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    Cost and batch accounting

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    2. Horton and Sons produces specialty furniture. The company has received an order to create 50 custom tables for a customer. What type of costing method should they use?
    Inventory costing,

    Cost of goods sold

    Batch costing

    Job order costing

    Question . Omega Manufacturing bases its rate on direct labor cost. At the beginning of the year, the company made the following estimates:

    Direct labor-hours: 30,000

    Machine-hours: 5,000

    Materials overhead cost: $486,000

    Direct labor cost: $270,000

    What is the predetermined overhead rate?
    17%

    56%

    180%

    600%

    Question 6. 6. Omega Manufacturing had a total applied manufacturing overhead of $486,000 budgeted direct labor cost was $270,000. Their actual manufacturing overhead was $350,000 and actual direct labor cost was $300,000. Which of the following would best describe the overhead?

    Overestimated

    Mixed
    Underapplied
    Overapplied

    Question 7. 7. A sporting goods company manufactures sports shoes in batches. Why should a job order costing system be implemented for the production of the shoes?
    To find the total cost of doing a run of the shoes
    To find the exact cost per unit for each run of the shoes

    To find if manufacturing the shoes will be profitable

    To let managers decide if making the shoes is worth the cost

    Question 8. 8. Depont Enterprises uses the job order costing system. They have received their first product order and need to make entries to the accounts. How should the flow of costs be recorded for their first job?
    Work in process inventory, finished goods inventory, job cost record, cost of goods sold

    Work in process inventory, finished goods inventory, costs of goods sold, job cost record

    Job cost record, work in process inventory, finished goods inventory, cost of goods sold

    Job cost record, work in process inventory, cost of goods sold, finished goods inventory

    Question 9. 9. John knows that 1,000 widgets are needed in the upcoming job order. What type of document does he need to fill out in order to put the widgets into production?
    Materials requisition
    Job cost record

    Direct materials requisition

    Subsidiary ledger

    Question 10. 10. Under a job order costing system, how are accumulated costs treated when a company finishes a job?
    Accumulated costs are recorded as overhead on the income statement

    Accumulated costs are assigned to batches and transferred to Work in Process Inventory (WIP)

    Accumulated costs are moved from Work in Process Inventory (WIP) to finished goods inventory

    Accumulated costs are recorded as cost of goods sold on the income statement

    Question 11. 11. Why do organizations prepare specific strategic budgets?
    They show how many resources are needed to implement a business strategy
    They help identify where the main focus should be placed in an organization

    They give managers detailed information on costs in a company

    They allow managers to create more detailed plans

    Question 12. 12. Seaside Software Company is a decentralized company with management taking control at different levels. When looking at information flow, what type of budget should be implemented?
    Bottom-up budget

    Strategic budget

    Participative budget

    Top-down budget

    Question 13. 13. Sara's Cake Company uses the following materials in its cakes:

    1 cup flour

    0.25 cups sugar

    2 eggs

    0.25 cups cocoa powder

    Here are the costs for each of the items:

    Flour: $0.50 per cup

    Sugar: $0.20 per cup

    Eggs: $0.25 per egg

    Cocoa: $0.80 per cup

    What is the standard materials cost of a single cake?

    $2.25 per cake

    $1.25 per cake

    $1.05 per cake

    $1.00 per cake

    Question 14. 14. Sara's Cake Company needs to figure out what her labor cost is for baking each cake. She currently pays the following an hour:

    $10 base hourly rate for bakers

    $14 base hourly rate for sales representatives

    $2 in payroll taxes per hour

    $2 in health and fringe benefits per hour

    It takes the following time to to bake a cake:

    Mixing: 15 minutes

    Baking: 1 hour

    Frosting: 15 minutes

    What is the standard cost for labor for baking a cake?
    $42 per cake

    $36 per cake

    $21 per cake

    $15 per cake

    Question 15. 15. Which one of the following budgets is the last component before creating budgeted (pro-forma) financial statements?
    Sales budget

    Direct labor budget

    Production budget

    Cash budget

    Question 16. 16. When creating a master budget, which one of the following is not directly related to manufacturing? Manufacturing overhead budget

    Cash budget

    Sales and administrative budget

    Sales budget

    Question 17. 17. B&B Used Car Sales likes to keep a minimum cash balance of $25,000. Last year, the company had sales of $225,000. Of those sales, $100,000 were made on account. The company made a gross profit of $75,000. At the end of the year, it had a cash deficit of $32,000. How much cash would B&B need to borrow in short-term loans to cover the cash requirements?
    $25,000

    $32,000

    $43,000

    $57,000

    Question 18. 18. Which of the following statements describes pro-forma financial statements?
    They are based on estimations of future investment
    They are based on estimations of future operations

    They are a combination of actual and estimated operations

    They are a combination of past and current operations

    Question 19. 19. Which of the following would be considered a goal of budget planning?
    To have management set budget goals through a top-down approach
    To define realistic goals that will contribute to the financial well-being of the company

    To analyze the financial and operation amounts for a specific project

    To decide the cost of the direct materials needed for production

    Question 20. 20. Hansen Company has prepared a budgeted income statement. Reported were the following amounts.

    1. Sales revenue - $350,000
    2. Cost of goods sold - $175,000
    3. Variable operating expenses - $55,000
    4. Fixed operating expenses - $11,000

    What is the gross profit amount?
    $109,000

    $164,000

    $175,000

    $284,000

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    Solution Summary

    This solution helps to answer question related with costing methods.

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