Ac505 Quiz 1

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 1.| Question :| (TCO F) For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system?|

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 | Student Answer:| | A steel factory that processes iron ore into steel bars |  | | | A factory that processes sugar and other ingredients into black licorice |  | | | A costume maker that makes specialty costumes for figure skaters |  | | | All of these |

 | Instructor Explanation:| Chapter 3|
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 | Points Received:| 5 of 5 |
 | Comments:| |
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 2.| Question :| (TCO F) Process costing would be appropriate for each of the following except:|
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 | Student Answer:| | custom furniture manufacturing. |  | | | oil refining. |
 | | | grain milling. |
 | | | newsprint production. |
 | Instructor Explanation:| Chapter 4|
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 | Points Received:| 5 of 5 |
 | Comments:| |
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 3.| Question :| (TCO F) Lucas Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in the Forming Department, which is the first of two stages in its production process. Information concerning operations in the Forming Department in October follows:    | Units| Material Cost|

Work in process on October 1| 6,000| $3,000|
Units started in October| 50,000| $25,560|
Units completed and transferred to next Department during October| 44,000|  |

 
What was the materials cost of work in process at on October 31?|
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 | Student Answer:| | $3,060 |
 | | | $5,520 |
 | | | $6,000 |
 | | | $6,120 |
 | Instructor Explanation:| To solve for units transferred:   + Work in process, beginning| 6,000|
+ Units started into production during the month| 50,000| - Units completed and transferred out during the month| 44,000| = Work in process, ending| 12,000|

 
Equivalent Units of Production:
   | Materials|
Transferred to next department| 44,000|
Ending work in process|  |
     (conversion: 17,000 units x 10% complete)| 12,000| Equivalent units of production| 56,000|

 
Cost per Equivalent Unit:
   | Materials|
Cost of beginning work in process| $3,000|
Cost added during the period| 25,560|
Total cost (a)| 28,560|
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Equivalent units of production (b)| 56,000|
Cost per equivalent unit (a) / (b)| $0.51|

 
Ending Work in Process Inventory:
   | Materials|
Equivalent units of production (materials 12,000 units  - 100% complete)| 12,000| Cost per equivalent unit| $0.51|
Ending work in proces inventory| $6.120|
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 | Points Received:| 5 of 5 |
 | Comments:| |
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 4.| Question :| (TCO F) The journal entry to record the incurrence of indirect labor costs is:|
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 | Student Answer:| | a Wages Payable| XXX| |
| Manufacturing Overhead| | XXX|
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 | | | b Work In Process| XXX| |
| Wages Payable| | XXX|
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 | | | c Manufacturing Overhead| XXX| |
| Wages Payable| | XXX|
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 | | | d Wages Payable| XXX| |
| Work in Process| | XXX|
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 | Instructor Explanation:| Chapter  3|
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 | Points Received:| 5 of 5 |
 | Comments:| |
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 5.| Question :| (TCO F) During October, Crusan Corporation incurred $62,000 of direct labor costs and $4,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:|

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 | Student Answer:| | debit to Work in Process of $66,000. |  | | | credit to Work in Process of $66,000. |
 | | | debit to Work in Process of $62,000. |
 | | | credit to Work in Process of $62,000. |
 | Instructor Explanation:| Chapter 3
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 | Points Received:| 5 of 5 |
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