Ac 505 Quiz and Solution

AC505 Practice Quiz #1 1. For which of the businesses would the job order cost system be appropriate? a. Auto repair shop b. Crude Oil refinery. c. Drug Manufacturer.

d. Root beer producer. 2. Which of the following companies would most likely use job costing? a. Paper manufacturer. b.

Paint Producer. c. Breakfast cereal maker. d.

Advertising agency. 3. An equivalent unit of conversion costs is equal to the amount of conversion costs required to: a. Start a unit. b. Start and complete a unit.

c. Transfer a unit in. d. Transfer a unit out.

4.Job 655 was recently completed. The following data has been recorded on its job cost sheet: Direct materials $ 78,000 Direct labor costs 45,000 Number of units completed 4,000 The company applies manufacturing overhead on the basis of direct labor costs. The predetermined overhead rate is 75% of direct labor costs. Required: Compute the unit product cost that would appear on the job cost sheet for this job: 5.

Prepare the necessary journal entries from the following information for Kingston Company: a.Purchased raw materials on account, $ 45,000. b. Raw materials requisitioned for use in production. Direct Materials $ 23,000; Indirect materials, $ 12,000. c.

Salaries and wages cost incurred: Direct Labor cost, $ 47,000; Indirect Labor Cost, $ 15,000. d. Depreciation on Factory Equipment, $ 12,000. e. Depreciation on Office Equipment, $ 5,000.

f. Manufacturing Overhead was applied at a rate of 80% of direct labor costs. g. Goods costing $ 75,000 were completed during the period. h.

Goods costing $ 36,000 were sold on account for $ 48,000. 6.Ulmer Company uses the weighted-average method in its process-costing system. The Framing Department of Ulmer Company reported the following information for the month of September: Percentage Complete with Units Respect to Conversion Work In Process, September 1 5,000 70% Units Started 26,000 Completed and Transferred Out 22,000Work in Process, September 30 9,000 40% Costs for September: Materials Conversion Work in Process, September 1 $ 37,200 $ 48,640 Added during the month $161,200 $ 192,000 All materials are added at the beginning of the process. Required: Compute the following items using the weighted-average method: a. The equivalent units of production for conversion costs.

b. The cost per equivalent unit for conversion costs. c.The total cost assigned to units transferred out the Framing Department for September. d. The cost assigned to work in process inventory as of September 30.

7. The Simmons Company manufactures a product for which materials are added at the beginning of the manufacturing process. A review of the company’s inventory and cost records for the most recently completed year revealed the following information: Units Materials Conversion Work In Process, March 1 ( 60% completeWith respect to conversion costs) 80,000 $ 200,000 $ 291,200 Units started into production 170,000 Costs added during the year: Materials $ 600,000 Conversion $ 582,400 Units completed during the year 190,000 The company uses the weighted-average cost method in its process costing system.The ending inventory is 30% complete with respect to conversion costs.

Required: a. Compute the equivalent units of production and the cost per equivalent units for materials and for conversion costs. b. Determine the cost transferred to finished goods..

c. Determine the amount of cost that should be assigned to the ending work-in-process inventory. AC505 Solution to Practice Quiz #1 1. A 2.

D 3. B 4. Cost Summary: Direct Materials $ 78,000 Direct Labor 45,000 Manufacturing Overhead 33,750 $45,000 X 75%) ---------- Total Cost $ 156,750/Units Completed 4,000 = Unit Product Cost = $ 39. 19 5. a. Raw Materials Inventory 45,000 Accounts Payable 45,000 b.

Work In Process 23,000 Manufacturing Overhead 12,000 Raw Materials Inventory 35,000 c.Work in Process 47,000 Manufacturing Overhead 15,000 Salaries and Wages Payable 62,000 d. Manufacturing Overhead 12,000 Accumulated Depreciation 12,000 e. Depreciation Expense 5,000 Accumulated Depreciation 5,000 f. Work in Process 37,600 Manufacturing Overhead 37,600 g.

Finished Goods 75,000 Work in Process 75,000 h. Accounts Receivable 48,000 Sales Revenue 48,000 Cost of Goods Sold 36,000 Finished Goods 36,000 6. a.Units transferred out 22,000 Add: equivalent units in ending inventory ( 9,000 X 40%) 3,600 Equivalent units for conversion costs 25,600 b. Work in Process, September 1 $ 48,640 Conversion Costs added during the current month 192,000 Total costs $ 240,640 240,640/25,600 Equivalent Units = $ 9.

40 per equivalent unit. c. Units transferred out 22,000 Add: equivalent units in ending inventory ( 9,000 X 100%, since all units are 100% complete with respect to materials) 9,000 Equivalent units for materials 31,000 Materials cost per equivalent unit: ( $ 37,200 + $ 161,200)/31,000 Equivalent Units = $6. 40 per equivalent unit.

Conversion cost per equivalent unit: ( $ 48,640 + $ 192,000)/25,600 Equivalent Units = $ 9. 40 per equivalent unit. Costs transferred out: 22,000 units X ( $6. 40 + $9. 40) = $ 347,600 d.

Materials costs: 9,000 X $ 6. 40 = $ 57,600 Conversion costs: 9,000 X 40% complete X $ 9. 40 = $ 33,840 Cost assigned to ending inventory $ 91,440 7. Materials Conversion Units completed and transferred out (all units re 100% complete with respect to materials) 190,000 190,000 Work in Process, March 31: Materials: 60,000 X 100% 60,000 Conversion: 60,000 X 30% 18,000 -------------- --------------- Equivalent Units of Production 250,000 208,000Materials Conversion Costs in beginning work in process $ 200,000 $ 291,200 Costs added during the year 600,000 582,400 Total $800,000 873,600 Equivalent Units of Production 250,000 208,000 Cost per Equivalent Unit $3.

0 $ 4. 20 b. Costs transferred to finished goods 190,000 X ( $3. 20 + $4. 20) = $ 1,406,000 c.

Ending Work in Process: Materials 60,000 X $ 3. 20 = $ 192,000 Conversion: 18,000 X 4. 20 = $ 75,600