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    Management accounting

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    Please show all steps and reasoning behind selected answers for problems 11 thru 14.
    1. Wages paid to a timekeeper in a factory are a:
    Prime Cost YES.....Conversion Cost NO
    Prime Cost YES.....Conversion Cost YES
    Prime Cost NO....Conversion Cost NO
    Prime Cost NO.....Conversion Cost YES

    2. Fixed costs expressed on a per unit basis:
    will increase with increases in activity.
    will decrease with increases in activity.
    are not affected by activity.
    should be ignored in making decisions since they cannot change.

    3. Inventoriable costs are also known as:
    variable costs
    conversion costs
    product costs
    fixed costs

    4. When the activity level is expected to decline within the relevant range, what effects would be anticipated with respect to each of the following?
    Fixed Costs per Unit Increase and Variable Costs per Unit Increase
    Fixed Costs per Unit Increase and Variable Costs per Unit do not change
    Fixed Costs per Unit do not change and Variable Costs per Unit do not change
    Fixed Costs per Unit do not change and Variable Costs per Unit Increase

    5. Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company misclassified a portion of direct labor cost as indirect labor. The effect of this misclassification will be to:
    understate the predetermined overhead rate
    overstate the predetermined overhead rate
    have no effect on the predetermined overhead rate
    cannot be determined from the information given

    6. A process cost system is employed in those situations in which:
    many different products, jobs, or batches of production are being produced each period
    where manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis
    a service is performed such as in a law firm or an accounting firm
    full or absorption cost approach is not employed

    7. Equivalent units for a process costing system using the FIFO method would be equal to:
    units completed during the period, plus equivalent units in the ending work in process inventory
    units started and completed during the period, plus equivalent units in the ending work in process inventory
    units completed during the period and transferred out
    units started and completed during the period, plus equivalent units in the ending work in process inventory, plus work needed to complete units in the beginning work in process inventory

    8. The contribution margin ratio always decreases when the:
    break-even point increases
    break-even point decreases
    variable expenses as a percentage of net sales increase
    variable expenses as a percentage of net sales decrease

    9. The break-even point in unit sales is found by dividing total fixed expenses by:
    the contribution margin ratio
    the variable expenses per unit
    the sales price per unit
    the contribution margin per unit

    10. Under variable costing:
    net operating income will tend to move up and down in response to changes in levels of production
    inventory costs will be lower than under absorption costing
    net operating income will tend to vary inversely with production changes
    net operating income will always be higher than under absorption costing

    11. The following data (in thousands of dollars) have been taken from the accounting records of Larklin Corporation for the just completed year.
    Sales $820
    Purchases of raw materials $180
    Direct labor $130
    Manufacturing overhead $200
    Administrative expenses $180
    Selling expenses $140
    Raw materials inventory, beginning $60
    Raw materials inventory, ending $20
    Work in process inventory, beginning $50
    Work in process inventory, ending $20
    Finished goods inventory, beginning $110
    Finished goods inventory, ending $150
    Required: Prepare a Schedule of Cost of Goods Manufactured statement in the text box below.

    12. The Michigan Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below:
    Percent completed
    Units Materials Conversion
    Work in process, June 1 40,000 65% 45%
    Work in process, Jun 30 35,000 75% 65%
    The department started 175,000 units into production during the month and transferred 180,000 completed units to the next department.
    REQUIRED: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.
    13. A cement manufacturer has supplied the following data:
    Tons of cement produced and sold 220,000
    Sales revenue $924,000
    Variable manufacturing expense $297,000
    Fixed manufacturing expense $280,000
    Variable selling and admin expense $165,000
    Fixed selling and admin expense $82,000
    Net operating income $100,000
    Required:
    a. Calculate the company's unit contribution margin
    b. Calculate the company's unit contribution ratio
    c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company's net operating income be?

    14. Maffei Company, which has only one product, has provided the following data concerning its most recent month of operations:
    Selling Price $ 138

    Units in beginning Inventory 0
    Units Produced 7200
    Units sold 7000
    Units in ending Inventory 200

    Variable Costs per unit:
    Direct materials $ 42
    Direct labor $ 32
    Variable manufacturing overhead $ 1
    Variable selling and admin $ 8

    Fixed Costs:
    Fixed manufacturing overhead $ 280,800
    Fixed selling and admin $ 98,000
    Required:
    a. What is the unit product cost for the month under variable costing?
    b. What is the unit product cost for the month under absorption costing?
    c. Prepare an income statement for the month using the variable costing method.
    d. Prepare an income statement for the month using the absorption costing method.

    © BrainMass Inc. brainmass.com April 3, 2020, 8:48 pm ad1c9bdddf
    https://brainmass.com/business/accounting/management-accounting-342027

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    Solution Summary

    The solution explains some questions relating to types of costs, activity levels, contribution margin, break even

    $2.19

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