Costing Methods
Which of the following would use process costing?
Custom cabinets
Auto mechanic
Golf Balls
Commissioned Art
Golf Balls
Describe the flow of goods from materials purchase to COGS. What accounts will the direct materials move through?
Materials Inventory -> WIP -> Finished Goods ->COGS
What is the formula for the predetermined manufacturing overhead rate?
Estimated MOH / Estimated Cost Driver
If actual MOH is greater than applied MOH, overhead is _____ applied.
Under-applied
What is the fundamental accounting equation (Balance Sheet)?
Assets = Liabilities + Stockholder's Equity
Market Price of headphones is $95; company A expects to make a 10% profit. What is the target cost?
$85.50
What is the amount of DM Used?
ABC Co, had materials inventory of $40,000 as of January 1st, throughout the year they purchased $190,000 of materials. The balance at December 31st was $64,000.
$166,000 = $40,000 + $190,000 - $64,000
What are the 3 major source documents in Job Costing and what does each do?
Materials Req. Form - keeps track of DIRECT materials used for each job
Direct Labor Time Ticket - keeps track of DIRECT labor used for each job
Job Cost Sheet - Summarizes all manufacturing costs, DM + DL + MOH applied
Estimated MOH = $140,000
Actual MOH = $161,000
Estimated DL Hours = 70,000
Actual DL Hours = 74,000
Job A incurs 140 direct labor hours, how much MOH should be applied to Job A?
$280
$140,000 / 70,000 = $2 per DL Hour
$2 x 140 DL hours = $280
A group of lions is known as what?
A pride
What makes up total manufacturing costs?
Direct Materials
Direct Labor
Applied Manufacturing Overhead
What is the amount of COGM?
BWIP $62,000
BFG $134,000
EWIP $70,000
EFG $117,000
Man Costs $152,000
COGS $174,000
$144,000
BWIP + MAN COSTS - EWIP
What is the predetermined MOH rate using DL Cost?
Estimated DL Hours: 12,000
Estimated MOH = $140,000
Actual MOH = $147,000
Estimated DL Cost = $280,000
Actual DL Cost = $295,000
50%
$140,000 / $280,000
What is the total amount of MOH?
Factory Rent $60,000
Office Rent $12,000
Factory Insurance $5,500
Indirect Materials $2,000
CEO Salary $120,000
Mach. Maint. $6,500
$74,000
$60,000 + $5,500 + $2,000 + $6,500
Who founded Microsoft?
Bill Gates
A company that makes various products with different impacts on resources, should use what costing method?
Activity Based Costing
Assuming both beginning and ending WIP were zero, what was the cost of jobs completed and transferred (COGM) to finished goods inventory:
DM- $130K; DL $211K
Actual MOH- $270K; Applied MOH- $229K
$570,000
Laguna company has budgeted DM of $106,760, DL of $36,625 and DL hours of 910. Budgeted overhead costs were $8,400,000 and budgeted DL hours were 168,000. What is the predetermined overhead rate using an allocation base of DL hours?
$50 per DL Hour
Describe the timing of manufacturing costs in regards to the financial statement they'll be found on.
Inventory costs on the balance sheet until sold, then COGS (expense) on the income statement
Name the smallest state in the US
Rhode Island
Number of Setups: Standard-18; Deluxe-32
Number of Components: Standard-9; Deluxe-14
OH Costs: Setup-$75,000; Components-$87,400
# of setups and # of components are activity cost drivers. Assuming ABC what is the amount of overhead assigned to the standard model?
$61,200
$75,000 / (18 + 32) = $1,500 per setup
$87,400 / (9 + 14) = $3,800 per component
($1,500 x 18) + ($3,800 x 9) = $61,200
Beginning Finished Goods Inventory $160,000
Cost of Goods Manufactured $184,000
Cost of Goods Sold $214,000
Beginning WIP $143,000
Ending WIP $117,000
What is the Ending Finished Goods Inventory?
$130,000
$160,000 + $184,000 - $214,000
BGT DL Cost: Assembly-$200K; Machining-$165K
BGT MOH: Assembly-$300K; Machining-$180K
BGT Mach Hours: Assembly-51K; Machining: 30K
ACT DL Cost: Assembly-$11K; Machining-$14K
ACT Mach Hours: Assembly-5K; Machining: 3K
Compute the predetermined OH rates for Assembly (cost allocation of DL Cost) and Machining (cost allocation of machine hours) and what is the total overhead applied to the assembly department?
Assembly: $300K/$200K = 150%
Machining: $180K/$165K = $6 per hour
Total OH for Assembly= (150% * 11,000)+(6*5,000)=$46,500
Actual DM = $45,000
Actual DL = $80,000
Applied MOH = $74,000
Actual MOH = $82,000
COGS = $184,000
Profit = $41,000
What are the correct COGS and Profit numbers after "fixing" MOH?
COGS = $192,000
Profit = $33,000
What accounting regulation is a result of Enron and other early 2000's accounting scandals?
Sarbanes Oxley (SOX)