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# Cost accounting

The following data (in thousands of dollars) have been taken from the accounting records of Larsen Corporation for the year completed.

Sales.......................................................\$860
Purchases of raw materials.......................\$150
Direct labor.............................................\$110
Selling expenses.......................................\$180
Raw Materials inventory, beginning............\$ 40
Raw Materials inventory, ending...............\$ 80
Work in process inventory, beginning.........\$ 20
Work in process inventory, ending..............\$ 80
Finished goods inventory, beginning............\$ 80
Finished goods inventory, ending...............\$150

Required

Prepare a Schedule of Cost of Goods Manufactured in good form.
Compute the Cost of Goods Sold.
Using data from your answers above as needed, prepare an Income Statement in good form.

The following data have been recorded for recently completed Job 501 on its job cost sheet. Direct materials cost was \$3,067. A total of 30 direct labor-hours and 104 machine-hours were worked on the job. The direct labor wage rate is \$12 per labor-hour. The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is \$11 per machine-hour. The total cost for the job on its job cost sheet would be:

\$4571
\$3757
\$3090
\$3427

Which of the following companies would be most likely to use a job-order costing system rather than a process costing system?

fast food restaurant
ship building
crude oil refining
all the above

The Work in Process inventory account of a manufacturing company shows a balance of \$2,400 at the end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of \$400 and \$200 for direct materials, and charges of \$300 and \$500 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:

80%
125%
300%
240%

Dagnon Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was \$299,130. At the end of the year, actual direct labor-hours for the year were 17,400 hours, manufacturing overhead for the year was overapplied by \$13,850, and the actual manufacturing overhead was \$294,130. The predetermined overhead rate for the year must have been closest to:

\$17.70
\$17.19
\$18.22
\$16.90

Hards Corporation had \$38,000 of raw materials on hand on September 1. During the month, the company purchased an additional \$54,000 of raw materials. The journal entry to record the purchase of raw materials would include a:

debit to Raw Materials of \$54,000
debit to Raw Materials of \$92,000
credit to Raw Materials of \$54,000
credit to Raw Materials of \$92,000

Cahin Corporation applies manufacturing overhead on the basis of machine-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of \$21,060. Actual manufacturing overhead for the year amounted to \$13,000 and actual machine-hours were 1,380. The company's predetermined overhead rate for the year was \$16.20 per machine-hour.

The overhead for the year was:

\$1,296 overapplied
\$9,356 overapplied
\$9,356 underapplied
\$1,296 underapplied

Mataalii Corporation uses the weighted-average method in its process costing. The following data pertain to its Assembly Department for September.

Percent Complete
Units Materials Conversion

Work in process, Sep 1 300 85% 60%
Units started into production
during September 7,200
Units completed during Sep and
transferred to the next department 6,600
Work in process, September 30 900 80% 10%

Required:

Computer the equivalent units of production for both materials and conversion costs for the Assembly Department for September using the weighted-average method.

Dewey Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 15,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was \$19,200. An additional 86,000 units were started into production during the month. There were 13,000 units in the ending work in process inventory of the Welding Department that were 60% complete with respect to conversion costs. A total of \$575,360 in conversion costs were incurred in the department during the month.

The cost per equivalent unit for conversion costs is closest to:

\$5.812
\$6.206
\$6.400
\$6.690

Process costing would be appropriate for each of the following except:

custom furniture manufacturing
oil refining
grain milling
newsprint production

Assume there is no beginning work in process inventory and the ending work in process inventory is 100% complete with respect to materials costs. The number of equivalent units with respect to materials costs under the weighted-average method is:

the same as the number of units put into production
less than the number of units put into production
the same as the number of units completed
less than the number of units completed

The Assembly Department started the month with 59,000 units in its beginning work in process inventory. An additional 274,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 21,000 units in the ending work in process inventory of the Assembly Department.
How many units were transferred to the next processing department during the month?

\$333,000
\$236,000
\$354,000
\$312,000

#### Solution Summary

The solution explains some questions relating to job order and process costing

\$2.19