Reference no: EM131156281

ACCOUNTING FOR MANAGER

WIP inventory, January 1	0 units
Units started	7,500
Units completed and transferred out	3,300
WIP inventory, December 31	4,200
Direct materials	$15,500
Direct labor	$18,400
Manufacturing overhead	$9,000

The units in ending WIP inventory were 90% complete for materials and 50% complete for conversion costs. At the end of the year, what are the equivalent units for conversion costs?

A. 3,750
B. 3,300
C. 5,400
D. 2,100

When absorption costing is used and management bonuses are related to operating income, managers are more likely to:

A. decrease inventory levels.
B. increase inventory levels.
C. keep inventory levels consistent.
D. steal from the company.

A company manufactures mirrors. Last month's costs were as follows.

Direct materials	$90,000
Direct labor	144,000
Manufacturing overhead	158,000

What were the conversion costs for the month?

A. $302,000
B. $392,000
C. $234,000
D. $90,000

The representation for fixed cost per unit of activity is:

A. vx divided by v.
B. vx divided by y.
C. y divided by x.
D. f divided by x.

The Jones Corporation uses a process system. During the current period, 2,500 units were started and 1,100 units were completed and transferred out. Ending units were 60% complete for materials and 45% complete for conversion costs. Direct materials costs added were $35,405 and conversion costs added were $32,870. There was no beginning WIP inventory and conversion costs are added evenly throughout the process. At the end of the period, what are the total equivalent units for conversion costs?

A. 1,940
B. 1,400
C. 1,100
D. 1,730

Which of the following is unique to a process costing system?

A. Work is not started on a product until an order is received.
B. Direct materials, direct labor, and manufacturing overhead are assigned to the first department only.
C. Costs for each process stay with that process until the goods are moved to finished goods.
D. Each process has its own WIP account.

Fun Stuff Manufacturing produces ping pong balls using a three-step sequential process that includes molding, coloring, and finishing. When the balls and associated costs are transferred from the coloring process to the finishing process, which account is credited?

A. WIP inventory-coloring
B. WIP inventory-molding
C. Raw materials inventory
D. WIP inventory-finishing

When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. What are these costs called?

A. Transported costs
B. Transmitted costs
C. Transferred costs
D. Conveyed costs

Which of the following does NOT appear on an income statement prepared using variable costing?

A. Fixed production costs
B. Contribution margin
C. Gross margin
D. Variable production costs

On a traditional income statement, sales revenue less cost of goods sold equals:

A. gross profit.
B. contribution margin.
C. operating income.
D. operating expenses.

Sugartown Corporation has total sales revenues of $930,000. If its total fixed costs are $182,000 and its total variable costs are $267,000, then the total contribution margin is:

A. total revenue minus total fixed costs.
B. total revenue minus total variable costs.
C. total variable costs minus total fixed costs.
D. equal to operating income.

The contribution margin is equal to:

A. sales minus cost of goods sold.
B. sales minus operating expenses.
C. sales minus fixed expenses.
D. sales minus variable expenses.

Total fixed costs for Purple Figs Company are $52,000. Total costs, both fixed and variable, are $160,000 if 80,000 units are produced. The fixed cost per unit at 80,000 units would be:

A. $1.35/unit.
B. $0.65/unit.
C. $2.00/unit.
D. $2.65/unit.

The first step of the 5-step process costing procedure is.

A. compute output in terms of equivalent units.
B. summarize total costs to account for.
C. compute the cost per equivalent unit.
D. summarize the flow of physical units.

Fun Stuff Manufacturing produces Frisbees using a three-step process that includes molding, coloring, and finishing. Which of the following accounts is debited for conversion costs?

A. WIP inventory-finishing
B. Finished goods inventory
C. Raw materials inventory
D. Cost of goods sold

In process costing, ________ is/are found by taking the number of partially completed physical units and multiplying it by the percentage of the process completed.

A. cost of goods sold
B. equivalent units
C. fixed manufacturing overhead costs
D. conversion costs

Fixed costs that are the result of previous management decisions that current managers have no control over in the short run are called ________ fixed costs.

A. discretionary
B. committed
C. standard
D. past

At Hodgson Corporation, direct materials are added at the beginning of the process, and conversion costs are uniformly applied. Other details include the following.

Beginning WIP direct materials	$32,000
Beginning WIP conversion costs	$20,250
Costs of materials added	$384,100
Costs of conversion added	$271,125
WIP beginning (50% for conversion)	19,200 units
Units started	119,500 units
Units completed and transferred out	115,700 units
WIP ending (60% for conversion)	23,000 units

What are the total equivalent units for conversion costs?

A. 127,200
B. 125,300
C. 129,500
D. 138,700

The use of either absorption or variable costing will make little difference in companies:

A. using just-in-time inventory methods.
B. with large inventories.
C. with high fixed costs.
D. with high variable costs.

When predicting costs at other volumes using a cost equation derived from either the high-low method or regression analysis, managers should consider:

A. outliers.
B. general inflation.
C. seasonality.
D. All of the above