Multiple Choice Answers

1) Job
Number June 1
Work in Process
Inventory Direct
Materials Direct
Labor
235 $2,500 $600 $400
236 $1,500 $800 $1,000
237 $1,000 $1,200 $1,750
238 $800 $1,500 $2,250
Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers.

Lee Company’s work-in-process inventory balance on June 30 was

A 9450
B 3940
C 4100
D 3300

2) Sanker Inc. has provided the following data for the month of August. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.
Work In
Process Finished
Goods Cost of
Goods Sold Total
Direct materials $2,790 $7,680 $18,240 $28,710
Direct labor 9,700 19,200 45,600 74,500
Manufacturing
overhead applied 5,440 8,000 18,560 32,000
Total $17,930 $34,880 $82,400 $135,210
Manufacturing overhead for the month was overapplied by $5,000. The company allocates any underapplied or overapplied 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.
The journal entry to record the allocation of any underapplied or overapplied overhead for August would include

A) credit to finished goods of $1,250.
B) credit to finished goods of $34,880
C) debit to finished goods of $1,250
0 Ddebit to finished goods of $34,880

3) Abis Corporation uses the weighted-average method in its process-costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory were
Cost Percent Complete
Material costs $6,000 50%
Conversion costs $9,900 30%
A total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
Cost
Material costs $113,900
Conversion costs $322,500
The ending inventory was 80% complete with respect to materials and 20% complete with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that’s the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

The total cost transferred from the first processing department to the next processing department during the month is closest to

A) 420,414.
B) 436,400
C) 452,300.
D) 512,700.

4)
The Lee Company uses a job-order costing system. The following data were recorded for June:
Added During June—-
Job
Number June 1
Work in Process
Inventory Direct
Materials Direct
Labor
235 $2,500 $600 $400
236 $1,500 $800 $1,000
237 $1,000 $1,200 $1,750
238 $800 $1,500 $2,250
Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers.

Lee Company’s cost of goods sold for June was

A) 9,730
B) 10,170.
C) 15,520
D) $14,640.

5) The following cost data pertain to the operations of Lefthand Department Stores, Inc., for the month of December.
Corporate legal office salaries $74,000
Shoe Department cost of sales,
Brentwood Store $35,000
Corporate headquarters building lease $78,000
Store manager’s salary
Brentwood Store $14,000
Shoe Department sales commissions,
Brentwood Store $5,000
Store utilities,
Brentwood Store $14,000
Shoe Department manager’s salary,
Brentwood Store $3,000
Central warehouse lease cost $10,000
Janitorial costs, Brentwood Store $8,000

The Brentwood Store is just one of many stores owned and operated by the company. The Shoe Department is one of many departments at the Brentwood Store. The central warehouse serves all of the company’s stores.

a) 78,000
b) 162,000
c) 43,000
d) 36,000

6) Abis Corporation uses the weighted-average method in its process-costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory were
Cost Percent Complete
Material costs $6,000 50%
Conversion costs $9,900 30%
A total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
Cost
Material costs $113,900
Conversion costs $322,500
The ending inventory was 80% complete with respect to materials and 20% complete with respect to conversion costs.
The cost per equivalent unit for materials for the month in the first processing department is closest to

a)12.44
B)11.39
c)11.99
d)11.82

7)
The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just-completed year.
Sales $910
Raw materials, inventory, beginning $80
Raw materials, inventory, ending $20
Purchases of raw materials $100
Direct labor $130
Manufacturing overhead $200
Administrative expenses $160
Selling expenses $140
Work in process inventory, beginning $40
Work in process inventory, ending $10
Finished goods inventory, beginning $130
Finished goods inventory, ending $150

The net operating income for the year (in thousands of dollars) was

a)410
B)110
c)40
d)180

8) The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just-completed year.
Sales $910
Raw materials, inventory, beginning $80
Raw materials, inventory, ending $20
Purchases of raw materials $100
Direct labor $130
Manufacturing overhead $200
Administrative expenses $160
Selling expenses $140
Work in process inventory, beginning $40
Work in process inventory, ending $10
Finished goods inventory, beginning $130
Finished goods inventory, ending $150
The cost of goods sold for the year (in thousands of dollars) was

a)650
B)500
C)670
D)540

9) The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just-completed year.
Sales $910
Raw materials, inventory, beginning $80
Raw materials, inventory, ending $20
Purchases of raw materials $100
Direct labor $130
Manufacturing overhead $200
Administrative expenses $160
Selling expenses $140
Work in process inventory, beginning $40
Work in process inventory, ending $10
Finished goods inventory, beginning $130
Finished goods inventory, ending $150

The cost of goods manufactured (finished) for the year (in thousands of dollars) was
a)560
b)460
c)520
d)530

10) Abis Corporation uses the weighted-average method in its process-costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory were
Cost Percent Complete
Material costs $6,000 50%
Conversion costs $9,900 30%
A total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
Cost
Material costs $113,900
Conversion costs $322,500
The ending inventory was 80% complete with respect to materials and 20% complete with respect to conversion costs.
The cost per equivalent unit for conversion costs for the first department for the month is closest to

a)38.83
b)33.24
c)37.68
d 40.77

11.) The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just-completed year.
Sales $910
Raw materials, inventory, beginning $80
Raw materials, inventory, ending $20
Purchases of raw materials $100
Direct labor $130
Manufacturing overhead $200
Administrative expenses $160
Selling expenses $140
Work in process inventory, beginning $40
Work in process inventory, ending $10
Finished goods inventory, beginning $130
Finished goods inventory, ending $150

The cost of the raw materials used in production during the year (in thousands of dollars) was

a)180
b)160
c)40
d)120

12) When would the direct method and the step-down method of service department cost allocation result in identical allocations being made to the operating departments?
a) The only time is when all costs in the service departments are fixed costs
b) That can happen only if there’s an equal amount of service departments and operating departments
c) The only time is when there is just one service department.
d) That can happen if there is only one service department or, if the company has more than one service department, if all the costs in those departments are fixed costs.

13. Cost of goods manufactured will usually include
A) only costs incurred during the current period
b) some period costs as well as some product costs
c) only direct labor and direct materials costs.
d)
some costs incurred during the prior period as well as costs incurred during the current period.

14.) In September, one of the processing departments at Shenkel Corporation had a beginning work-in-process inventory of $25,000 and an ending work-in-process inventory of $18,000. During the month, the cost of units transferred out from the department was $304,000. In the department’s cost reconciliation report for September, the total cost accounted for would be
a)43,000
b)619,000
c)644000
d)322000

15.) Sanker Inc. has provided the following data for the month of August. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.
Work In
Process Finished
Goods Cost of
Goods Sold Total
Direct materials $2,790 $7,680 $18,240 $28,710
Direct labor 9,700 19,200 45,600 74,500
Manufacturing
overhead applied 5,440 8,000 18,560 32,000
Total $17,930 $34,880 $82,400 $135,210
Manufacturing overhead for the month was overapplied by $5,000. The company allocates any underapplied or overapplied 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.
The work-in-process inventory at the end of August after allocation of any underapplied or overapplied overhead for the month is closest to

a)18593
b)17267
c)18780
d)17080

16.
Becky works on the assembly line of a manufacturing company where she installs a component part for one of the company’s products. She’s paid $16 per hour for regular time, and time and a half for all work in excess of 40 hours per week. Becky’s employer offers fringe benefits that cost the company $3 for each hour of employee time (both regular and overtime). During a given week, Becky works 42 hours but is idle for 3 hours due to material shortages. The company treats all fringe benefits relating to direct labor as added direct labor cost and the remainder as part of manufacturing overhead. The allocation of Becky’s wages and fringe benefits for the week between direct labor cost and manufacturing overhead would be which of the following?

a) Direct Labor: $624 / Manufacturing Overhead: $190
b) Direct Labor: $688 / Manufacturing Overhead: $126
c) Direct Labor: $741 / Manufacturing Overhead: $73
Direct Labor: $672 / Manufacturing Overhead: $142