ACCT 3403 Lecture Notes - Lecture 26: Activity-Based Costing
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1.) On January 31, Village Bank had 500,000 shares of $3 parvalue common stock outstanding. On that date, the company declareda 10% stock dividend when the market price of the stock was $62 pershare. The immediate effect of this dividend upon Village Bankwas:
A.)A reduction in cash of $3,794,500. | |||||||||||||||||||||||||||||||||||||||||
B.) A reduction in retained earnings of $3,100,000. | |||||||||||||||||||||||||||||||||||||||||
C.) A reduction in retained earnings of $150,000. | |||||||||||||||||||||||||||||||||||||||||
| D.) A liability to the stockholders of $150,000. 2.) Mayfair Corporation has outstanding 70,000 shares of $1 parvalue common stock as well as 20,000 shares of 7%, $100 par valuecumulative preferred stock. At the beginning of the year, thebalance in retained earnings was $800,000, and one year's dividendswere in arrears. Net income for the current year is $580,000.Compute the balance in retained earnings at the end of the year ifMayfair Corporation pays a dividend of $3 per share on its commonstock this year.
3.) During the years 2009 through 2011, Powers, Inc., reportedthe following amounts of net income (dollars in thousands):
4.) Hines Cannery issued capital stock in 2009 for $700,000.During 2009 the company paid dividends of $250,000. What is theeffect of these events in Hines' statement of cash flows for2009?
6.) Which of the following is a characteristic of manufacturingoverhead in a job order cost system?
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7.) A job order cost system traces direct materials cost to aparticular job by means of:
A.) | Materials requisitions. |
B.) | A production budget. |
C.) | The Materials Inventory controlling account. |
D.) | A debit to the job cost sheet for the job. |
8.) Which of the following costing systems would always use jobcost sheets?
A.) | Job order costing. |
B.) | Process costing. |
C.) | Activity-based costing. |
D.) | All three systems. |
9.) Edwards Auto Body uses a job order cost system. Overhead isapplied to jobs on the basis of direct labor hours. During thecurrent period, Job No. 337 was charged $425 in direct materials,$475 in direct labor, and $190 in overhead. If direct labor costsan average of $16 per hour, the company's overhead application rateis:
A.) | $7.27 per direct labor hour. |
B.) | $6.40 per direct labor hour. |
C.) | $17.50 per direct labor hour. |
D.) | $40 per direct labor hour. |
10.) Marty's Metal Shop uses a job order cost system. It appliesoverhead to jobs at a rate of 175% of direct labor costs. Job No.2617 required $800 in direct labor costs. The job was initiallybudgeted to require $850 in direct labor costs. Overhead applied toJob No. 2617 during the period amounted to:
A.) | $850. |
B.) | $1,400. |
C.) | $1,275. |
D.) | Some other amount. |
11.) In a job cost system, the Work-in-Process Inventorycontrolling account may be reconciled to the total of the:
A.) | Employee time cards. |
B.) | Materials requisitions. |
C.) | Work-in-Process Inventory records for each department orprocess. |
D.) | Job cost sheets. |
12.) For the month of December, its first month of operations,the Radcliffe Corporation completed and transferred 800 units ofproduct costing $80,000 to produce to Finished Goods Inventory. IfRadcliffe sold 650 units during the same month, how much was costof goods sold for the same period?
A.) | $80,000. |
B.) | $8,000. |
C.) | $6,500. |
D.) | $65,000. |
13.) The computation of equivalent full units is generally notnecessary when:
A.) | Beginning work-in-process inventories are significantly largerthan ending work-in-process inventories. |
B.) | Beginning and ending work-in-process inventories differ onlyslightly. |
C.) | The number of units in ending work-in-process exceeds the numberof units completed and transferred to finished goods during theperiod. |
D.) | Per-unit costs become distorted as a result of not computingequivalent full units of production. |
14.) During July, the equivalent full units of direct materialsadded to the product worked on by Department A amounted to a totalof 90,000 applied as follows: beginning inventory, 20,000 units;units started and completed in July, 60,000 units; and endinginventory, 10,000 units. Assuming that the cost of direct materialsrequisitioned by the department in July was $135,000; the amount ofthe materials cost to be assigned to the ending inventory wouldbe:
A.) | $16,875. |
B.) | $54,000. |
C.) | $15,000. |
D.) | $18,000. |
