2024 – 1 The development of just in time JIT methods of production focused on increasing sales revenue reducing inventories

1.  The development of just-in-time (JIT) methods of production focused on: 

 increasing sales revenue.

 reducing inventories.

 increasing customer service.

 reducing operating expenses.

 

2.  For a manufacturing company, which of the following is an example of a period cost rather than a product cost? 

 Wages of salespersons

 Salaries of machine operators

 Insurance on factory equipment

 Depreciation of factory equipment

 

3.  During 2009, a manufacturing company had the following operating results:

Beginning work-in-process inventory$ 45,000

Beginning finished goods inventory$190,000

Direct materials used in production$308,000

Direct labor$475,000

Manufacturing overhead incurred$250,000

Ending work-in-process inventory$ 67,000

Ending finished goods inventory$ 89,000

 

What is the cost of goods sold for 2009? 

 $1,011,000

 $1,134,000

 $1,033,000

 $1,112,000 

 

4. How would a 5% sales commission paid to sales personnel be classified in a manufacturing company? 

 Fixed, period cost

 Fixed, product cost

 Variable, period cost

 Variable, product cost

 

5.  2,000 units were produced and sold. 

Sales price per unit$ 800 per unit

Fixed costs:

Marketing and administrative$400,000 per period

Manufacturing overhead$200,000 per period

Variable costs:

Marketing and administrative$50 per unit

Manufacturing overhead$80 per unit

Direct labor$100 per unit

Direct materials$200 per unit

 

What is the full cost per unit of making and selling the product?

 $430

 $480

 $530

 $730  

 

6.  Mukwonago Industries has developed two new products, but it has enough plant capacity to introduce only one product during the current year. The following data will assist management in deciding which product should be selected.

 

Mukwonago’s fixed overhead includes rent and utilities, equipment depreciation, and supervisory salaries. Selling and administrative expenses are not allocated to individual products.

Product LProduct W

Direct materials$44$36

Machining ($12/hour)1815

Assembly ($10/hour)3010

Variable overhead ($8/hour)3618

Fixed overhead ($4/hour)189

Total cost$146$88

Estimated selling price per unit$170$100

Actual research and development costs$240,000$175,000

Estimated advertising costs$500,000$350,000

 

For Mukwonago’s Product L, the unit costs for direct material, machining, and assembly represent: (Points : 4) 

 conversion costs.

 period costs.

 prime costs.

 fixed costs. 

 

7.  The following pertains to Clove Co. for the year ending December 31, 2008:

Budgeted sales$1,000,000

Break-even sales$700,000

Budgeted contribution margin$600,000

Cashflow breakeven$200,000

 

Clove’s margin of safety is: 

 $300,000.   

 $400,000.

 $500,000.

 $800,000.

 

8.  The CJP Company produces 10,000 units of item S10 annually at a total cost of $190,000.

Direct materials$20,000

Direct labor$55,000

Variable overhead$45,000

Fixed overhead   $70,000

Total           $190,000

 

The XYZ Company has offered to supply 10,000 units of S10 per year for $18 per unit. If CJP accepts the offer, $4 per unit of the fixed overhead would be saved. In addition, some of CJP’s facilities could be rented to a third party for $15,000 per year. What are the relevant costs for the “make” alternative? 

 $160,000

 $165,000

 $175,000    

 $185,000

 

9.  The Chambers Manufacturing Company recorded overhead costs of $14,182 at an activity level of 4,200 machine hours and $8,748 at 2,300 machine hours. The records also indicated that overhead of $9,730 was incurred at 2,600 machine hours. Using the high-low method to estimate the cost equation, determine the variable cost per machine hour. 

 $2.78

 $2.86  

 $3.10

 $3.38 

 

10.  The following information has been gathered for the GHI Manufacturing Company for its fiscal year ending December 31: 

 

Actual manufacturing OC    $212,500

Actual direct labor hours     54,900

Actual direct labor costs     $445,000

Estimated man. OC          $210,000

Estimated direct labor         $434,000

Estimated DL hours            56,000 

 

What is the predetermined manufacturing overhead rate per direct labor hour?

 $3.87

 $3.79

 $3.83

 $3.75    

 

11.  What is the amount transferred in for Case B?

Case B

Beginning balance$15,100

Ending balance$11,400

Transferred in???

Transferred out$93,200

 

 $96,900

 $119,700

 $89,500   

 $66,700 

 

12.  The following information has been gathered for Roswell Machining for its fiscal year ending December 31:   

 

 

 

What is the predetermined factory overhead rate per labor hour? 

 

 $29.01

 $31.25

 $37.01

 $34.36

 

 

13.  Lo-crete produces quick setting concrete mix. Production of 200,000 tons was started in April and 190,000 tons were completed. Material costs were $3,152,000 for the month while conversion costs were $591,000. There was no beginning work-in-process; the ending work-in-process was 70 percent complete. What is the cost of the product that was completed and transferred to finished goods? 

 

 $3,610,000  

 $3,555,850   

 $2,994,400

 $3,743,000