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ACTG 2300 Final: Exam 2 SG

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purplecicada511
7 Feb 2017
School
University of Denver
Department
Accounting
Course
ACTG 2300
Professor
Patelli Lorenzo

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Document Summary

Total factory overhead / total allocation bases = manufacturing overhead rate. Manufacturing overhead rate * actual allocation base incurred by each cost object. Total estimated manufacturing overhead / total estimated allocation base = Predetermined manufacturing overhead rate * actual allocation base incurred by each cost object = manufacturing overhead applied. Difference between the manufacturing overhead cost applied (moca) and the actual manufacturing overhead cost (amoc) Manufacturing overhead applied > actual manufacturing overhead. Manufacturing overhead applied < actual manufacturing overhead. If not a large difference between applied and actual. Must adjust: overallocation = decrease cogs, underallocation = increase cogs. Overallocation - decrease: cogs, finished goods (fg) inventory, work in progress (wip) inventory. Underallocation - increase: cogs, finished goods (fg) inventory, work in progress (wip) inventory. Bep: in units = tfc / ucm, in $ = tfc / cm ratio. Cm ratio = cm / tr = ucm / p = (tcm/v) / p = (p-uvc) / p.

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Related Questions

Downloadthe Applying Excel form and enter formulas in all cells thatcontain question marks.

For example, in cell B13 enter the formula "= B5".

After entering formulas in all of the cells that containedquestion marks, verify that the dollar amounts match the example inthe text.

Check your worksheet by changing the estimated total amount ofthe allocation base in the Data area to 50,000 machine-hours,keeping all of the other data the same as in the original example.If your worksheet is operating properly, the predetermined overheadrate should now be $6.00 per machine-hour. If you do not get thisanswer, find the errors in your worksheet and correct them.

Chapter 3: Applying Excel
Data
Allocation base Machine-hours
Estimated manufacturing overhead cost $300,000
Estimated total amount of the allocationbase 75,000 machine-hours
Actual manufacturing overhead cost $290,000
Actual total amount of the allocationbase 68,000 machine-hours
Enter a formula into each of the cellsmarked with a ? below
Computation of the predeterminedoverhead rate
Estimated manufacturing overhead cost ?
Estimated total amount of the allocationbase ? machine-hours
Predetermined overhead rate ? per machine-hour
Computation of underapplied oroverapplied manufacturing overhead
Actual manufacturing overhead cost ?
Manufacturing overhead cost applied toWork in Process during the year:
Predetermined overhead rate ? per machine-hour
Actual total amount of the allocationbase ? machine-hours
Manufacturing overhead applied ?
Underapplied (overapplied) manufacturingoverhead ?

1. ABC generally causes the least amount of cost distortionamong products because indirect costs are allocated to the productsbased on

types of activities used by theproduct.
the extent to which the activitiesare used.
both A and B.

none of the above.

2.

Chicago Steel's operating activities for the year are listedbelow:

Beginning inventory

$1,000,800
Ending inventory

$350,500
Purchases

$750,300
Sales revenue

$1,500,400
Operating expenses

$700,200

What is the cost of goods sold for the year?

$1,751,100
$1,400,600
$750,100

$50,100

3.

The following is selected financial data from Turtle BayManufacturing for the most recent year:

Ending raw materials inventory

$21,200
Ending work in process inventory

$44,900
Ending finished goods inventory

$53,200
Amount of underallocated manufacturing overhead

$5,100
Cost of goods sold for year

$85,500
Cost of raw materials purchased during year

$45,700
Cost of direct materials requisitioned during year

$44,300
Cost of indirect materials requisitioned during year

$7,200
Cost of goods completed during year

$120,200
Manufacturing overhead allocated

$60,400
Manufacturing overhead % of direct labor cost

135%

What is the beginning raw materials inventory?

$27,000
$51,500
$19,800

$5,800

4. Which of the following is not an activity inan ABC system that determines the cost of a manufacturedproduct?

Materials handling
Inspecting
Machining

Accounting

5. Which type of company utilizes managerialaccounting?

Manufacturers
Service
Retailers

All of the above

6. On a traditional income statement, all manufacturing-relatedcosts, whether fixed or variable, are listed

above the gross profit line.
below the operating incomeline.
above the sales line.

above the contribution margin line.

7. In a process costing system, direct labor and manufacturingoverhead are normally

incurred evenly throughout theprocess.
incurred at the end of theprocess.
incurred in full at the beginningof the process.

not recorded.

8. Manufacturing overhead costs for a productinclude

operating expenses.
indirect manufacturing costs.
direct material.

prime costs.

9.

Here are selected basic data for Wilson Company:

Estimated manufacturing overhead

$243,750

 Factory utilities

$30,900
Estimated labor hours

35,000

 Indirect labor

$22,600
Actual direct labor hours

36,000

 Sales commissions

$54,600
Estimated direct labor cost

$325,000

 Factory rent

$47,800
Actual direct labor cost

$320,000

 Factory property taxes

$28,700
Factory depreciation

$65,600

 Indirect materials

$33,300

If the company allocates overhead based on direct labor cost,what are the total actual manufacturing overhead costs?

$173,000
$283,500
$228,900

$260,900

10. ERP stands for

Enterprise Resource Planning.
Enclosed Resource Placement.
Edwin R. Perry, the man thatcreated the first system.
Entity Replacement Product.

Hi-Tek Manufacturing Inc. makes two types of industrial component parts—the B300 and the T500. An absorption costing income statement for the most recent period is shown below:

Hi-Tek Manufacturing Inc.
Income Statement
Sales $ 1,761,600
Cost of goods sold 1,249,034
Gross margin 512,566
Selling and administrative expenses 580,000
Net operating loss $ (67,434)

Hi-Tek produced and sold 60,300 units of B300 at a price of $21 per unit and 12,700 units of T500 at a price of $39 per unit. The company’s traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company’s two product lines is shown below:

B300 T500 Total
Direct materials $ 400,500 $ 162,200 $ 562,700
Direct labor $ 120,000 $ 42,700 162,700
Manufacturing overhead 523,634
Cost of goods sold $ 1,249,034

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek’s ABC implementation team concluded that $55,000 and $101,000 of the company’s advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company’s manufacturing overhead to four activities as shown below:

Manufacturing Activity
Activity Cost Pool (and Activity Measure) Overhead B300 T500 Total
Machining (machine-hours) $ 209,884 90,600 62,600 153,200
Setups (setup hours) 152,650 75 280 355
Product-sustaining (number of products) 100,600 1 1 2
Other (organization-sustaining costs) 60,500 NA NA NA
Total manufacturing overhead cost $ 523,634

1. Compute the product margins for the B300 and T500 under the company’s traditional costing system. (Do not round your overhead rate. Round your other intermediate and final answers to the nearest whole number.)

B300 T500 Total
Product margin

2. Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.)

B300 T500 Total
Product margin

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Do not round your overhead rate. Round your other intermediate calculations and final answers to the nearest whole number. Round your "Percentage" answer to 1 decimal place. (i.e. .1234 should be entered as 12.3))

B300 T500 Total
% of % of
Amount Total Amount Amount Total Amount Amount
Traditional Cost System
% %
% %
% %
Total cost assigned to products $ $
Total cost $
B300 T500 Total
% of % of
Amount Total Amount Amount Total Amount Amount
Activity-Based Costing System
Direct costs:
% %
% %
% %
Indirect costs:
% %
% %
% %
Total cost assigned to products $ $ $
Costs not assigned to products:
Total cost $