Managerial Accounting Assignment

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Managerial Accounting Assignment-2
Prof. Murtaza J. Bhatti

Please submit a separate answer sheet, with the answers carefully numbered as mentioned here.

1. At the beginning of the year, manufacturing overhead for the year was estimated to be $670,530. At the end of the year, actual direct labor-hours for the year were 29,400 hours, the actual manufacturing overhead for the year was $665,530, and manufacturing overhead for the year was under-applied by $27,550. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been:

2. Carver Company produces a product which sells for $40. Variable manufacturing costs are $18 per unit. Fixed manufacturing costs are $5 per unit based on the current level of activity, and fixed selling and administrative costs are $4 per unit. A selling commission of 15% of the selling price is paid on each unit sold. The contribution margin per unit is:

3. The Factory Overhead account in a job costing system is credited for the: a) Excess of applied overhead over actual overhead.
b) Actual overhead.
c) Applied overhead.
d) Indirect materials and indirect labor.

4. Himalyan Corp. sells a product for $10 per unit. The variable expenses are $6 per unit, and the fixed expenses total $35,000 per period. By how much will net operating income change if sales are expected to increase by $40,000?

5. If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit, the break-even point in units will: |
6. The Work in Process inventory account of a manufacturing company shows a balance of $18,000 at the end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of $6,000 and $3,000 for materials, and charges of $4,000 and $2,000 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:

7. Under normal circumstances the Work in Process account used in a job costing system:  a) Will include charges for direct labor, direct materials, and applied overhead. b) Will include only charges for direct materials and applied overhead.  The labor is charged to expense as incurred. c) Will include charges for direct labor, direct materials, and actual overhead. d) Will include only charges for direct labor and direct materials.

8. Sargent Company applies overhead cost to jobs on the basis of 80 percent of direct labor cost. If Job 210 shows $10,000 of manufacturing overhead cost applied, how much was the direct labor cost on the job?

9. The theoretically correct method of allocating under- or overapplied overhead is to: a) Allocate the amount to cost of goods sold. b) Allocate the amount to finished goods. c) Allocate the amount to work in process and finished goods. d) Allocate the amount among work in process, finished goods, and cost of goods sold.10. Lily Company has the following estimated costs for next year: Direct materials: $ 30,000

Direct labor: 110,000
Indirect materials: 10,000
Rent on factory equipment: 32,000
Salary of production supervisor: 70,000
Advertising expense: 22,000
Sales commissions: 150,000
The company estimates that 10,000 direct labor and 16,000 machine hours will be worked during the year. If overhead is applied on the basis of machine hours, the predetermined overhead rate per hour will be: | | | |

11. With the job order cost system a credit balance in the Factory Overhead account at the end of an accounting period would indicate: a) That an error in the job cost system has occurred.
b) That the company lost money during the period.
c) The presence of underapplied overhead.
d) The presence of overapplied overhead.

12. Braam Corporation uses direct labor-hours in...
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