Posted: September 16th, 2017

Cost Accounting Test – Exam 2 Fall 2014

Take Test: Exam 2 Fall 2014

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Question 1

House CompanyHouse Company adds material at the start of production. The following production information is available for June:

Beginning Work in Process Inventory

(45% complete as to conversion) 10,000 units

Started this period 120,000 units

Ending Work in Process Inventory

(80% complete as to conversion) 8,200 units

Beginning Work in Process Inventory Costs:

Material $24,500

Conversion 68,905

Current Period Costs:

Material $ 75,600

Conversion 130,053

Refer to House Company. What are the equivalent units for conversion using the weighted average method?

a. 128,360

b. 120,000

c. 130,000

d. 123,440

3 points

Question 2

House CompanyHouse Company adds material at the start of production. The following production information is available for June:

Beginning Work in Process Inventory

(45% complete as to conversion) 10,000 units

Started this period 120,000 units

Ending Work in Process Inventory

(80% complete as to conversion) 8,200 units

Beginning Work in Process Inventory Costs:

Material $24,500

Conversion 68,905

Current Period Costs:

Material $ 75,600

Conversion 130,053

Refer to House Company. What is the conversion cost per equivalent unit using the weighted average method?

a. $1.01

b. $1.05

c. $1.61

d. $1.55

Question 3

House CompanyHouse Company adds material at the start of production. The following production information is available for June:

Beginning Work in Process Inventory

(45% complete as to conversion) 10,000 units

Started this period 120,000 units

Ending Work in Process Inventory

(80% complete as to conversion) 8,200 units

Beginning Work in Process Inventory Costs:

Material $24,500

Conversion 68,905

Current Period Costs:

Material $ 75,600

Conversion 130,053

Refer to House Company. What is the material cost per equivalent unit using the weighted average method?

a. $.62

b. $.82

c. $.58

d. $.77

Question 4

Allen ManufacturingThe following March information is available for Allen Manufacturing Company when it produced 2,100 units:

Standard:

Material 2 pounds per unit @ $5.80 per pound

Labor 3 direct labor hours per unit @ $10.00 per hour

Actual:

Material 4,250 pounds purchased and used @ $5.65 per pound

Labor 6,300 direct labor hours at $9.75 per hour

Refer to Allen Manufacturing. What is the labor efficiency variance?

a. $731.25 F

b. $731.25 U

c. $750.00 F

d. $0

Question 5

In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is a

a. debit Finished Goods Inventory, credit Work in Process Inventory #2.

b. debit Work in Process Inventory #2, credit Finished Goods Inventory.

c. debit Cost of Goods Sold, credit Work in Process Inventory #2.

d. debit Finished Goods Inventory, credit Work in Process Inventory #1.

3 points

Question 6

Equivalent units of production are equal to the

a. units completed by a production department in the period.

b. identifiable units existing at the end of the period in a production department.

c. number of units worked on during the period by a production department.

d. number of whole units that could have been completed if all work of the period had been used to produce whole units.

3 points

Question 7

Transferred-in cost represents the cost from

a. the last department only.

b. the current period only.

c. the last production cycle.

d. all prior departments.

3 points

Question 8

Allen ManufacturingThe following March information is available for Allen Manufacturing Company when it produced 2,100 units:

Standard:

Material 2 pounds per unit @ $5.80 per pound

Labor 3 direct labor hours per unit @ $10.00 per hour

Actual:

Material 4,250 pounds purchased and used @ $5.65 per pound

Labor 6,300 direct labor hours at $9.75 per hour

Refer to Allen Manufacturing. What is the material price variance?

a. $637.50 U

b. $637.50 F

c. $630.00 U

d. $630.00 F

Question 9

Allen ManufacturingThe following March information is available for Allen Manufacturing Company when it produced 2,100 units:

Standard:

Material 2 pounds per unit @ $5.80 per pound

Labor 3 direct labor hours per unit @ $10.00 per hour

Actual:

Material 4,250 pounds purchased and used @ $5.65 per pound

Labor 6,300 direct labor hours at $9.75 per hour

Refer to Allen Manufacturing. What is the material quantity variance?

a. $290 F

b. $290 U

c. $275 U

d. $275 F

3 points

Question 10

The term “standard hours allowed” measures

a. actual output at actual hours.

b. actual output at standard hours.

c. budgeted output at standard hours.

d. budgeted output at actual hours.

3 points

Question 11

Which of the following factors should not be considered when deciding whether to investigate a variance?

a. likelihood that an investigation will reduce or eliminate future occurrences of the variance

b. trend of the variances over time

c. magnitude of the variance

d. whether the variance is favorable or unfavorable

3 points

Question 12

Seegar CompanySeegar Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for August when Seegar made 4,500 units:

Standard:

DLH per unit 2.50

Variable overhead per DLH $1.75

Fixed overhead per DLH $3.10

Budgeted variable overhead $21,875

Budgeted fixed overhead $38,750

Actual:

Direct labor hours 10,000

Variable overhead $26,250

Fixed overhead $38,000

Refer to Seegar Company. Using the four-variance approach, what is the variable overhead spending variance?

a. $4,375.00 U

b. $4,375.00 F

c. $8,750.00 U

d. $6,562.50 U

Question 13

Seegar CompanySeegar Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for August when Seegar made 4,500 units:

Standard:

DLH per unit 2.50

Variable overhead per DLH $1.75

Fixed overhead per DLH $3.10

Budgeted variable overhead $21,875

Budgeted fixed overhead $38,750

Actual:

Direct labor hours 10,000

Variable overhead $26,250

Fixed overhead $38,000

Refer to Seegar Company. Using the four-variance approach, what is the variable overhead efficiency variance?

a. $2,187.50 U

b. $9,937.50 F

c. $2,937.50 F

d. $2,187.50 F

Question 14

Seegar CompanySeegar Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for August when Seegar made 4,500 units:

Standard:

DLH per unit 2.50

Variable overhead per DLH $1.75

Fixed overhead per DLH $3.10

Budgeted variable overhead $21,875

Budgeted fixed overhead $38,750

Actual:

Direct labor hours 10,000

Variable overhead $26,250

Fixed overhead $38,000

Refer to Seegar Company. Using the four-variance approach, what is the fixed overhead spending variance?

a. $ 750.00 F

b. $3,125.00 F

c. $ 750.00 U

d. $7,000.00 U

Question 15

Seegar CompanySeegar Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for August when Seegar made 4,500 units:

Standard:

DLH per unit 2.50

Variable overhead per DLH $1.75

Fixed overhead per DLH $3.10

Budgeted variable overhead $21,875

Budgeted fixed overhead $38,750

Actual:

Direct labor hours 10,000

Variable overhead $26,250

Fixed overhead $38,000

Refer to Seegar Company. Using the four-variance approach, what is the fixed overhead volume variance?

a. $3,875.00 U

b. $3,125.00 F

c. $3,875.00 F

d. $6,063.00 U

Question 16

Allen ManufacturingThe following March information is available for Allen Manufacturing Company when it produced 2,100 units:

Standard:

Material 2 pounds per unit @ $5.80 per pound

Labor 3 direct labor hours per unit @ $10.00 per hour

Actual:

Material 4,250 pounds purchased and used @ $5.65 per pound

Labor 6,300 direct labor hours at $9.75 per hour

Refer to Allen Manufacturing. What is the labor rate variance?

a. $1,575 F

b. $1,594 U

c. $0

d. $1,575 U

Question 17

The Western Corporation, began operations on October 1. It employs a job-order costing system. Overhead is charged at a normal rate of $2.40 per direct labor hour. The actual operations for the month of October are summarized as follows:

a. Purchases of raw material, 33,000 pieces @ $1.40/piece.

b. Material and labor costs charged to production:

Job No.

Units

Material Directlabor cost Directlabor hours

101 10,000 $5,000 $6,000 3,000

102 8,800 3,600 5,400 2,700

103 16,000 7,000 9,000 4,500

104 8,000 3,200 4,800 2,400

105 20,000 8,000 3,600 1,800

c. Actual overhead costs incurred:

Variable $18,500

Fixed 15,000

d. Completed jobs: 101, 102, 103, and 104

e. Sales-$105,000. All units produced on Jobs 101 and 103 were sold.

Required: Compute the following $ balances on October 31:

a. Material inventory =

b. Work in process inventory

c. Finished goods inventory

d. Cost of goods sold (before closing OH)

e. Under- or overapplied overhead

Question 18

Discuss why standards may need to be changed after they have been in effect for some period of time.

Question 19

Compare and contrast job-order and process costing systems.