1) Which of the following is an example of direct labor cost in a factory?
a. Wages of assembly line personnel
b. Salary of vice president of production
c. Wages of factory security guard
d. Salary of production manager
2) Which of the following is true of product costs?
a. They are expensed in the period they are paid.
b. For external reporting, GAAP requires that they be expensed before the products are sold.
c. They are first recorded in an inventory account.
d. For merchandising companies, product costs do not include freight costs.
3) Which of the following is true of absorption costing?
a. the variable manufacturing costs are considered period costs
b. the fixed manufacturing costs are considered period costs
c. both variable and fixed manufacturing costs are considered product costs
d. both variable and fixed manufacturing costs are considered period costs
4) Which of the following would use a process costing system rather than a job order costing system?
a. a health-care provider
b. a music production studio
c. a paint manufacturer
d. a home remodeling contractor
5) The procurement manager was able to bring down the cost of direct materials by purchasing materials of a slightly lower grade quality than the company had used previously. The lower grade of materials, however, meant a higher defect rate on the assembly line, and higher wastage of materials during production, which in turn lowered operating income. This situation would have led to a(n):
a. favorable direct materials cost variance.
b. unfavorable direct labor cost variance.
c. unfavorable direct labor efficiency variance.
d. favorable direct materials efficiency variance.
6) Which of the following is an example of a labor cost standard?
a. $40 per direct labor hour
b. 50 square feet per unit
c. $0.95 per square foot
d. 0.5 direct labor hours per unit
1) Amoeba Manufacturing Company provided the following information for the year 2015:
Purchases-Raw Materials $90,000
Plant Utilities & Insurance 67,500
Indirect Materials 11,750
Indirect Labor 4,750
Direct Materials Used in Production 96,000
Direct Labor 117,500
Depreciation on Factory Plant & Equipment 6,000
Cost of Goods Manufactured 290,850
Cost of Goods Sold 304,550
The inventory account balances as of January 1st 2015 are given below.
Raw Materials Inventory $42,000
Work-in-Process Inventory 12,000
Finished Goods Inventory 49,500
What is the ending balance in the finished goods inventory?
2) The following information was obtained from Fizz Company:
Advertising Costs $9,900
Indirect Labor 11,000
CEO's Salary 49,000
Direct Labor 41,000
Indirect Materials 7,900
Direct Materials Used 61,000
Factory Utilities 700
Factory Janitorial Costs 2,300
Manufacturing Equipment Depreciation 2,100
Delivery Vehicle Depreciation 1,100
Administrative Wages and Salaries 21,000
How much were Fizz's period costs?
3) Samson Inc. reported the following information for the year 2015:
Service Revenue $40,000
Operating Expenses $23,625
Net Income $16,375
Number of Services Provided for the Year 10,500
How much was the unit cost per service?
4) Muses Manufacturing produces plastic toys and uses process costing. There are three processing departments-Assembling, Finishing, and Packaging. On January 1, 2012, the Finishing Department had 2,000 units of partially processed product in production. During January, 32,000 units were transferred in from the Assembling Department and 29,000 units were completed and transferred out. At the end of the month, there were 5,000 units of partially processed products remaining in the Finishing Department. See additional details below.
Finishing Department, ending balance at January 31, 2012
Percentage completion for materials cost: 90%
Percentage completion for conversion cost: 75%
For the Finishing Department, what was the number of equivalent units for the month of January, with respect to direct materials?
5) Antique Works is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen, and collectors. The cost data are as follows:
Price per unit $720
Variable costs per unit 470
Fixed costs per month 8,000
If Antique expects to sell 40 units per month, what is his margin of safety expressed in units per month?
6) Jame Company sells glass vases at a wholesale price of $3 per unit. The variable cost of manufacture is $1.75 per unit. The fixed costs are $7,500 per month. Jame sold 5,500 units during this month. Calculate Jame's operating income (loss) for this month.
7) Wood Designs Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $4.00 per square foot from the supplier. Delivery costs are $0.25 per board foot. Carpenters' wages are $25.00 per hour. Payroll costs are $3.60 per hour and benefits are $5.00 per hour. How much is the direct materials cost standard (per square foot)