Explore BrainMass
Share

# Cost accounting for business taxation

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

1. Waters Salad Dressing had beginning work-in-process in July of \$248,320 consisting of \$101,640 of materials and \$146,680 of conversion costs. There were 16,000 units (one unit equals one case of salad dressing) in beginning work-in-process, 40% complete as to conversion costs. Materials are added at the beginning of the process. During November, 34,000 were transferred out; 1,000 were spoiled and 9,000 remained in ending inventory. The spoiled units were 60% complete for conversion cost. The ending work-in-process was 70% complete for conversion cost. Costs during the period amounted to \$781,200 for direct materials and \$1,009,280 for conversion. Waters uses the weighted-average-method and identifies all spoilage costs separately.

The number of units started during July was:
A) 35,000
B) 53,000
C) 28,000
D) 34,000

2. The Stanhope Corporation produces three outputs: A, B and C from one input. The net-realizable-value of A at the split-off point is \$200,000. The net-realizable-value of B at the split-off point is \$400,000 and the net-realizable- value of C at the split-off is \$50,000. Final sales values are \$400,000, \$600,000 and \$50,000 for A, B and C respectively. However, these prices are subject to erratic change. The additional processing costs for A, B and C are \$100,000, \$150,000 and \$0 respectively. Stanhope produces 120,000 units of A, 120,000 units of B and 60,000 units of C. The total costs incurred up to the split-off point are \$300,000.

If the net-realizable-value method is used and product C is accounted for as a joint-product, what amount of joint- costs should be allocated to product A?

A) \$112,500
B) \$114,286
C) \$120,000
D) \$168,750

3. A summary of the usage of the service department services by other services departments as well as by two producing departments is as follows:

Service Departments Producing Departments
Department S1 S2 S3 P1 P2
S1 --- .10 .05 .40 .45
S2 --- --- --- .45 .55
S3 .10 .10 --- .35 .45

Direct costs in the various departments are as follows:

Department Direct Costs
S1 \$105,000
S2 \$90,000
S3 \$270,000
P1 \$1,050,000
P2 \$1,350,000
In what order should the three service departments be allocated, assuming the step-method is used?

A) S3-S2-S1
B) S3-S1-S2
C) S2-S1-S3
D) S2-S3-S1

4. The Vituilli Company manufactures surgical gowns for hospitals. Their controller, Evah Hieken is preparing the variance analysis report for October. Standard Costs are as follows:

Direct Material 2.0 yards at \$6 per yard
Direct Labor0.25 hours at \$12 per hour

During October, Ms Hieken's report shows:

100,000 gowns produced
175,000 yards of fabric purchased at a cost of \$1,137,500
185,000 yards of fabric used
Employees worked 24,000 hours at a cost of \$276,000

The direct labor efficiency variance is

A) \$12,000 favorable
B) \$12,000 unfavorable
C) \$36,000 favorable
D) \$36,000 unfavorable

5. Riyyad Co. produces its only product in a highly automated process, expected monthly production is 50,000 units. The required direct material costs \$0.85 per unit. Manufacturing overhead costs are \$75,000 per month and are allocated based on units of production.

What is the total flexible budget for 50,000 units and 25,000 units, respectively?

A) \$117,500; \$58,750
B) \$ 75,000; \$37,500
C) \$ 75,000; \$38,000
D) \$117,500; \$96,250