Midterm: Variable Cost

Topics: Variable cost, Costs, Management accounting Pages: 7 (1266 words) Published: September 30, 2010
Midterm Exam

Page 1

1.| Indirect labor is a part of: |
A| Prime cost. |
B| Conversion cost. |
C| Period cost. |
D| Nonmanufacturing cost. |

2.| Prime cost and conversion cost share what common element of total cost? | A| Direct materials. |
B| Direct labor. |
C| Variable overhead. |
D| Variable overhead.|

3.| On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured figure represents: | A| the amount of cost charged to Work in Process during the period. | B| the amount of cost transferred from Finished Goods to Cost of Goods Sold during the period. | C| the amount of cost placed into production during the period. | D| the amount of cost of goods completed during the current year whether they were started before or during the current year. |

4.| Which of the following would most likely be included as part of manufacturing overhead in the production of a wooden table?| A| The amount paid to the individual who stains the table| B| The commission paid to the salesperson who sold the table| C| The cost of the glue used in the table|

D| The cost of the wood used in the table|

Page 2

1.| Overapplied overhead means that: |
A)| the applied overhead cost was less than the actual overhead cost. | B)| the applied overhead cost was greater than the actual overhead cost. | C)| the estimated overhead cost was less than the actual overhead cost. | D)| the estimated overhead cost was less than the applied overhead cost. |

2.| Departmental overhead rates are generally preferred to plant-wide overhead rates when: | A)| the activities of the various departments in the plant are not homogeneous. | B)| the activities of the various departments in the plant are homogeneous. | C)| most of the overhead costs are fixed. |

D)| all departments in the plant are heavily automated. |

3.| Discretionary fixed costs: |
A)| cannot be changed since they are fixed. |
B)| have a long-term planning horizon, generally encompassing many years. | C)| are made up of facilities, equipment, and basic organization. | D)| responses b and c are both correct. |
E)| none of these. |

4.| An example of a committed fixed cost is: |
A)| management training seminars. |
B)| a long-term equipment lease. |
C)| research and development. |
D)| advertising. |

Page 3

The following data were taken from the cost records of the Beca Company for last year: | Depreciation, factory equipment| $30,000|
| Depreciation, office equipment| 7,000|
| Supplies, factory| 1,500|
| Maintenance, factory equipment| 20,000|
| Utilities, factory| 8,000|
| Sales commissions| 30,000|
| Indirect labor| 54,500|
| Rent, factory building| 70,000|
| Purchases of raw materials| 124,000|
| Direct labor cost| 80,000|
| Advertising expense| 90,000|
| | |
| Inventories:| Beginning| Ending|
| Raw materials| $ 9,000| $11,000|
| Work in process| 6,000| 21,000|
| Finished goods| 69,000| 24,000|
| | | | | |
Required: Prepare a schedule of cost of goods manufactured in the text box below.

Page 4

Banerjee Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.

Work in process, beginning:
Units in process200
Stage of completion with respect to materials60%
Stage of completion with respect to conversion20%
Costs in the beginning inventory:
Conversion $1,508

Units started into production during the month 18,000 Units completed and transferred out 17,700

Costs added to production during the...
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