AC 315 Cost Accounting Name___________________________________ Mid‐term Exam‐ Chapters 4, 5, 6, 7, 17 & 18 MULTIPLE CHOICE. ( 2 Points Each ) Select the ONE, BEST Answer. 1) A job-cost sheet details the: 1) _______ A) irect materials purchased and paid d B) irect labor costs incurred d C) ndirect labor costs incurred i D) ctual indirect overhead costs incurred a 2) The flexible budget contains: 2) _______ A) udgeted amounts for actual output b B) udgeted amounts for planned output b C) ctual costs for actual output a D) ctual costs for planned output a 3) If initial budgets prove unacceptable, planners achieve the MOST benefit from: 3) _______ A) lanning again in light of feedback and current conditions p B) eciding not to budget this year d C) ccepting an unbalanced budget a D) sing last yearʹs budget u 4) The purpose of the equivalent-unit computation is to: 4) _______ A) onvert completed units into the amount of partially completed output units that could be c made with that quantity of input B) ssist the business in determining ending inventory a C) onvert partially completed units into the amount of completed output units that could be c made with that quantity of input D) oth B and C are correct. B 5) For variable manufacturing overhead, there is no: 5) _______ A) pending variance s B) fficiency variance e C) lexible-budget variance f D) roduction-volume variance p

Problem #1 ( 20 points ) Gerdie Company has the following information: Month Budgeted Sales March $50,000 April 53,000 May 51,000 June 54,500 July 52,500 In addition, the gross profit rate is 40% and the desired inventory level is 30% of next monthʹs cost of sales. Required: Prepare a purchases budget for April through June.

Problem # 2 ( 25 Points ) Cocoa Pet Corporation manufactures two models of grooming stations, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 3 30 650 Deluxe 7 50 150 Overhead costs $20,000 $60,000 Assume a traditional costing system applies the $80,000 of overhead costs based on direct labor hours. a. What is the total amount of overhead costs assigned to the standard model? b. What is the total amount of overhead costs assigned to the deluxe model? Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead. c. What is the total amount of overhead costs assigned to the standard model? d. What is the total amount of overhead costs assigned to the deluxe model? e. Explain the difference between the costs obtained from the traditional costing system and the ABC system. Which system provides a better estimate of costs? Why?

Problem # 3 ( 25 Points ) Jordana Woolens is a manufacturer of wool cloth. The information for March is as follows: Beginning work in process 10,000 units Units started 20,000 units Units completed 25,000 units Beginning work-in-process direct materials $ 6,000 Beginning work-in-process conversion $ 2,600 Direct materials added during month $30,000 Direct manufacturing labor during month $12,000 Factory overhead $ 5,000 Beginning work in process was half converted as to labor and overhead. Direct materials are added at the beginning of the process. All conversion costs are incurred evenly throughout the process. Ending work in process was 60% complete. Required: Prepare a production cost worksheet using the weighted-average method. Include any necessary supporting schedules.

Problem #4 ( 20 Points ) Heatherʹs Pillow Company manufactures pillows. The 20X5 operating budget is based on production of 20,000 pillows with 0.5 machine-hour allowed per pillow. Variable manufacturing overhead is anticipated to be $220,000. Actual production for 20X5 was 18,000 pillows using 9,500 machine-hours. Actual variable costs were $20 per machine-hour. Required: Calculate the variable overhead spending and efficiency variances.

1) B 2) A 3) A 4) C 5) D 6) Desired ending inventory Plus COGS Total needed Less beginning inventory Total purchases 7) a. [$80,000 / (650 + 150)] × 650 = $65,000 b. [$80,000 / (650 + 150)] × 150 = $15,000 c. Setups: $20,000 / (3 + 7) = $2,000 Components: $60,000 / (30 + 50) = $750 ($2,000 × 3) + ($750 × 30) = $28,500 d. ($2,000 × 7) + ($750 × 50) = $51,500 e. Because the products do not all require the same proportionate shares of the overhead resources of setup hours and components, the ABC system provides different results than the traditional system which allocates overhead costs on the basis of direct labor hours. The ABC system considers some important differences in overhead resource requirements and thus provides a better picture of the costs from each grooming table style, provided that the activity measures are fairly estimated. April $ 9,180 31,800 40,980 9,540 $31,440 May $ 9,810 30,600 40,410 9,180 $31,230 June $ 9,450 32,700 42,150 9,810 $32,340 Total $ 9,450 95,100 104,550 9,540 $ 95,010

8)

PRODUCTION COST WORKSHEET Conversion

Physical Units Direct Materials Flow of production Work in process, beginning 10,000 Started during period 20,000 To account for 30,000

Units completed 25,000 25,000 25,000 Work in process, ending 5,000 5,000 3,000 Accounted for 30,000 30,000 28,000 Totals Direct Materials Conversion Costs Work in process, beginning $ 8,600 $ 6,000 $ 2,600 Costs added during period 47,000 30,000 17,000 Total costs to account for $55,600 $36,000 $19,600 Divided by equivalent units 30,000 28,000 Equivalent unit costs $ 1.90 $ 1.20 $ 0.70 Assignment of costs Costs transferred out (25,000 × $1.90) $47,500 Work in process, ending Direct materials (5,000 × $1.20) 6,000 Conversion (5,000 × $0.70 × 0.60) 2,100 Costs accounted for $55,600 9) Budgeted variable overhead per hour = $220,000/(20,000 × 0.5) machine-hours Spending variance = ($22 - $20) × 9,500 = $19,000 favorable Efficiency variance = [9,500 - (20,000 × 0.5)] × $22 = $11,000 unfavorable = $22