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This 22 page Class Notes was uploaded by Reid Jones on Sunday October 25, 2015. The Class Notes belongs to 225 at University of Washington taught by Joseph B. Paperman in Fall 2015. Since its upload, it has received 69 views. For similar materials see Managerial Accounting in Accounting at University of Washington.
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Date Created: 10/25/15
Accounting 225 Quiz Section 1 Chapter 2 1 Class Exercises 1 Wollogong Group Ltd of New South Wales Australia acquired its factory building about 10 years ago For several years the company has rented out a small anneX attached to the rear of the building The company has received a rental income of 30000 per year on this space The renter39s lease will eXpire soon and rather than renewing the lease the company has decided to use the space itself to manufacture a new product Direct materials cost for the new product will be 80 per unit To have a place to store finished units of product the company will rent a small warehouse nearby The rental cost will be 500 per month In addition the company must rent equipment for use in producing the new product the rental cost will be 4000 per month Workers will be hired to manufacture the new product with direct labor cost amounting to 60 per unit The space in the anneX will continue to be depreciated on a straight line basis as in prior years This depreciation is 8000 per year Advertising costs for the new product will total 50000 per year A supervisor will be hired to oversee production her salary will be 1500 per month Electricity for operating machines will be 120 per unit Costs of shipping the new product to customers will be 9 per unit To provide funds to purchase materials meet payrolls and so forth the company will have to liquidate some temporary investments These investments are presently yielding a return of about 3000 per year Product Cost Period Cost Variab Fixe Direct Manufacturi selling Sun Ie d Materia Direct ng and Opportuni k Name ofthe Cost Cost Cost Is Labor Overhead admin ty Cost Cost Accounting 225 Quiz Section 1 Chapter 2 1 Class Exercises Accounting 225 Quiz Section 1 Chapter 2 1 Class Exercises 2 You are an intern at WiddiGnomerson Corporation Management has asked for your help in preparing some reports for June Raw materials beginning inventory balance was 20000 The company purchased 69000 of raw materials during the month the ending raw materials inventory balance was 32000 Direct labor cost incurred in June was 24000 which was 25 of conversion cost for the month Beginning work in process balance was 22000 the ending balance was 19000 Beginning and ending finished goods balances were 53000 and 51000 respectively The company incurred 20000 in selling eXpense and 35000 administrative eXpense during the month Use the space below for T Accounts a What was the prime cost for June b What was the Cost of Goods Manufactured for June c What was the Cost of Goods Sold for June Accounting 225 Quiz Section 1 Chapter 2 1 Class Exercises For each item in the table below indicate whether the cost behaVior appears to be fixed F variable V or mixed M Total Cost to Total Cost to Cost Item Produce 5000 Produce 3000 F V or M units units Cost A 13500 13500 Cost B 22500 15500 Cost C 62500 37500 For each item in the table below indicate whether the cost is direct D or indirect I with respect to the cost object listed next to it Cost Item Cost Object D or I Salary of the president of a home A particular home being built construction company Accounting 225 Quiz Section 1 Chapter 2 1 Class Exercises Cost of lubrication oil used at the auto The auto repair shop repair shop of an automobile dealer The total tip given to a waiter by a group A particular member of the group of 10 people dining together Slonaker Inc has provided the following data concerning its maintenance costs i RquotlizliilllllC39 ULll lRquotlillllLCllizlllLIC LUE39BL April 5 73999 3 03 7399 hie 5 7quot 82 3 02 89 Ttme 5764 3023 July 5761 830233 August 5 7quot 391 7quot 3 I I 7quot 8 September 5 73995 3 0 6E Cleteber 5 809 3 03 8 8 Nevember 5 8 I 391 3 0 3 7quot 8 December 5 739 87 3031 8 Management believes that maintenance cost is a mixed cost that depends on machine hours Estimate the variable cost per machinehour and the xed cost per month using the high low method Show your work Accounting 225 Quiz Section 2 Chapter 2 2 Class Exercises 1 Pittman Corporation a merchandising company reported the following results for September moi o tomato oi ouu Cost goods sold all 39srariable assessor Total sFariable selling expense 1 Eases Total fixed selling expense 52UU Total sFariable administrative expense 1 1200 Total fixed adininis39tra39tiRFe expense 1447UU a Prepare a traditional format income statement for September b Prepare a contribution format income statement for September Accounting 225 Quiz Section 2 Chapter 2 2 Class Exercises 2 Whitman Corporation a manufacturing company reported sales of 7400 units for May at a selling price of 677 per unit The cost of goods sold included 441 per unit and 500000 of fixed manufacturing overhead The variable selling expense was 54 per unit The total fixed selling expense was 155600 The variable administrative expense was 24 per unit and the total fixed administrative expense was 370400 Assume beginning inventory was zero and units produced were equal to units sold Also assume that actual MOH was equal to applied MOH a Prepare a contribution format income statement for May b Prepare a traditional format income statement for May Accounting 225 Quiz Section 4 Chapter 3 Class Exercises 1 Loraine Company applies manufacturing overhead to jobs using a predetermined overhead rate of 70 of direct labor cost During August the following transactions were recorded by the company Purchased during the month 30000 Used in production 1000 Labor Direct labor hours worked during the month H 3000 Direct labor cost incurred H 2 7000 Indirect labor cost incurred H 6000 Manufacturing OVGI l l39S d costs incurred total H 19000 Inventories Ratv materials all direct August 31 H 8000 Wor 6 in process August 1 H 7000 Wor 6 in process August 31 l H 15000 a Manufacturing Overhead allocated to WIP in August was b The Cost of Goods Manufactured for August was Accounting 225 Quiz Section 4 Chapter 3 Class Exercises Accounting 225 Quiz Section 4 Chapter 3 Class Exercises 2 Lund Company applies manufacturing overhead to jobs using a predetermined overhead rate of 95 of direct labor cost During March the following transactions were recorded by the company Raw Materials Purchased 40000 Used 75 Direct Materials 36000 La bo r DL Hours Worked 2500 Direct Labor Cost 20000 Indirect Labor Cost 5500 Manufacturing Overhead Total MOH Incurred 17000 Inventories Raw Materials 331 7500 WIP 31 10500 WIP 331 14000 gt Contains 5000 of DL Cost Finished Goods 3 1 11000 Finished Goods 331 5000 a Complete cost ows for March using T Accounts for RM WIP PG and MOH Accounting 225 Quiz Section 4 Chapter 3 Class Exercises b The Cost of Goods Manufactured for March was c The Cost of Goods Sold for March was d How much MOH incurred was not indirect materials e The amount of Direct Materials cost in the March 31 WIP balance was 3 Dasilva Company had only one job in process on May 1 The job had been charged with 1400 of direct materials 6192 of direct labor and 5712 of manufacturing overhead cost The company assigns overhead cost to jobs using the predetermined overhead rate of 1190 per direct labor hour During May the following activity was recorded Accounting 225 Quiz Section 4 Chapter 3 Class Exercises Beginning balance 8500 Purchased duringr the month 48000 Us ed in production H 5 1 800 Labor Direct laborhours wmlred duringr the month L900 Direct labor cost incurred 245 10 Actual 111annfacturing 0t l ll d co ata incurred 21000 lmrentories Raw materials 30 H Raw materials consist solely of items that are classified as direct materials a The balance in the raw materials inventory account on May 30 was b Manufacturing Overhead allocated to WIP in May was Accounting 225 Quiz Section 4 Chapter 3 Class Exercises c The cost of goods manufactured for May was 4 Babb Company is a manufacturing firm that uses job order costing The company39s inventory balances were as follows at the beginning and end of the year Raw materials 11000 15000 Work in process 32000 14000 Ennlinwl quotnan T1 0 T1 ll The company applies overhead to jobs using a predetermined overhead rate based on machine hours At the beginning of the year the company estimated that it would work 17000 machine hours and incur 272000 in manufacturing overhead cost The following transactions were recorded for the year Raw materials were purchased 416000 Raw materials were requisitioned for use in production 412000 376000 direct and 36000 indirect The following employee costs were incurred direct labor 330000 indirect labor 69000 and administrative salaries 157000 Selling costs 113000 Factory utility costs 29000 Depreciation for the year was 121000 of which 114000 is related to factory operations and 7000 is related to selling general and administrative activities Manufacturing overhead was applied to jobs The actual level of activity for the year was 15000 machine hours Sales for the year totaled 1282000 Accounting 225 Quiz Section 4 Chapter 3 Class Exercises Assume all SGampA eXpenses are fixed Reg uired a Complete a set of T accounts and record all applicable transactions b Correct for any overunder applied MOH using the direct write off method c Prepare an income statement using the traditional Gross Margin format Accounting 225 Quiz Section 4 Chapter 3 Class Exercises Accounting 225 Quiz Section 4 Chapter 3 Class Exercises 5 Alvardo Inc has provided the following data for the month of November There were no beginning inventories consequently the direct materials direct labor and manufacturing overhead applied listed below are all for the current month Process Goods Goods Sold Total Direct materials 8 3500 11200 8 51800 8 66500 Direct labor 3260 14400 66600 84260 Manufacturing overhead applied 3840 7680 36480 48000 Manufacturing overhead for the month was underapplied by 6000 The company allocates any underapplied or overapplied manufacturing overhead among work in process finished goods and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts a Provide the journal entry that would record the allocation of underapplied or overapplied among work in process finished goods and cost of goods sold b Determine the cost of work in process finished goods and cost of goods sold AFTER allocation of the underapplied or overapplied manufacturing overhead for the period Accounting 225 Quiz Section 4 Chapter 3 Class Exercises 10 Accounting 225 Quiz Section 4 Chapter 3 Class Exercises 6 Binegar Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct laborhours DLHs The company has two products R586 and R090 about which it has provided the following data Direct materials per unit 1590 35240 Direct labor per unit 130 2730 Direct laborlhplirs per unit 0l0 210 The company39s estimated total manufacturing overhead for the year is 1617600 and the company39s estimated total direct laborhours for the year is 24000 The company is considering using a form of activitybased costing to determine its unit product costs for external reports Data for this proposed activitybased costing system appear below 0000000500000 004539TIIIZIIIII 0 0007000 Preparing batches batctres 252000 Eroduct support product variati ons A A 000600 Rs0 quotquot00390390quotquotquot Tp tal DILIls 3000 21000 24000 528 1 l52 1680 The manufacturing overhead that would be applied to a unit of product R586 under the company39s traditional costing system is closest to The manufacturing overhead that would be applied to a unit of product R090 under the activitybased costing system is closest to 11 Accounting 225 Quiz Section 5 Chapter 5 Class Exercises 1 Churchill Corporation produces and sells a single product Data concerning that product appear below Fixed EXpenses 603000 Sales Price 200 Variable Mfg Cost 95 Var Selling Cost 15 a What is the breakeven point in units b What is the breakeven in sales dollars c Assume the company39s monthly target profit is 500000 Determine the unit sales to attain that target profit d Assume current monthly sales are 10000 units What is the Margin of Safety in i Units ii Sales dollars iii Percentage Accounting 225 Quiz Section 5 Chapter 5 Class Exercises 2 Parkins Company produces and sells a single product The company39s income statement for the most recent month is given below mum WWW mm m m 1 WWWquot Less manufacturing costs Direct 483000 Direct labor 609000 quotsial39iable factory 123000 Fixed factory 30000 150000 Gross margin 909000 Less selling and other expenses quotsiariable selling and other 24000 Fixed selling and other 42000 66000 ETA A xau12 2 a nxx A 1quot H l There are no beginning or ending inventories a Compute the company39s monthly break even point in units of product b What would the company39s monthly net operating income be if sales increased by 25 and there is no change in total fixed expenses Accounting 225 Quiz Section 5 Chapter 5 Class Exercises c What dollar sales must the company achieve in order to earn a net operating income of 50000 per month d The company has decided to automate a portion of its operations The change will reduce direct labor costs per unit by 40 percent but it will double the costs for fixed factory overhead Compute the new break even point in units Accounting 225 Quiz Section 5 Chapter 5 Class Exercises 3 A manufacturer of tiling grout has supplied the following data Sales revnue Variable manufacturing ex pense Figetl malnuiacturirlg enema variable selling and administrative expense Fixed selling anti aministrative expense The company39s breakeven in unit sales is The company39s contribution margin ratio is The company39s degree of operating leverage is statute i EEEE l 3E 2 Bil