ACC 220 Lecture Notes - Lecture 4: Ovh, Middle Ages

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6 May 2020

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Job = a set of distinct units. Products must be large quantities and indistinguishable. Divide costs by the amount of units processes. Production is often uneven from period to period. Problems are pervasive in all costing systems. Difference between job-order and more sophisticated systems. Manufacturing firms - recall how we did it in chapter 2. Estimating overhead: calculated a predetermined overhead rate, apply ovh to production throughout the year, reconcile the difference between the actual and applied overhead. Estimated overhead is always incorrect, but its a guess. Estimates are commonly based on last year adjusted for anticipated changes in the coming. The associated activity level focuses on an activity that drives or moves overhead for that year firm. The level is set based on budget. A company"s overhead application rate is /dlh. the company incurred ,000 in dm and 1,200 dlhs at a cost of per hour.

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Identify each statement as true or false. If false, indicate howto correct the statement.

1. Process cost systems are used to apply costs to similarproducts that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit isindistinguishable from another.
3. Companies that produce soft drinks, motion pictures, andcomputers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individualjobs.
5. Job order costing and process costing track differentmanufacturing costs elements.
6. Both job order costing and process costing account for directmaterials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for bothjob order costing and process costing.
8. In a process cost system, only one work in process account isused.
9. In a process cost system, costs are summarized in a job costsheet.
10. In a process cost system, the unit cost is total manufacturingcosts for the period divided by the units produced during theperiod.

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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.

A.)	$1,080,000.
B.)	$1,670,000.
C.)	$890,000.
D.)	$310,000.

3.) During the years 2009 through 2011, Powers, Inc., reportedthe following amounts of net income (dollars in thousands):

Relative to the prior year, the percentage change in netincome:

A.)	Was the same in 2010 and 2011.
B.)	Was larger in 2011 than in 2010.
C.)	Was smaller in 2011 than in 2010.
D.)	Cannot be determined without knowing how many shares of stockwere outstanding.

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?

A.)

$700,000 cash provided by investing activities, and $250,000cash disbursed for financing activities.

B.)

$700,000 cash provided by financing activities, and $250,000cash disbursed for investing activities.

C.)

$700,000 cash provided by financing activities, and $250,000cash disbursed for operating activities.

D.)

$450,000 net cash provided by financing activities

5.) Direct labor costs in a paint factory would include wages ofemployees who:

A.)	Supervise heavy equipment operators.
B.)	Operate paint-mixing machines.
C.)	Develop highly secret formulas for new products.
D.)	Paint the interior of the factory every two years.

6.) Which of the following is a characteristic of manufacturingoverhead in a job order cost system?

A.)	It is indirectly traceable to specific jobs or units.
B.)	It includes the cost of all labor relating to manufacturingoperations.
C.)	It is assigned to units produced by means of an overheadapplication rate.
D.)	It includes the cost of direct materials used and of indirectlabor.

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.

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1. Total assets turnover measures the ability of a firm to:

a. Generate profits on sales

b. Generates sales through the use of assets

C. Buy new Assets

D. Move inventory

E. Cover long term debt.

2.Managerial accounting :

a. focuses only on historical data

b. is govern by GAAP

c. focuses primarily on the needs of personnel within theorganization.

d. provides information for parties external to theorganization

e. focuses on the financial statement and other financialreports.

3. which of the following statement about similarities betweenprocess costing and job costing are true.

I. Both systems assign production costs to unit of output.

II. Both system require extensive knowledge of financialaccounting.

III. The flow of costs through the manaufacturing accopunts isessentially the same.

A. I only

B. I and III

C. II and III

D. III only

E. I,II, and III

4. The comprehensive set of budget that serves as a companyoverall financial plan si commonly known as:

A. Integrated budget

B. a Pro-forma budget

C. Master budget

D. a master budget

E. a rolling budget

5. A flexible budget:

A. classifies budget request by activity and estimates thebenefits arising from each activity.

B. presents a statement of expectations for a period of time butdoes not present a firm committment.

C. presents the plan for only one level of activity and does notadjust to changes in the level of activity.

D presents the plan for a range of activity so that the plan canbe adjust for changes in the activity level.

6. Which of the following is the correct method to calculate apredetermined overhead rate?

A. Budgeted total manufacturing cost budgeted amount of costdriver.

B. Budgeted overhead cost budgeted amount of cost driver

C. Budgeted amount of cost driver budgeted overhead cost

D. Actual overhead cost budgeted amount of cost driver

E. Actual overhead cost actual amount of cost driver.

7.Which of the following statements about joint-cost allocationis FALSE?

A. Joint cost allocation is useful in deciding whether tofurther process a product after split-off

B. Joint cost allocation is useful in making a profitdetermination about individual joint products

C. Joint cost allocation is helpful in inventory valuation

D. Joint cost allocation can be based on the number of unitsproduced.

E. Joint cost allocation can be accompanied by using differentmethods that focus on sale value and product worth.

8.The total production cost of a job is composed of:

A. Direct material and direct labor

B. direct material, direct labor, manufacturing overhead, andoutlays for selling costs.

C. direct material. direct labor, manufacturing overhead,andoutlays for both selling and administration costs.

D. direct materiaL, direct labor,and applied manufacturingoverhead

E. direct material, direct labor, and selling expenses.

9.What will cause the variable overhead efficiency variance?

A. Efficient or inefficient use of a specific component ofvariable overhead(e.g. electricity)

B. Full or partial utilization of major equipment resources

C. Production of unit in excess of the number of units sold.

D. Efficient or inefficient use of cost driver(e.g. machinehours) for variable overhead

E. Changes in the salary cost of manufacturing supervisors.

10. Which of the following is classified as an inventoryshortage cost?

A. Purchase order preparation

B. Production disruption

C. Lost sales and lost customers.

D. Spoilage

E. Production disruption, lost sales and lost customers.

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ACC 220 Lecture Notes - Lecture 4: Ovh, Middle Ages

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