COST Review EXAM 1

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Temple University *

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2521

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Accounting

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Feb 20, 2024

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Uploaded by GrandIceFrog12

EXAM 1 Question 1 Eagles corporation manufactures sweaters. The yarn used in the sweaters manufactured is classified as A variable cost and a product cost Question 2 Peters corporation is a manufacturing company. The salary paid to the maintenance supervisor in the factory is classified as Indirect labor and manufacturing overhead Question 3 Beta Corporation’s job order costing system uses labor-hours as the cost allocation base. Budgeted information at the beginning of the year was as follows: Budgeted manufacturing overhead costs $200,000 Budgeted direct labor hours 50,000 Budgeted machine hours 500 Beta Corporation completed Job A4 in May. Information for the job is as follows: Direct materials costs $5,000 Direct labor costs $6,000 Direct labor hours 450 What are the total manufacturing costs for Job A4?

$12,800 Questions 4-6 are based on the following. Costs for the Zar Company, a manufacturing firm, for 2018 are given below: Direct materials used $4,000 Indirect materials used $2,100 Direct labor $12,000 Factory supervisors salaries $5,000 Factory utilities $3,500 Depreciation of factory equipment $1,300 Selling and administrative expenses $9,000 Depreciation on office equipment $900 Factory equipment leasing $5,200 Shipping of merchandise to customers $2,000 Question 4 What is the company's product costs for 2018? $33,100 Question 5 What is the company’s manufacturing overhead costs for 2018? $17,100 Question 6 What is the company’s period costs for 2018? $11,900

Question 7 Philly Pizza is a pizza store. The store manager has identified its fixed costs and variable costs. Which of the following is true (within a relevant range) Total variable cost will not change as the number of pizzas increases. Question 8 Gear Company is a merchandising enterprise. Gear has provided the following data for 2019: Merchandise inventory, January 1, 2019 $15,000 Merchandise inventory, December 31, 2019 $17,000 Purchases $95,000 Merchandise Freight-in $3,500 Purchase returns and allowances $2,000 Purchase discounts $3,000 Marketing and distribution costs $28,500 Store Utility Costs $20,000 Depreciation on store furniture and fixtures $5,000 General and Administrative costs $12,500 Revenues $200,000 Gear’s Cost of goods sold is: $91,500 Question 9 Grand Bakery sells strawberry cakes for $20 each. Variable costs are $10 per unit, and Fixed costs are $3,200 per month. Grand's tax rate is 25%. How many cakes must Grand sell each month if they want to earn $6,000 in operating income?

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920 Question 10 June Corporation is a manufacturing company that uses normal costing. The accountant prepares a statement for cost of goods manufactured and cost of goods sold. The following numbers are extracted from the full statement. Actual MOH costs $100,000 Applied MOH costs $102,000 Unadjusted Cost of goods sold $350,000 June uses the cost of goods sold account to adjust for over or underapplied overhead costs. Therefore, the Adjusted Cost of Goods Sold would be: $348,000 Questions 11-14 are based on the following. Drury Corporation provides the following data for January 2019. Drury's accountant prepares income statements in both the traditional and contribution formats. Question 11 Drury’s contribution margin is: $2,300 Question 12

Drury’s gross margin is $3,560 Question 13 Drury’s breakeven point in revenue is: $4,000 Question 14 Suppose Drury’s accountant finds that variable selling, and administrative costs are actually $1,800, and not $1,500 as shown in the table. Drury’s correct BEP in units is (note that you do not have to change any of the answers above): 230 Question 15 Which of the following statements about CVP analysis is true? At the breakeven point, revenue is exactly equal to total costs. Question 16 Orange corporation has a Target Net income of $36,000 and its tax rate is 40%. Then Orange's target operating income is $60,000 Question 17 For a manufacturing firm, Manufacturing Overhead costs are All manufacturing costs other than direct material costs and direct labor costs Question 18 This question refers to two companies: Global Inc. is a service sector company. Grand Electronics is a manufacturing company that makes rechargeable batteries. Which of the following statements is true?

Wages of Grand Electronics’ assembly line workers are inventoriable costs. Question 19 Cost accounting: measures the costs of acquiring or using resources in an organization Questions 20-21 are based on the following. Emerald Corporation provides the following inventory information for 2018: 1/1/2018 12/31/2018 Direct Materials $120 $140 Work in Process $300 $325 Finished Goods $800 $700 Other select information is as follows: Sales revenue $5,000 Selling, general and administrative expenses $1,450 Direct materials purchased $1,000 Cost of goods manufactured $2,700 Question 20 Direct Materials used in production is $980 Question 21 The following information is for Grand Corporation: Breakeven point 2,000 units Variable costs per unit $27.50 Total fixed costs $32,000

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What is Grand’s selling price per unit? $27.50 Question 22 Harmony Manufacturing Inc. wants to estimate costs for its products. Harmony produces three products, A, B and C. The cost object is the number of units of product A. The depreciation on factory equipment that is used for all three products is a: fixed and indirect cost Question 23 The accountants at Eagles Corporation are conducting an analysis of their cost and revenue structures. They predict that, next year, their variable cost per unit will be higher than this year’s variable cost per unit, but the product price and fixed costs will remain unchanged. What will happen to the breakeven point (in units) next year? It will increase. Question 24 Owl Corp has a beginning finished goods inventory of $40,000, cost of goods sold of $700,000, and an ending finished goods inventory of $50,000. Owl’s cost of goods manufactured is: $710,000 Questions 25-26 are based on the following. Brutus Corporation has the following data for 2018: Units sold 20,000 Fixed costs $300,000 Price $150 Tax rate 40% Variable cost per unit $100 Question 25 Brutus’s margin of safety in units in 2018 was 14,000

Question 26 Brutus’s operating income in 2018 was $700,000 Question 27 Brutus Corp manufactures recliner frames which it sells to a recliner manufacturer. This year Brutus will manufacture 10,000 units, although its factory capacity allows production of 15,000 units. Brutus’s managers expect to expand production to 12,000 units next year. Brutus’s current annual relevant range is: from 0 to 15,000 units Questions 28-29 are based on the following. Grease Corporation uses labor hours as the cost driver for its maintenance costs. The information for six months is provided below: Month Labor hours Maintenance Costs 1 325 $2,000 2 250 $1,250 3 150 $1,400 4 175 $1,500 5 400 $2,150 6 350 $2,050 Use the high-low method to estimate Grease’s cost function. Then answer the following questions: Question 28 Grease’s variable costs per labor hour is: $3

Question 29 Grease expects to use 370 labor hours next month. Based on the cost function you estimated, Owl’s estimated maintenance costs would be: $2,060 Question 30 Chrome Corporation’s managers have estimated the following cost function for their specialty product: TC = 400 + 800X TC is total cost and X is the number of units sold. This means: If the product price is $1,000 per unit, their contribution margin per unit would be $200.

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