Management Accounting and Finished Goods

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Week 3 : CVP Analysis and Variable Costing - Quiz

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1. (TCO 2) Bubba’s Crawfish Processing Company uses a traditional overhead allocation based on direct labor hours. For the current year overhead is estimated at $2,250,000 and direct labor hours are budgeted at 415,000 hours. Actual overhead was $2,200,000 and actual overhead hours worked were 422,000.

(a) Calculate the predetermined overhead rate.
(b) Calculate the overhead applied.
(c) Determine the amount of overhead that is over/underapplied. (Points : 6)

(a) Calculate the predetermined overhead rate.
2250000/415000 = 5.4217 per hour
(b) Calculate the overhead applied.
422000 x 5.4217 = 2287952
(c) Determine the amount of overhead that is over/underapplied. 2287952-2200000 = 87952 overapplied|
2. (TCO 2) Thibodeaux Limousine Corporation is trying to determine a predetermined manufacturing overhead. Estimated overhead for the upcoming year is $776,000. Budgeted machine hours are 105,000 hours, and budgeted labor hours are 17,500 hours at a rate of $10.00 per hour. Compute the predetermined overhead rate based on:

(a) Direct labor dollars
(b) Direct labor hours
(c) Machine hours (Points : 6)

Predetermined overhead rate based on machine hours = (776000-175000)/105000 = 5.72 per hour| 3. (TCO 1) List and briefly describe four of the five differences between managerial accounting and financial accounting. (Points : 4)

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4. (TCO 2)The following information is available for Sappy’s Surgical Shears for the fiscal year ending December 31, 20XX.

Beginning balance in Finished Goods $ 17,000
Ending balance in Finished Goods 15,200
Beginning balance in Work in Process 2,500
Ending balance in Work in Process 1,836
Selling expenses 123,000
General and administrative expenses 89,000
Direct material cost 54,500
Direct labor cost 66,000
Manufacturing overhead 21,400
Sales 385,000

Prepare a schedule of cost of goods manufactured. (Points : 4)

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5. (TCO 2) Match each of the following six terms with the phrase that most closely describes it. Each answer below may be used only once.

______ 1. activity-based costing
______ 2. cost of goods available for sale
______ 3. period costs
______ 4. process costing system
______ 5. just-in-time system
______ 6. work in process

(A) Costs assigned to the goods produced; also known as manufacturing costs (B) Materials costs that are not traced directly to products produced (C) System that seeks to minimize Raw Materials Inventory and Work in Process Inventory (D) Cost of items that are completed and transferred from Work in Process Inventory to Finished Goods Inventory (E) Costs that are identified with accounting periods rather than with goods produced (F) Actual overhead is greater than overhead that has been applied to products (G) Method of assigning overhead costs that uses multiple allocation bases (H) System that uses job-order sheets to collect costs for each individual job (I) Cost of all materials and parts that are directly traced to the items produced (J) Beginning balance in the Finished Goods Inventory plus cost of goods manufactured (K) Overhead applied to products is greater than the actual overhead costs incurred (L) Used by companies that produce large quantities of identical items (M) Cost of all manufacturing activities other than direct material and direct labor (N) Inventory account that contains the cost of goods that are only partially completed

(Points : 6)

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6. (TCO 2) Far Out Ceramics makes custom macaroni tile and applies job-order costing. The following information relates to the fiscal year ending December 31, 20XX.

Beginning balance in Raw Materials Inventory $ 12,500
Purchases of raw material 189,000
Ending balance in Raw Materials Inventory 14,300
Beginning balance in Work in Process 24,500
Ending balance in Work in Process 23,100
Direct...
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