Answer True (T) or False:

1.The James Company has incurred the following costs of production:
Direct Materials $350,000
Direct Labor $475,000
Manufacturing Overhead $722,000
Selling and Administrative Costs $256,000
The James Company conversion costs are $1,197,000.

2.Product costs are offset against revenue in the period in which the related products are manufactured, rather than the period in which the products are sold.

3.Metalworks Incorporated purchased $54,500 worth of direct materials to be used in Job #222. During the accounting period, Job #222 used $45,600 of direct materials. The amount of direct materials that would be shown in Job #222 Job Cost Sheet at the end of the accounting period should be $54,500, since this is the amount of direct materials the company had purchased for this particular job.

4.A debit balance in the manufacturing overhead account at month end indicates overhead applied to jobs was greater than the actual overhead costs.

5.The number of equivalent units of production during a period may be greater than, equal to, or smaller than the actual number of units completed and transferred to the finished goods warehouse.

6.Completing 3,000 units which were each 75% complete at the beginning of the period represents 2,250 equivalent units of work during the current period.

7.Debiting Work in Process in Department Two and crediting Work in Process in Department One represents costs transferred from Department Two to Department One.

8.Costs which increase in total amount in direct proportion to an increase in output are called variable costs.

9.The higher the unit contribution margin, the higher the volume of unit sales required to cover a given amount of fixed costs.

10.The margin of safety sales volume in dollars times the contribution margin ratio equals operating income.

 

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