Spring ACC312 2010 Midterm I
Test Form A
Name Instructor Class Day______________ Time
UTEID
__
Summary M/C ______/40
Seat #__________
Problem 1. ____/12 Problem 2. ____/14 Problem 3. ____/14 Problem 4. ____/20
DO NOT OPEN UNTIL GIVEN INSTRUCTIONS TO DO SO.
Total
____/100
1. Confirm that you have 11 numbered pages printed front and back. Answers to MultipleChoice questions should be recorded on the Scantron. On your Scantron answer sheet, write and bubble in your name, UTEID, and the Test Form letter noted above. Use a #2 pencil only to mark your responses on your Scantron answer sheet. Mark clearly and erase completely as needed. Only multiple choice answers marked on your Scantron answer sheet will be graded. The time allotted for an exam includes the time required to bubble-in your Scantron answer sheets. It is cheating to take extra time to bubble in the answer sheet after time is up for the exam.
2. Answers to Problems should be recorded on the exam where indicated. Show your work in the
space provided. Scratch paper is available from the proctor but only calculations recorded on the exam itself will be considered for partial credit. 3. Cell phones, books, notes, PDAs and programmable calculators are NOT allowed at your desk during the exam. 4. In the interest of minimizing disruptions and making sure all students have exactly the same information on the exam, we will answer only the following kinds of questions during the exam: a. Vocabulary questions relating to non-class-specific words; b. Questions about a possible mistake in the exam. In the latter case, if a mistake is confirmed, we will answer by making an announcement to the whole class. If no announcement is made in a short period of time, you may assume that the problem is correct as written. 5. Bring your entire exam, scratch paper, Scantron answer sheet, and student ID to the front of the room when you have finished. 6. You are reminded of the Universitys honor policy which requires you do your own work and not give or receive assistance on this exam.
ACC312 Spring 2010 Midterm I
Test Form A
SECTION I MULTIPLE CHOICE (40 points 20 questions, 2 points each) -- Please choose the ONE BEST answer for each question and record your answer on the Scantron sheet. There is no partial credit on multiple choice questions 1.) The left side of the Manufacturing Overhead T-account is used to accumulate: A. actual manufacturing overhead costs incurred throughout the accounting period. B. overhead applied to Work-in-Process Inventory. C. underapplied overhead. D. predetermined overhead. E. overapplied overhead. 2.) Copley uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production. The company finished 40,000 units during the period and had 15,000 units in progress at year-end, the latter at the 40% stage of completion. Total material costs amounted to $220,000; conversion costs were $414,000. The cost of the ending work in process is: A. $54,000. B. $78,000. C.$114,000. D. $195,000. E. some other amount. 3.) The accounting records of Bronco Company revealed the following information:
Bronco's cost of goods manufactured is: A. $519,000. B. $522,000. C. $568,000. D. $571,000. E. $545,000
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ACC312 Spring 2010 Midterm I
Use the following information to answer questions 4, 5 and 6.
Test Form A
TI-Dye Company manufactures T-Shirts. At the beginning of July, the following information was supplied by its accountant: Raw materials inventory Work-in process inventory Finished goods inventory $140,000 $121,000 $ 23,200
During July, the direct labor cost was $66,000 and raw material purchases totaled $87,000. Manufacturing overhead costs are applied at a rate of 250% of direct labor cost. The inventories at the end of July for raw materials and work-in-process were $29,800 and $37,500, respectively. The company reported a gross margin of $157,000 and sales revenue of $400,000 at the end of the month. 4.) What is the cost of goods manufactured for July? A. B. C. D. E. $428,200 $511,700 $549,200 $501,700 $499,500
5.) What are conversion costs for the month of July? A. B. C. D. E. $362,200 $263,200 $428,200 $231,000 $243,000
6.) What is the amount of finished goods inventory at the end of July? A. B. C. D. E. $37,500 $291,900 $157,000 $243,000 $248,150
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ACC312 Spring 2010 Midterm I
Test Form A
7.) Jackson manufactures products X and Y, applying overhead on the basis of labor hours. X, a low-volume product, requires a variety of complex manufacturing procedures. Y, on the other hand, is both a high-volume product and relatively simplistic in nature. What would an activity-based costing system likely disclose about products X and Y as a result of Jackson's current accounting procedures?
B 8.) When underapplied or overapplied manufacturing overhead is prorated, amounts can be assigned to which of the following accounts? A. Raw-Material Inventory, Manufacturing Overhead, and Direct Labor. B. Cost of Goods Sold, Work-in-Process Inventory, and Finished-Goods Inventory. C. Work-in-Process Inventory, Raw-Material Inventory, and Cost of Goods Sold. D. Raw-Material Inventory, Finished-Goods Inventory, and Cost of Goods Sold. E. Raw-Material Inventory, Work-in-Process Inventory, and Finished-Goods Inventory
9.) When determining customer profitability, activity-based costing can be used to analyze:
A. orders processed. B. sales visits. C. special packaging and handling. D. billing and collections. E. All of these. 10.) Which of the following statements is (are) correct? A. Overtime premiums should be treated as a component of manufacturing overhead. B. Overtime premiums should be treated as a component of direct labor. C. Idle time should be treated as a component of direct labor. D. Idle time should be accounted for as a special type of loss. E. Both "B" and "C" are correct.
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ACC312 Spring 2010 Midterm I
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Test Form A
11.) Willingham uses a process-costing system for its single product, which is manufactured from Material X and Material Y. X and Y are introduced to the product as follows: Material X: Added at the beginning of manufacturing Material Y: Added at the 75% stage of completion The company started and completed 40,000 units during the period, and had an ending workin-process inventory amounting to 8,000 units, 20% complete. Which of the following choices correctly expresses the total equivalent units of production for Material X and Material Y?
. 12.) Sanger Corporation debited Cost of Goods Sold and credited Manufacturing Overhead at year-end. On the basis of this information, one can conclude that: A. budgeted overhead exceeded actual overhead. B. budgeted overhead exceeded applied overhead. C. budgeted overhead was less than applied overhead. D. actual overhead exceeded applied overhead. E. actual overhead was less than applied overhead. 13.) In comparison with a system that uses a single, volume-based cost driver, an activitybased costing system is preferred when a company has:
A. a large proportion of nonunit-level activities. B. product-line diversity or a large proportion of nonunit-level activities. C. minimal product-line diversity and a small proportion of nonunit-level activities. D. existing variances from budgeted amounts. E. a situation other than those noted above.
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ACC312 Spring 2010 Midterm I
Test Form A
14.) Gorski began operations on January 1 of the current year. The company uses a processcosting system, and conversion cost is incurred evenly throughout manufacturing. By January 31, the firm had completed 56,000 units. Which of the following statements could be true about the ending work-in-process inventory if equivalent units for conversion cost totaled 59,000 units?
A. There is no ending work-in-process inventory. B. The ending work-in-process inventory totaled 3,000 physical units. C. The ending work-in-process inventory of 10,000 physical units was 30% complete. D. The ending work-in-process inventory of 20,000 physical units was 85% complete. E. More than one of the above could be true.
Chen Corporation, a new company, adds material at the beginning of its production process; conversion cost, in contrast, is incurred evenly throughout manufacturing. During May, the firm completed 15,000 units and had ending work in process of 2,000 units, 60% complete. Equivalent-unit costs were: materials, $15; conversion, $22. 15.) The cost of Chen's completed production is: A. $225,000. B. $330,000. C. $333,000. D. $555,000. E. some other amount. 16.) Simon uses a predetermined overhead application rate of $8 per direct labor hour. A review of the company's accounting records for the year just ended discovered the following: Underapplied manufacturing overhead: $7,200 Actual manufacturing overhead: $392,000 Budgeted labor hours: 50,000 Simon's actual labor hours worked totaled: A. 48,100. B. 49,100. C. 49,000. D. 50,900. E. cannot be determined based on the information presented.
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ACC312 Spring 2010 Midterm the I
Use following information to answer questions 17, 18 and 19.
Test Form A
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ACC312 Spring 2010 Midterm I
Test Form A
Pitney Corporation manufactures two types of transpondersno. 156 and no. 157and applies manufacturing overhead to all units at the rate of $76.50 per machine hour. Production information follows.
The controller, who is studying the use of activity-based costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours worked, and outgoing shipments, the activities' three respective cost drivers, follow.
The firm's total overhead of $3,060,000 is subdivided as follows: manufacturing setups, $260,000; machine processing, $2,400,000; and product shipping, $400,000. 17.) The pool rates that would be used for manufacturing setups, machine processing, and product shipping respectively, in an activity-based costing system are: Choice Manufacturing setups Machine Processing Product Shipping A B C D E. $13 per setup $2,600 per setup $2,600 per setup $13 per setup $13 per setup $120 per mach hr $60 per mach hr $120 per mach hr $60 per mach hr $120 per mach hr $20 per shipment $2,000 per shipment $2,000 per shipment $20 per shipment $2,000 per shipment
18.) Assuming use of activity-based costing, the per unit overhead costs of product nos. 156 and 157 if the expected manufacturing volume is attained would be:
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ACC312 Spring 2010 Midterm I
A. $150 and$107 respectively. B. $190 and $119 respectively. C. $150 and $75respectively. D. $216 and $126 respectively. E. $96 and $153 respectively.
Test Form A
19.). Assuming the use of activity-based costing, the total manufacturing cost per unit of product no. 156 would be.
A. $256.25. B. $281. C. $216. D. $206. E. $185.
20.). First Corporation adds all materials at the beginning of production and incurs conversion cost evenly throughout manufacturing. The company completed 70,000 units during the year and had 12,000 units in process at December 31, 20% complete with respect to conversion cost. Equivalent units for the year total: A. materials, 70,000; conversion, 70,000. B. materials, 70,000; conversion, 2,400. C. materials, 72,400; conversion, 72,400. D. materials, 82,000; conversion, 72,400. E. materials, 82,000; conversion, 82,000.
End of Multiple Choice Section
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ACC312 Spring 2010 Midterm I
Test Form A
SECTION II PROBLEMS (60 points) You MUST show your work to receive any partial credit. Please try to be as neat and organized as possible. Scratch paper is available from the proctor but only calculations recorded on the exam itself will be considered for partial credit. 1. (12 points) Longhorn Manufacturing Co., is a manufacturer of custom truck bodies. Despite the economy, 2009 was a pretty good year as Longhorn sold more truck bodies than they did in 2008 with less price discounting than they had expected. Sales Revenue was $1,520,000 for the year. The firms tax rate is 38%. Longhorn had the following inventory balances at the beginning of 2009. Inventory Raw material Work in process Finished goods January 1, 2009 $35,000 $90,000 $120,000
During 2009, the company purchased $276,000 of raw materials and spent an average of $23 per hour for 18,250 direct labor hours. Other selected Year-end account balances were as follows: Finished goods inventory Dec 31 Indirect material used Indirect labor Work in process inventory Dec 31 Depreciation on plant and equipment Utilities: plant Raw material inventory Dec 31 Other mfg costs Selling and administrative exp $135,000 $12,000 $22,000 $85,000 $110,000 $23,000 $55,000 $35,000 $125,000
What were the firms total manufacturing costs? (3 points) What was the firms cost of goods manufactured? (3 points)
$ ______ $_______
What was the firms cost of goods sold? (3 points) What was the firms net income after taxes? (3 points)
$ ______ $_____
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ACC312 Spring 2010 Midterm I
Test Form A
2. (14 points) Dodge Products uses a job-costing system for its units, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department performs a number of manual-assembly activities. The following information relates to the Machining Department for the year just ended:
The Machining Department data that follow pertain to job no. 775, the only job in production at year-end.
Required: A. Assuming the use of normal costing, calculate the predetermined overhead rate that is used in the Machining Department. (2 points) $__ per machine hour B. Compute the cost of the Machining Department's year-end work-in-process inventory. (6 points) $ ______ C. Determine whether overhead was under- or overapplied during the year in the Machining Department. (2 points) _____ applied D. If Dodge disposes of the Machining Department's under- or overapplied overhead as an adjustment to Cost of Goods Sold, would the company's Cost-of-Goods-Sold account increase or decrease? Briefly explain why. (2 points) . E. How much overhead would have been charged to the Machining Department's Work-inProcess account during the year? (2 points) $ _________
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ACC312 Spring 2010 Midterm I
Test Form A
3. (14 points) State Chemical Inc. manufactures a product that goes through several departments prior to completion. Direct materials are always added to production at the beginning of the process. The following information is available from the Mixing department during May. Physical Work in process, beginning 15,000 Started into production 165,000 Completed and transferred out Not Given Work in process, ending 50,000 % Complete: Units Conversion 75% 60%
Cost in beginning WIP inventory and cost added during May were as follows: Materials Direct Labor Work in process, beginning $50,000 $14,000 Cost added during May $292,000 $106,000 The company uses the weighted-average process costing method to compute unit costs. The Mixing department is the first department in the production process, after mixing has been completed; the units are transferred to the Blending department. Overhead is applied to the Mixing department at the rate of 100% of direct-labor costs. Required (Mixing Department Only) A. Calculate the equivalent units of production for direct materials and conversion costs. (4 points) DM _______ Conv _______ B. Calculate the cost per equivalent unit of production for material and conversion. (4 points) DM $ ____ Conv $ ____ C. Calculate the total cost of ending work in process. (3 points)
$ ________ D. Calculate the total cost of goods completed and transferred out. (3 points) $ __________ 4. (20 points) Whitfield Corporation owns a small printing press that prints leaflets, brochures, etc.
Whitfield classifies its various jobs as either standard jobs or special jobs. They charge customers
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ACC312 Spring 2010 Midterm I
Test Form A
$1,200 for a Standard job and $1,500 for a Special job. Of the 600 jobs they do each year, 400 are Standard jobs and 200 are Special jobs. Direct manufacturing labor costs an average of $ 15 per hour. They currently use a single cost pool to allocate overhead. Whitfield operates at capacity and currently allocates all overhead using printing machine-hours as the allocation base. Whitfield has been concerned about the accuracy of their current overhead allocation methodology and is planning on implementing an activity-based costing system with five categories for assigning overhead: design, purchasing, setup, printing machine operations, and administration. To see how activity-based costing would affect the costs of standard and special jobs, Whitfield collected the following information for the fiscal year 2009 that just ended. Cost Pool Printing Machine Operations Set up costs Purchasing Design costs Budgeted Cost $150,000 $90,000 $36,000 $40,000 Cost Driver Total printing machine hours Total Set up hours Number of purchase orders Percentages of work for each job type based on a study of all work in the Design department-20% of design costs for Standard jobs and 80% for Special jobs. Direct manufacturing labor hours
Mfg plant Administrative costs
$50,700
Other cost/activity information Direct material cost/job Direct Manufacturing labor hours/job Printing machine hours/job Set up hours/job Number of purchase orders
Standard $200 12 10 4 400
Special $250 15 10 7 500
1. Calculate the total unit cost of a standard job and a special job under the current traditional costing system. (4 points) Std. _______ Spec _______ 2. Calculate the total unit cost of a standard job and a special job under an activity-based costing approach. (12 points) Std. ______ Spec. ________
3. What is Whitfields current gross margin dollars per job for a Special job and what would the Gross margin dollars be for a Special job using activity based costing measures? (4 points). Current GM 12 Std. _______ Spec _______
ACC312 Spring 2010 Midterm I
Test Form A
ABC GM
Std.________ Spec _______
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