period cost, work in process, manufacturing overhead costs

Project Description:

acct 321-6380
cost accounting

name elethress wilson-knights

questions 1-2 are based on the following data.

tee times, inc. produces and sells the finest quality golf clubs in all of clay county. the company expects the following revenues and costs in 2004 for its elite quality golf club sets:
revenues (400 sets sold @ $600 per set) $240,000
variable costs 160,000
fixed costs 50,000

1. how many sets of clubs must be sold for tee times, inc. to reach their breakeven point?

2. how many sets of clubs must be sold to earn a target operating income of $90,000?

3. the precision widget company had the following balances in their accounts at the end of the accounting period:
work-in-process $ 5,000
finished goods 20,000
cost of goods sold 200,000

if their manufacturing overhead was overallocated by $8,000 and precision widget adjusts their accounts using a proration based on total ending balances, the revised ending balance for cost of goods sold would be?

4. liberty box company calculated an indirect-cost rate of $12.50 per labor hour for fringe benefits for use in their normal costing system. at the end of the year, the actual cost of fringe benefits was $980,000. the total of labor hours worked for the year was the same amount as budgeted, 70,000 hours. if job #640 required the use of 15 labor hours and the company used the adjusted allocation rate approach, by what amount would the cost of job #640 change?
the following data apply to questions 5 and 6.

hester company budgets on an annual basis for its fiscal year. the following beginning and ending inventory levels (in units) are planned for the fiscal year of july 1, 2010 through june 30, 2011.

july 1, 2010 june 30, 2011
raw material1 40,000 10,000
work in process 8,000 8,000
finished goods 30,000 5,000
1 three (3) units of raw material are needed to produce each unit of finished product.

5. [cma adapted] if hester company plans to sell 500,000 units during the 2010–2011 fiscal year, the number of units it would have to manufacture during the year would be?

6. [cma adapted] if 450,000 finished units were to be manufactured during the 2010–2011 fiscal year by hester company, the units of raw material needed to be purchased would be?

7. a mixed cost function has a constant component of $20,000. if the total cost is $60,000 and the independent variable has the value 200, what is the value of the slope coefficient?

8. information on pruitt company’s direct-material costs for the month of july 2011 was as follows:
actual quantity purchased 30,000 units
actual unit purchase price $2.75
materials purchase-price variance
—unfavorable (based on purchases) $1,500
standard quantity allowed for actual production 24,000 units
actual quantity used 22,000 units

[cpa adapted] for july 2011 there was a favorable direct-materials efficiency variance of

9. information for garner company’s direct-labor costs for the month of september 2011 was as follows:

actual direct-labor hours 34,500 hours
standard direct-labor hours 35,000 hours
total direct-labor payroll $241,500
direct-labor efficiency variance—favorable $ 3,200

[cpa adapted] what is garner’s direct-labor price (or rate) variance?

the following data apply to questions 10–15.

sebastian company, which manufactures electrical switches, uses a standard cost system and carries all inventories at standard. the standard manufacturing overhead costs per switch are based on direct labor hours and are shown below:

variable overhead (5 hours @ $12 per direct manufacturing labor hour) $ 60
fixed overhead (5 hours @ $15* per direct manufacturing labor hour) 75
total overhead per switch $135
*based on capacity of 200,000 direct manufacturing labor hours per month.

the following information is available for the month of december:

• 46,000 switches were produced although 40,000 switches were scheduled to be produced.
• 225,000 direct manufacturing labor hours were worked at a total cost of $5,625,000.
• variable manufacturing overhead costs were $2,750,000.
• fixed manufacturing overhead costs were $3,050,000.

10. [cma adapted] the variable overhead spending variance for december was?

11. [cma adapted] the variable manufacturing overhead efficiency variance for december was

12. the total variable manufacturing overhead variance was

13. [cma adapted] the fixed manufacturing overhead spending variance for december was

14. the fixed overhead production volume variance for december was

15. what amount should be credited to the allocated manufacturing overhead control account for the month of december?

16. when 10,000 units are produced, fixed costs are $14 per unit. therefore, when 20,000 units are produced fixed costs will:
a. increase to $28 per unit
b. remain at $14 per unit
c. decrease to $7 per unit
d. total $280,000.

17. xian manufacturing produces a unique value, and has the capacity to produce 50,000 valves annually. currently xian produces 40,000 valves and is thinking about increasing production to 45,000 valves next year. what is the most likely behavior of total manufacturing costs and unit manufacturing costs given this change?
a. total manufacturing costs will increase and unit manufacturing costs will stay the same.
b. total manufacturing costs will increase and unit manufacturing costs will decrease.
c. total manufacturing costs will stay the same and unit manufacturing costs will stay the same.
d. total manufacturing costs will stay the same and unit manufacturing costs will decrease.

18. schuppener company sells its only product for $18 per unit, variable production costs are $6 per unit, and selling and administrative costs are $3 per unit. fixed costs for 10,000 units are $10,000. the contribution margin is:
a. $12 per unit
b. $9 per unit
c. $11 per unit
d. $8 per unit

19. if selling price per unit is $30, variable costs per unit are $20, total fixed costs are $10,000, the tax rate is 30%, and the company sells 5,000 units, net income is:
a. $12,000
b. $14,000
c. $28,000
d. $40,000

20. what is the breakeven point in units, assuming a product’s selling price is $100, fixed costs are $8,000, variable costs are $20, and operating income is $32,000?
a. 100 units
b. 300 units
c. 400 units
d. 500 units

21. how many units would have to be sold to yield a target operating income of $22,000, assuming variable costs are $15 per unit, total fixed costs are $2,000, and the unit selling price is $20?
a. 4,800 units
b. 4,400 units
c. 4,000 units
d. 3,600 units

22. if the contribution margin is .30, targeted net income is $76,800, and targeted sales volume in dollars is $480,000, then total fixed costs are:
a. $23,000
b. $44,160
c. $67,200
d. $144,000

23. if the contribution margin ratio is .40, targeted net income is $50,000, and total fixed costs are $75,000, then sales volume in dollars is:
a. $250,000
b. $312,500
c. $275,000
d. $350,000

use this information for questions 24-26.
sunny company manufactures pipes and applies manufacturing overhead costs to production at a budgeted rate of $15 per direct labor hour. the following data are obtained from accounting records for june 20x2:
direct materials $280,000
direct labor (7,000 hours @ $11/hour $77,000
indirect labor $20,000
plant facility rent $60,000
depreciation on plant machinery and equipment $30,000
sales commissions $40,000
administrative expenses $50,000

24. the actual amount of manufacturing overhead costs incurred in june 20x2 totals:

25. the amount of manufacturing overhead allocated to all jobs during june 20x2 totals:

26. for june 20x2, manufacturing overhead was;

use this information for questions 27-29.
gibson manufacturing is a small textile manufacturer using machine-hours to allocate manufacturing overhead. the following budgeted items are provided for the coming year for the company and actual cost for the winfield high school band jacket job.
company winfield high school job
direct materials $40,000 $1,000
direct labor $10,000 $200
manufacturing overhead $30,000
machine hours 100,000 mh 900 mh

27. what amount of manufacturing overhead will be allocated to the winfield job?

28. what are the total manufacturing costs of this job?

29. what is the bid price for the winfield high school job if the company uses a 40% markup of total manufacturing costs?

30. [cpa adapted] mikaelabelle products sells product a at a selling price of $40 per unit. mikaelabelle’s cost per unit based on the full capacity of 500,000 units is as follows:

direct materials $ 6
direct labor 3
indirect manufacturing (60% of which is fixed) 10

a one-time-only special order offering to buy 50,000 units was received from an overseas distributor. the only other costs that would be incurred on this order would be $4 per unit for shipping. mikaelabelle has sufficient existing capacity to manufacture the additional units. in negotiating a price for the special order, mikaelabelle should consider that the minimum selling price per unit should be

31. burkhart company manufactures a product that has a variable cost of $25 per unit. fixed costs total $1,000,000, allocated on the basis of the number of units produced. selling price is computed by adding a 25% markup to full cost. how much should the selling price be per unit for 200,000 units?

the following data apply to questions 32 and 33.
each month, haddon company has $275,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (36% fixed). haddon’s monthly sales are $500,000.

32. the markup percentage on full cost to arrive at the target (existing) selling price is

33. the markup percentage on variable costs to arrive at the existing (ta
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