Chapter 1
The following costs were incurred in June:
What were the conversion costs during the month?
57,300
Jones Corporation uses a predetermined overhead rate based on direct labor-hours. The estimated costs for the next year are:
Jones estimates 25,000 direct labor-hours will be worked during the year. What is the predetermined overhead rate per direct labor-hour?
$2.52
Which of the following demonstrates the leverage effect on net operating income due to fixed costs?
a) A 20% increase in sales resulting in a 25% increase in net operating income.
b) A 15% increase in sales resulting in a 10% decrease in fixed costs.
c) A 25% increase in sales resulting in a 25% increase in net operating income.
d) A 30% increase in sales resulting in a 10% decrease in net operating income.
a) A 20% increase in sales resulting in a 25% increase in net operating income. Fixed costs remain constant, causing a disproportionate increase in net operating income.
Brooks Company has the following balances for the current month:
What are Brooks' prime costs?
$63,000
Longobardi Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the labor-hours for the upcoming year at 40,200 labor-hours. The estimated variable manufacturing overhead was $6.50 per labor-hour, and the estimated total fixed manufacturing overhead was $1,200,000. The actual labor-hours for the year turned out to be 37,500 labor-hours. What was the predetermined overhead rate for the recently completed year?
$36.35 per labor-hour
A company reported the following last year:
What was the company’s break-even point in sales dollars?
$920,000
The following data pertains to activity and costs for two months:
June July
Activity level in units 12,000 | 13,000
Direct materials $18,000 | $ ?
Fixed factory rent. 25,000 | ?
Other production costs 22,000 | ?
Total cost $ 65,000 | $ 69,500
Assuming that these activity levels are within the relevant range, what were the other production costs for July?
$25,000
Pyles Auto Repairs uses job-order costing and applies overhead based on direct labor-hours. The estimates for the year are:
For Mr. Smith’s job, the data is:
If the company uses a markup of 30% of the total job cost, what is the selling price for Mr. Smith’s job?
$1,242.80
A company sells a product for $120 per unit, with variable costs of $50 per unit. Fixed costs total $280,000 per year. If the company aims for a target profit of $70,000, how many units must it sell?
5,000
Addington Corporation's relevant range of activity is 3,000 units to 7,000 units. When it
produces and sells 4,500 units, its average costs per unit are as follows:
Direct materials $ 7.25
Direct labor $ 4.20
Variable manufacturing overhead $ 1.40
Fixed manufacturing overhead $ 3.50
Fixed selling expense $ 0.60
Fixed administrative expense $ 0.50
Sales commissions $ 1.60
Variable administrative expense $ 0.45
If 6,000 units are produced, the average fixed manufacturing cost per unit produced is
closest to
$2.63
Brooks Bikes uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. The estimates are:
For Job XYZ, the data is:
The bike is sold for $4,200. What is the gross margin?
$650
A company’s break-even sales are $480,000, and the variable expense ratio is 40%. The company reports a margin of safety percentage of 30%. What is the actual net operating income?
$123,428.57
The following data have been collected for four different cost items.
Cost Item Cost at 100 units | Cost at 140 units
W $ 8,000 | $ 10,560
X $ 5,000 | $ 5,000
Y $ 6,500 | $ 9,100
Z $ 6,700 | $ 8,580
What is the classification of the cost items by cost driver for each?
Mahon Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department’s predetermined overhead rate is
based on machine-hours and the Customizing Department’s predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
Casting | Customizing
Machine-hours 20,000 | 15,000
Direct labor-hours 7,000 | 8,000
Total fixed manufacturing overhead cost
$100,000| $80,000
Variable manufacturing overhead per machine-hour $4.00
Variable manufacturing overhead per direct labor-hour $6.50
During the current month the company started and finished Job T138. The following data
were recorded for this job:
Job T138: Casting | Customizing
Machine -hours 80 | 40
Direct labor-hours 10 | 85
The amount of overhead applied in the Customizing Department to Job T138 is closest to:
1,402.50
Mcdale Inc. produces and sells two products. Data concerning those products for the most recent month appear below:
Product I49V. Product Z50U
Sales. $40,000 | $45,000
Variable expenses. $20,000 | $30,600
The fixed expenses of the entire company were $50,000
The break-even point for the entire company is closest to:
$123,529