is a / 1.
2-3. Managerial accounting reports use two types of information. These include:
2. ______data / 2.
3. ______data / 3.
4. The Sales Department would be considered a (line, staff) department / 4.
5. The chief management accountant is called the / 5.
6-7. Manufacturing costs are generally classified into two categories:
6. / 6.
7. / 7.
8. The development of organizational objectives and the translation of these objectives into courses of action is called / 8.
9-11. Work in process consists of these costs that have entered the manufacturing process on unfinished products:
9. / 9.
10. / 10.
11. / 11.
12. The term used to describe the cost of materials that are an integral part of total product cost is / 12.
13. Factory overhead is sometimes called / 13.
14. Direct labor and factory overhead are what kind of cost of the product? / 14.
15. Direct labor and direct materials are what kind of cost of the product? / 15.
16. The information that allows management to isolate significant departures from plans for further investigation and possible remedial action is called / 16.
17. The philosophy of continually improving employees, business processes and products is called / 17.
18. Indirect materials, indirect labor, and production-equipment depreciation expense are examples of this manufacturing cost / 18.
19. The cost of finished products on hand that have not been sold is called / 19.
Continued on next page
Answers / For
Scoring
20. The cost of a machine operator’s wages in a tool manufacturing plant would be a (direct, indirect) cost / 20.
21. Costs which make up the cost of manufacturing a product are called / 21.
22. Costs which are incurred in operating the selling and administrative operations of a business are called / 22.
23. The cost of the president of the company is part of the manufacturing cost of a manufactured product. (True, False) / 23.
24. The accounting report that accumulates the product costs originating with inventory and ending with the cost of goods sold is the / 24.

PROBLEM1—ANALYSISOFCOSTS—Chapter 16

INSTRUCTIONS: For each of the following situations, identify the cost as either a direct cost (D) or an indirect cost (I) and indicate whether it is a product cost (Pt) or a period cost (Pd).

ITEM / Direct or
Indirect / For
Scoring / Period or
Product / For
Scoring
0. Postage expense for a broom manufacturer / I / 0. / Pd / 0.
1-2. Materials used for specific jobs / 1. / 2.
3-4. Factory labor incurred on non-specific jobs / 3. / 4.
5-6. Cash paid for factory utilities costs incurred / 5. / 6.
7-8. Rental cost on the factory building / 7. / 8.
9-10. Design costs for the new product line / 9. / 10.
11-12. Accounting Department salaries / 11. / 12.
13-14. Factory labor incurred on specific jobs / 13. / 14.
15-16. Salary of vice-president of manufacturing / 15. / 16

FILL-IN-THE-BLANK—PRINCIPLESANDTERMINOLOGY—Chapter 17

INSTRUCTIONS: Complete each of the following statements by writing the appropriate words in the Answers column.

Answers / For
Scoring
0. The cost accounting system used by companies who make large quantities of items that are not distinguishable from each other is / process cost system / 0.
1. A custom-furniture designer would probably use which method of cost accounting? / 1.
2. The cost of finished products on hand that have not been sold is called / 2.
3-5. Work in process consists of these costs that have entered the manufacturing process on unfinished products:
3. / 3.
4. / 4.
5. / 5.
6. The accounting system that accumulates the product costs originating with inventory and ending with the cost of goods sold is the / 6.
7. The system best suited to industries that manufacture custom goods to fill special orders is referred to as a / 7.
8. The system that accumulates costs for each of the departments within the factory is a / 8.
9. The Receiving Department document that shows the quantity received and its condition is the / 9.
10. Materials are released from the storeroom to the factory in response
to a / 10.
11. The amount of time spent by an employee in the factory is usually recorded on / 11.
12. Indirect materials and indirect labor are examples of this manufacturing cost / 12.
13. The costing method that accumulates and allocates factory overhead costs to products using many overhead rates is / 13.
14. If estimated total factory overhead costs are $75,000 and direct labor hours are 15,000, the predetermined factory overhead rate is / 14.
15. The process of assigning factory overhead costs to a cost object is termed / 15.
16. In highly-automated factory settings, a widely used activity base for predetermining a factory overhead rate is / 16.
17. The subsidiary ledger that contains cost data for the units manufactured, units sold, and units on hand is / 17.
18. The direct labor and overhead costs of a service business are accumulated in a / 18.
19. If the actual factory overhead costs exceed the amount of factory overhead applied, the factory overhead account balance will be a (debit or credit) / 19.
20. The factory overhead in Question 19 is said to be / 20.
21. The source of the data for debiting Work in Process for direct materials
is a / 21.
22. The accounting document that is used to accumulate the costs for each client’s job in a service business is a / 22.
23. The controlling account for the cost ledger is / 23.

PROBLEM2—ANALYSISOFTRANSACTIONS—Chapter 17

INSTRUCTIONS: Indicate the titles of the accounts to be debited and credited in recording the summarized operations presented below by inserting the letter or letters of the account titles listed in the appropriate columns.

ACCOUNTS

A. Accounts Payable E. Factory Overhead I. Selling and Administrative Expenses

B. Accounts Receivable F. Finished Goods J. Wages Payable

C. Cash G. Materials K. Work in Process

D. Cost of Goods Sold H. Sales

TRANSACTIONS / Debit / For
Scoring / Credit / For
Scoring
0. Cash paid on account / A / 0. / C / 0.
1-2. Materials requisitioned for use on specific jobs and for general factory use / 1. / 2.
3-4. Factory labor incurred on specific jobs and for general factory use / 3. / 4.
5-6. Applied factory overhead to jobs / 5. / 6.
7-8. Paid salary of vice-president of finance / 7. / 8.
9-10. Cash paid for overhead costs incurred / 9. / 10.
11-12. Transferred small balance of under-applied overhead / 11. / 12.
13-14. Jobs completed / 13. / 14.

FILL-IN-THE-BLANK—PRINCIPLESANDTERMINOLOGY—Chapter 18

INSTRUCTIONS: Complete each of the following statements by writing the appropriate words or amounts in the Answers column.

Answers / For
Scoring
0. The cost system (process or job order) best suited to industries that manufacture homogeneous units of products on a continuous basis is /
process / 0.
1-4. Identify whether the process cost or job order cost system would be more appropriate for each of the following businesses:
1. accounting firm / 1.
2. breakfast cereal manufacturer / 2.
3. ship construction / 3.
4. pharmaceuticals company / 4.
5. computer chip manufacturer / 5.
6. The number of units that could have been completed within a given accounting period with respect to direct materials and conversion costs is the / 6.
7. Direct labor and factory overhead are referred to as / 7.
8–9. Oslo Manufacturing incurred $72,000 of direct materials costs, direct labor costs of $24,500, and factory overhead of $20,500. If 1,000 direct materials equivalent units and 900 conversion equivalent units were manufactured, then:
8. The equivalent unit cost for direct materials is / $ / 8.
9. The equivalent unit cost for conversion is / $ / 9.
10. The periodic report prepared for each processing department, summarizing (1) the units for which the department is responsible and their disposition and (2) the costs charged the department and their allocation, is termed the / 10.
11. The method of inventory costing that assumes the unit product costs should be determined separately for each period in the order in which the costs were incurred is / 11.
12–15. In a process cost system, the cost of goods completed and the ending inventory valuation are determined by using the following four steps:
12. / 12.
13. / 13.
14. / 14.
15. / 15.
16–17. The transferred costs of completed production in Department A using a process cost system include:
16. / 16.
17. / 17.
continued
Answers / For
Scoring
18–20. The three categories of units to be assigned cost for an accounting period in a process cost system are:
18. / 18.
19. / 19.
20. / 20.

PROBLEM3—ANALYSISOFTRANSACTIONS—Chapter 18

INSTRUCTIONS: Indicate the titles of the accounts to be debited and credited in recording the selected transactions given below by inserting the letter or letters of the account titles listed in the appropriate columns. (Do not record the amounts.)

ACCOUNTS

A. Accounts Payable E. Factory Overhead–Department A I. Sales

B. Accounts Receivable F. Factory Overhead–Department B J. Wages Payable

C. Cash G. Finished Goods K. Work in Process–Department A

D. Cost of Goods Sold H. Materials L. Work in Process–Department B

TRANSACTIONS / Debit / For
Scoring / Credit / For
Scoring
0. Paid cash for wages owed, $47,000 / J / 0. / C / 0.
1-2. Materials requisitioned for use in Department A, $36,000, of which $31,500 entered directly into the product /
1. /
2.
3-4. Labor in Department A, $13,000, was used directly in the manufacture of the product /
3. /
4.
5-6. Factory overhead applied to production in Department A, $6 per machine hour /
5. /
6.
7-8. Goods finished in Department A and transferred to Department B,
$79,000 /
7. /
8.
9-10. Goods finished in Department B and transferred to finished goods, $114,000 /
9. /
10.
11-12. Cost of finished goods sold, $126,374 / 11. / 12.

PROBLEM 4-SAMPLE PROBLEM: PROCESS COSTING

Green Valley Winery produces wines in four different processes: crushing, fermenting, oak ageing, and bottling. All raw materials are added at the beginning of the production process. Data for the Fermenting Department in January was as follows:

Work in Process, January 1: 800 cases (units), 60% completed $15,520

Direct materials transferred from Crushing Department during January:

24,500 gallons at $14.40 per case $352,800

Direct labor $74,498

Factory overhead $146,996

During January, 24,100 cases were completed. Work in Process at January 31 consisted of 1,200 cases, 60% completed.

Instructions:

1.)  Prepare a worksheet that calculates (a) whole units, (b) equivalent units of production (EUP) for materials, and (c) EUP for conversion costs, for the January activity of the Fermenting Department.

2.)  Calculate total conversion costs.

3.)  Calculate conversion cost per EUP.

4.)  Calculate direct materials cost per EUP.

5.)  Calculate the total cost of the January 1 work in process upon completion.

6.)  Calculate the cost of units started and completed in January.

7.)  Calculate the cost of the work in process inventory at January 31.

PROBLEM 5-SHORT ESSAY

Alpine Furniture produces standard furniture products. Should Alpine use a job order or process costing system? Justify your answer.

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