CMA p1 SU3 test1. - Columbia Company produces two products that are serviced by two support areas. Columbia uses the reciprocal method to allocate support area costs to the products with information as follows. Support Area 1 Support Area2 Product 1 Product 2 Allocation base Hours used Square feet Area 1 hours used 5,000 120,000 75,000 Space occupied 3,000 40,000 20,000 Direct costs $350,000 $200,000 What additional information does Columbia need in order to complete the cost allocation?
$159,375., $184,375., $209,375., $279,175.,
2. A company has two service departments and is planning to use the reciprocal method to allocate service department costs. The following information from operations was collected for analysis. Human resources (HR) Data processing Machining Assembly Budgeted overhead costs $400,000 $70,000 $225,000 $125,000 Human resources labor hrs 3,000 5,000 8,200 Data processing labor hrs 600 3,500 600 Which one of the following equations represents the complete reciprocated cost of the Data Processing Department?
$265,000., $250,000, $235,000, $234,308.,
3. Scenario for essay question (kindly copy your answer to a mail message and send it to your instructor) Inman Inc. is a manufacturer of a single product and is starting to develop a budget for the coming year. Because cost of goods manufactured is the biggest item, Inman’s senior management is reviewing how costs are calculated. In addition, senior management wants to develop a budgeting system that motivates managers and other workers to work toward the corporate goals. Inman has incurred the following costs to make 100,000 units during the month of September. Materials $400,000 Direct labor 100,000 Variable manufacturing overhead 20,000 Variable selling and administrative costs 80,000 Fixed manufacturing overhead 200,000 Fixed selling and administrative costs 300,000 Inman Inc.’s September 1 inventory consisted of 10,000 units valued at $72,000 using absorption costing. Total fixed costs and variable costs per unit have not changed during the past few months. In September, Inman sold 106,000 units at $12 per unit. 1- Calculate Inman’s September manufacturing cost per unit under both absorption and variable costing 2- Identify and explain one reason why the income calculated in the previous two methods might differ. 3- Identify and discuss one advantage of using each of the following: a. absorption costing b. variable costing
Sales value at split-off method., Physical-quantity method., Constant gross-margin percentage method.,
4. Warren Company uses departmental rates to assign overhead to its two products. Budgeted data for the next year are shown below. Department 1 Department 2 Overhead costs $5,000,000 $7,000,000 Cost driver Machine hours labor hours Machine hours 500,000 120,000 Labor Hours 100,000 1,400,000 Warren expects to manufacture 400,000 units of Product A during the year. Each unit of Product A requires 0.5 machine hours in Department 1 and 1.5 labor hours in Department 2. The budgeted overhead cost for one unit of Product A is
$40/hr. $10/hr, $10/hr. $40/hr, $100/hr. $50/hr. , $50/hr. $100/hr.,
5. Huntley Company has two departments, Machining and Assembly, at its Milwaukee plant. This year%27s budget for the plant contained the following information. Machining Assembly Manufacturing overhead $4,000,000 $2,000,000 Direct labor hours 100,000 200,000 Machine hours, 40,000 40,000 If the Milwaukee plant allocates manufacturing overhead based on machine hours, which of the following represents the allocation rates? Machining Assembly
$11.03., $12.50., $12.73, $15.00.,
6. - All of the following would be considered manufacturing overhead costs by a book publisher except
Sales dollars., Direct labor costs, Machine hours., Direct labor hours.,
7. Tucariz Company processes Duo into two joint products, Big and Mini. Duo is purchased in 1,000 gallon drums for $2,000. Processing costs are $3,000 to process the 1,000 gallons of Duo into 800 gallons of Big and 200 gallons of Mini. The selling price is $9 per gallon for Big and $4 per gallon for Mini. Big can be processed further into 600 gallons of Giant if $1,000 of additional processing costs are incurred. Giant can be sold for $17 per gallon If Tucariz uses the net realizable value method to allocate costs to the joint products, the total cost of producing Giant is
$70,000 %2b [(600/4,700) x $400,000]., $70,000 %2b [(3,000/16,200) x $400,000]., $70,000 x (600/4,700) %2b $350,000 x (3,000/16,200)., Non of the above is correct,
8. Last year a company had sales of 75,000 units and production of 100,000 units. Other information for the year is shown below. Direct labor $187,500 Variable overhead $100,000 Direct materials $150,000 Variable selling expenses $100,000 Fixed administrative expenses $100,000 Fixed overhead $200,000 Assuming no beginning inventory, what is the total value of ending finished goods inventory under absorption costing?
fixed factory overhead of $560,000 and a lower hourly rate for variable overhead., fixed factory overhead of $560,000 and the same hourly rate for variable overhead., fixed factory overhead of $560,000 and a higher hourly rate for variable overhead., variable overhead of less than $180,000 and a lower hourly rate for variable overhead.,
9. A capital-intensive manufacturer of large construction equipment has a manufacturing process that relies heavily on specialized machinery. This machinery is run by a relatively few number of highly skilled laborers. In determining its predetermined overhead rate, what allocation base should the company use?
$553,125., $478,125., $403,125., $328,125.,
10. - In joint-product costing and analysis, which one of the following costs is relevant when deciding the point at which a product should be sold to maximize profits?
depreciation on the printing equipment., wages paid to the production supervisor., rent on the warehouse containing the finished books inventory., fire insurance on the printing facilities,
11. Using absorption costing, Langdon Company’s income for October was $250,000. Langdon began the month with 10,000 units in finished goods inventory that contained $30,000 of fixed manufacturing overhead costs. During October, the company produced 330,000 units and sold 325,000 units. The fixed manufacturing overhead for October totaled $990,000. If Langdon Company used variable costing, its income for October would be
Direct costs of Products 1 and 2., Hours used by Support Area 1 and the space occupied by Support Area 2., Order in which the support areas will be allocated., No additional information is needed,
12. A company manufactures several products that originate in a joint process and are separated at a split-off point. Which one of the following methods of joint cost allocation would allocate the same unit cost to each separable product?
Step-down method., Direct method., Reciprocal method., Activity-based method.,
13. A company has budgeted overhead costs at its normal capacity based on machine hours. Variable factory overhead is $180,000; and fixed factory overhead is $560,000. If the firm operates at a slightly lower rate of activity, it will expect total
$2,200., $4,800., $7,200., $12,000.,
14. Sully Inc. manufactures wall clocks. Sully sells each clock for $30. Variable manufacturing expense for each clock is $18. Sully plans to sell 400 clocks this month and anticipates incurring $2,600 of fixed expenses. What will be Sully’s total contribution margin this month?
The selling price of a by-product.., The inventory cost of joint products for financial reporting. , Whether one of the joint products should be discontinued., The variance between budgeted and actual common costs. ,
15. All of the following are methods of allocating joint costs to joint products except .
Separable production cost method, Physical quantities method, Gross market value method., Net realizable value method.,
16. The primary purpose for allocating common costs to joint products is to determine
H-102 only, B-40 and H-102. , B-40 only. , J-60 only. ,
17. Central Vacuum Company recorded the following production costs during the previous two-week period. Week 1 Week 2 Direct labor costs $17,000 $19,500 Other manufacturing costs $25,000 $28,000 Untis produced 5,000 6,000 Assuming both weeks fall in the same relevant range, what was the total fixed cost during week one?
$5,520 , $5,564 , $5,600 , $4,600 ,
18. Breegle Company produces three products (B-40, J-60, and H-102) from a single process. Breegle uses the physical volume method to allocate joint costs of $22,500 per batch to the products. Based on the following information, which product(s) should Breegle continue to process after the split-off point in order to maximize profit? B-40 J-60 H-102 Physical units produced per batch 1,500 2,000 3,200 Sales value per unit at split-off $10.00 $4.00 $7.25 Cost per unit of further processing after split-off 3.05 1.00 2.50 Sales value per unit after further processing 12.25 5.70 9.75
Separable costs after the split-off point. , Sales salaries for the period when the units were produced, Purchase costs of the materials required for the joint products., Joint costs to the split-off point.,
19. Last year, a company had sales of 75,000 units and production of 100,000 units. Other information for the year is shown below. Direct manufacturing labor $187,500 Variable manufacturing overhead $100,000 Direct materials $150,000 Variable selling expenses $100,000 Fixed administrative expenses 100,000 Fixed manufacturing overhead $200,000 Assuming no beginning inventory, what is the cost of goods sold under variable costing?
. Inman’s September manufacturing cost per unit under both absorption and variable costing are calculated as follows Absorption cost per unit Variable cost per unit Materials $400,000 $400,000 Direct labor 100,000 , , ,