Ch2, Job-Order Costing Calculating Unit Product Costs Part 2

[QUESTION] 37. 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 46,000 labor-hours. The estimated variable manufacturing overhead was $6.25 per labor-hour and the estimated total fixed manufacturing overhead was $1,026,260. The actual labor-hours for the year turned out to be 41,200 labor-hours. The predetermined overhead rate for the recently completed year was closest to: A) $28.56 per labor-hour B) $22.31 per labor-hour C) $6.25 per labor-hour D) $31.16 per labor-hour Answer: A Difficulty: 2 Medium Learning Objective: 02-01 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: Estimated total manufacturing overhead = $1,026,260 + ($6.25 per labor-hour × 46,000 labor-hours) = $1,313,760 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $1,313,760 ÷ 46,000 labor-hours = $28.56 per labor-hour [QUESTION] 38. Valvano Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $440,000, variable manufacturing overhead of $2.20 per machine-hour, and 50,000 machine-hours. The estimated total manufacturing overhead is closest to: A) $440,000 B) $110,000 C) $440,002 D) $550,000 Answer: D Difficulty: 1 Easy Learning Objective: 02-01 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $440,000 + ($2.20 per machine-hour × 50,000 machine-hours) = $440,000 + $110,000 = $550,000 [QUESTION] 39. Brothern Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below: Estimates made at the beginning of the year: Estimated machine-hours........................................ Estimated variable manufacturing overhead............ Estimated total fixed manufacturing overhead......... Actual machine-hours for the year............................... 39,000 $6.76 $794,430 42,700 per machine-hour The predetermined overhead rate for the recently completed year was closest to: A) $25.37 per machine-hour B) $27.13 per machine-hour C) $6.76 per machine-hour D) $20.37 per machine-hour Answer: B Difficulty: 2 Medium Learning Objective: 02-01 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: Estimated total manufacturing overhead =$794,430 + ($6.76 per machine-hour × 39,000 machine-hours) = $1,058,070 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $1,058,070 ÷ 39,000 machine-hours = $27.13 per machine-hour [QUESTION] 40. Steele Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. Steele Corporation has provided the following estimated costs for next year: Direct materials................................. Direct labor....................................... Sales commissions........................... Salary of production supervisor........ Indirect materials.............................. Advertising expense......................... Rent on factory equipment................ $20,000 $60,000 $80,000 $40,000 $8,000 $16,000 $20,000 Steele estimates that 10,000 direct labor-hours and 16,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be: A) $4.25 B) $8.00 C) $9.00 D) $10.25 Answer: A Difficulty: 2 Medium Learning Objective: 02-01 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: Salary of production supervisor........ $40,000 Indirect materials.............................. 8,000 Rent on factory equipment................ 20,000 Manufacturing overhead........................ $68,000 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base Predetermined overhead rate = $68,000 ÷ 16,000 machine-hours = $4.25 per machine-hour [QUESTION] 41. Helland Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total direct labor-hours........................................................... Total fixed manufacturing overhead cost................................ Variable manufacturing overhead per direct labor-hour.......... 30,000 $189,000 $2.50 The predetermined overhead rate is closest to: A) $2.50 per direct labor-hour B) $11.30 per direct labor-hour C) $6.30 per direct labor-hour D) $8.80 per direct labor-hour Answer: D Difficulty: 1 Easy Learning Objective: 02-01 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $189,000 + ($2.50 per direct labor-hour × 30,000 direct labor-hours) = $189,000 + $75,000 = $264,000 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $264,000 ÷ 30,000 direct labor-hours = $8.80 per direct labor-hour [QUESTION] 42. Laflame Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours............................................................... Total fixed manufacturing overhead cost................................ Variable manufacturing overhead per machine-hour.............. The estimated total manufacturing overhead is closest to: A) $273,000 B) $630,000 C) $357,004 D) $357,000 Answer: B Difficulty: 1 Easy Learning Objective: 02-01 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: 70,000 $357,000 $3.90 Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $357,000 + ($3.90 per machine-hour × 70,000 machine-hours) = $357,000 + $273,000 = $630,000 [QUESTION] 43. Almaraz Corporation has two manufacturing departments--Forming and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Estimated total machine-hours (MHs)................................. Estimated total fixed manufacturing overhead cost............. Estimated variable manufacturing overhead cost per MH. . . Forming 7,000 $40,600 $1.30 Finishing Total 3,000 10,000 $8,100 $48,700 $2.80 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. That predetermined manufacturing overhead rate is closest to: A) $6.62 B) $4.87 C) $4.10 D) $7.10 Answer: A Difficulty: 2 Medium Learning Objective: 02-01 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: The first step is to calculate the estimated total overhead costs in the two departments. Forming Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($1.30 per MH × 7,000 MHs)...... Estimated total manufacturing overhead cost................................................... $40,600 9,100 $49,700 Finishing Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($2.80 per MH × 3,000 MHs)...... Estimated total manufacturing overhead cost................................................... $8,100 8,400 $16,500 The second step is to combine the estimated manufacturing overhead costs in the two departments ($49,700 + $16,500 = $66,200) to calculate the plantwide predetermined overhead rate as follow: Estimated total manufacturing overhead cost ....... Estimated total machine hours............................... Predetermined overhead rate................................ $66,200 10,000 MHs $6.62 per MH [QUESTION] 44. Bernson Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $492,000 and 30,000 machine-hours for the period. The company incurred actual total fixed manufacturing overhead of $517,000 and 28,300 total machine-hours during the period. The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to: A) $464,120 B) $492,000 C) $487,703 D) $25,000 Answer: A Difficulty: 1 Easy Learning Objective: 02-01 Learning Objective: 02-02 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: Estimated total fixed manufacturing overhead (a)... Estimated activity level (b)...................................... Predetermined overhead rate (a) ÷ (b).................... Actual activity level.................................................. Manufacturing overhead applied............................. $492,000 30,000 $16.40 28,300 $464,120 [QUESTION] 45. Beat Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours............................................................... Total fixed manufacturing overhead cost................................ Variable manufacturing overhead per machine-hour.............. 40,000 $344,000 $3.90 Recently, Job M759 was completed. It required 60 machine-hours. The amount of overhead applied to Job M759 is closest to: A) $750 B) $516 C) $984 D) $234 Answer: A Difficulty: 1 Easy Learning Objective: 02-01 Learning Objective: 02-02 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $344,000 + ($3.90 per machine-hour × 40,000 machine-hours) = $344,000 + $156,000 = $500,000 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $500,000 ÷ 40,000 machine-hours = $12.50 per machine-hour Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $12.50 per machine-hour × 60 machine-hours = $750 [QUESTION] 46. Mundorf Corporation has two manufacturing departments--Forming and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Estimated total machine-hours (MHs)................................. Estimated total fixed manufacturing overhead cost............. Estimated variable manufacturing overhead cost per MH. . . Forming 9,000 $52,200 $2.00 Assembly Total 1,000 10,000 $2,400 $54,600 $2.10 During the most recent month, the company started and completed two jobs--Job B and Job H. There were no beginning inventories. Data concerning those two jobs follow: Forming machine-hours........... Assembly machine-hours......... Job B Job H 6,100 2,900 400 600 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The amount of manufacturing overhead applied to Job B is closest to: A) $48,555 B) $35,490 C) $2,988 D) $45,567 Answer: A Difficulty: 2 Medium Learning Objective: 02-01 Learning Objective: 02-02 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: The first step is to calculate the estimated total overhead costs in the two departments. Forming Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($2.00 per MH × 9,000 MHs)...... Estimated total manufacturing overhead cost................................................... $52,200 18,000 $70,200 Assembly Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($2.10 per MH × 1,000 MHs)...... Estimated total manufacturing overhead cost................................................... $2,400 2,100 $4,500 The second step is to combine the estimated manufacturing overhead costs in the two departments ($70,200 + $4,500 = $74,700) to calculate the plantwide predetermined overhead rate as follow: Estimated total manufacturing overhead cost ....... Estimated total machine hours............................... Predetermined overhead rate................................ $74,700 10,000 MHs $7.47 per MH The overhead applied to Job B is calculated as follows: Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job = $7.47 per MH x (6,100 MHs + 400 MHs) = $7.47 per MH x (6,500 MHs) = $48,555 [QUESTION] 47. Parido Corporation has two manufacturing departments--Casting and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Estimated total machine-hours (MHs)................................. Estimated total fixed manufacturing overhead cost............. Casting 8,000 $44,000 Assembly Total 2,000 10,000 $4,200 $48,200 Estimated variable manufacturing overhead cost per MH. . . $1.90 $3.00 During the most recent month, the company started and completed two jobs--Job A and Job H. There were no beginning inventories. Data concerning those two jobs follow: Casting machine-hours............ Assembly machine-hours......... Job A Job H 5,400 2,600 800 1,200 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The amount of manufacturing overhead applied to Job H is closest to: A) $8,328 B) $26,372 C) $18,316 D) $18,044 Answer: B Difficulty: 2 Medium Learning Objective: 02-01 Learning Objective: 02-02 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: The first step is to calculate the estimated total overhead costs in the two departments. Casting Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($1.90 per MH × 8,000 MHs)...... Estimated total manufacturing overhead cost................................................... $44,000 15,200 $59,200 Assembly Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($3.00 per MH × 2,000 MHs)...... Estimated total manufacturing overhead cost................................................... $4,200 6,000 $10,200 The second step is to combine the estimated manufacturing overhead costs in the two departments ($59,200 + $10,200 = $69,400) to calculate the plantwide predetermined overhead rate as follow: Estimated total manufacturing overhead cost ....... Estimated total machine hours............................... Predetermined overhead rate................................ $69,400 10,000 MHs $6.94 per MH The overhead applied to Job H is calculated as follows: Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job = $6.94 per MH x (2,600 MHs + 1,200 MHs) = $6.94 per MH x (3,800 MHs) = $26,372 [QUESTION] 48. Juanita Corporation uses a job-order costing system and applies overhead on the basis of direct labor cost. At the end of October, Juanita had one job still in process. The job cost sheet for this job contained the following information: Direct materials.................................. Direct labor........................................ $480 $150 Manufacturing overhead applied....... $600 An additional $100 of labor was needed in November to complete this job. For this job, how much should Juanita have transferred to finished goods inventory in November when it was completed? A) $1,330 B) $500 C) $1,230 D) $1,730 Answer: D Difficulty: 2 Medium Learning Objective: 02-01 Learning Objective: 02-02 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred $600 = Predetermined overhead rate × $150 Predetermined overhead rate = $600 ÷ $150 = 4.0 Direct materials...................................................... Direct labor ($150 + $100)..................................... Manufacturing overhead applied (4.0 × $250)........ Total product cost................................................... $480 250 1,000 $1,730 [QUESTION] 49. Carradine Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $105,000, variable manufacturing overhead of $3.00 per machine-hour, and 70,000 machine-hours. The company recently completed Job P233 which required 60 machine-hours. The amount of overhead applied to Job P233 is closest to: A) $90 B) $270 C) $450 D) $180 Answer: B Difficulty: 1 Easy Learning Objective: 02-01 Learning Objective: 02-02 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $105,000 + ($3.00 per machine-hour × 70,000 machine-hours) = $105,000 + $210,000 = $315,000 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $315,000 ÷ 70,000 machine-hours = $4.50 per machine-hour Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $4.50 per machine-hour × 60 machine-hours = $270 [QUESTION] 50. Fusaro Corporation uses a predetermined overhead rate base on machine-hours that it recalculates at the beginning of each year. The company has provided the following data for the most recent year. Estimated total fixed manufacturing overhead from the beginning of the year.................................................... Estimated activity level from the beginning of the year..... Actual total fixed manufacturing overhead........................ Actual activity level........................................................... $684,000 40,000 $616,000 37,700 machine-hours machine-hours The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to: A) $644,670 B) $684,000 C) $68,000 D) $580,580 Answer: A Difficulty: 1 Easy Learning Objective: 02-01 Learning Objective: 02-02 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: Estimated total fixed manufacturing overhead (a)... $684,000 Estimated activity level (b)...................................... 40,000 Predetermined overhead rate (a) ÷ (b).................... $17.10 Actual activity level.................................................. 37,700 Manufacturing overhead applied............................. $644,670 [QUESTION] 51. Koelsch Corporation has two manufacturing departments--Molding and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Estimated total machine-hours (MHs)................................. Estimated total fixed manufacturing overhead cost............. Estimated variable manufacturing overhead cost per MH. . . Molding Customizing Total 1,000 9,000 10,000 $4,000 $25,200 $29,200 $2.00 $3.00 During the most recent month, the company started and completed two jobs--Job F and Job K. There were no beginning inventories. Data concerning those two jobs follow: Direct materials........................ Direct labor cost....................... Molding machine-hours............ Customizing machine-hours..... Job F Job K $12,300 $8,400 $18,200 $6,800 700 300 3,600 5,400 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 50% on manufacturing cost to establish selling prices. The calculated selling price for Job K is closest to: A) $72,561 B) $79,817 C) $24,187 D) $48,374 Answer: A Difficulty: 2 Medium Learning Objective: 02-01 Learning Objective: 02-02 Learning Objective: 02-03 Topic Area: Blooms: Apply AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: The first step is to calculate the estimated total overhead costs in the two departments. Molding Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($2.00 per MH × 1,000 MHs)...... Estimated total manufacturing overhead cost................................................... $4,000 2,000 $6,000 Customizing Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($3.00 per MH × 9,000 MHs)...... Estimated total manufacturing overhead cost................................................... $25,200 27,000 $52,200 The second step is to combine the estimated manufacturing overhead costs in the two departments ($6,000 + $52,200 = $58,200) to calculate the plantwide predetermined overhead rate as follow: Estimated total manufacturing overhead cost ....... Estimated total machine hours............................... Predetermined overhead rate................................ $58,200 10,000 MHs $5.82 per MH The overhead applied to Job K is calculated as follows: Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job = $5.82 per MH x (300 MHs + 5,400 MHs) = $5.82 per MH x (5,700 MHs) = $33,174 Job K’s manufacturing cost: Direct materials.................................. Direct labor cost................................. Manufacturing overhead applied....... Total manufacturing cost.................... The selling price for Job K: Total manufacturing cost................ Markup (50%)................................ Selling price................................... $8,400 6,800 33,174 $48,374 $48,374 24,187 $72,561