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“3. Data for Cost A and Cost B are as follows: Number of Units Produced Unit Cost Total Cost Cost A 1 ? $ 10 10 ? 100 100 ? 1000 1,000 ? 10000 Cost B 1 5000 ? 10 500 ? 100 50 ? 1,000 5 ? Which of the above best describes the behavior of Costs A and B? a. Cost A is fixed, Cost B is variable. b. Cost A is variable, Cost B is fixed. c. Both Cost A and Cost B are variable. d. Both Cost A and Cost B are fixed.”
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Read more“19. Precision Company used a predetermined overhead rate during 19×2 of $3 per direct labor hour, based on an estimate of 24,000 direct labor hours to be worked during the year. Actual costs and activity during 19×2 were: Actual manufacturing overhead cost incurred $84,000 Actual direct labor hours worked 27,000 The under- or overapplied overhead for 19×2 would be a. $3,000 underapplied b. $3,000 overapplied c. $12,000 underapplied d. $9,000 overapplied”,”1The under or overapplied overhead for 19×2 would be:Applied MOH = Predetermined Rate x Actual Hours3 x 27,000 = $81,000Actual MOH – Applied MOH = Over or (Under)84,000 – 81
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Read more4. Straight-line depreciation on a computer used in the marketing department of a manufacturing firm would be classified as a. a product cost that is fixed in terms of cost behavior. b. a period cost that is fixed in terms of cost behavior. c. an asset representing funds accumulated to replace the computer when it is retired. d. a liability representing the probably future outlay of funds to replace the computer when it is retired.
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Read more“20. Malcolm Company uses direct labor hours as a base for applying predetermined factory overhead to production jobs. On September 1, the estimates for the month were: Factory overhead $17,000 Direct labor hours 13,600 During September, the actual production figures were: Factory overhead $18,500 Direct labor hours 12,000 The cost records for September will show a. Overapplied overhead of $3,500 b. Underapplied overhead of $2,000 c. Overapplied overhead of $1,500 d. Underapplied overhead of $3,500”,”4Predetermined rate = Estimated MOH/ Estimated DLHPredetermined rate = 17,000 = $1.25/DLH 13,600Applied MOH = DLH x predetermined rateApplied MOH = 12,000 x 1.25 = $15,000Compare to $18,500: Underapplied by 3
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Read more5. Cobra Mining Company spent $200 million five years ago to develop underground mining and milling operations in a remote area of a western state. Metals prices have since declined precipitously and the company is considering abandoning the operation. The term that would best describe the $200 million expenditure as regards the abandonment decision is a. sunk cost. b. noncontrollable cost. c. differential cost. d. opportunity cost.
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Read more“21. The work in process account of a manufacturing firm shows a balance of $3,000 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $500 and $300 for materials used, and charges of $400 and $600 for direct labor used. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of a. 83% b. 120% c. 40% d. 250%”,”2Total Cost for uncompleted Jobs = $3,000 – Cost of Raw Materials (800) – DL Cost (1000) = App. MOH 1,200Compare 1,200 to $1
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Read more“6. CF Company manufactures wooden rocking chairs. CF identified the following three material costs in its production process for July: $100,000 for springs for the rocking mechanism. Two springs at a cost of $10 each are used in each chair. $1,700 for glue used as needed from one gallon containers. $500 for stain used to touch up spots on the chairs. The total cost that should have been assigned to indirect material for July was a. $102,200 b. $500 c. $2,200 d. $1,700”
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Read more“22. For 19×4, Parsons Company incurred $250,000 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was overapplied in the amount of $12,000 for the year. If the predetermined overhead rate was $8.00 per direct labor hour, how many hours were worked during the year? a. 31,250 hours b. 30,250 hours c. 32,750 hours d. 29,750 hours”,”3Number of hours worked during the year:Applied MOH = Actual MOH + Overapplied overhead = 250,000 + 12,000 = $262,000Actual Hrs = Applied MOH/ = 262,000 /= 32,750 Hrs. PredeterminedRate 8.0023.The overhead rate per hour:= Estimated MOH / Estimated activity base= (40,000+8,000+20,000)/16
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Read more“7. Fab Co. manufactures textiles. Among Fab’s 19×1 manufacturing costs were the following salaries and wages: Loom operators $120,000 Factory foremen 45,000 Machine mechanics 30,000 What was the amount of Fab’s 19×1 direct labor? a. $195,000 b. $165,000 c. $150,000 d. $120,000”
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