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Bsa 2202 SCM Prelim PDF
Bsa 2202 SCM Prelim PDF
2. When a firm redesigns a product to reduce the number of component parts, the firm is
a. increasing consumer value.
b. increasing the value added to the product.
c. decreasing product variety.
d. decreasing non-value-added costs.
9. If normal spoilage is detected at an inspection point within the process (rather than at
the end), the cost of that spoilage should be
a. included with the cost of the units sold during the period.
b. included with the cost of the units completed in that department during the
period.
c. allocated to ending work in process units and units transferred out based
on their relative values.
d. allocated to the good units that have passed the inspection point.
10. For product life cycle costing, R&D costs are
a. expensed as incurred.
b. capitalized and allocated over the life cycle.
c. deducted as period costs.
d. charged to specific departments as incurred.
12. The process of _________ occurs when equipment is programmed to stop when a
certain situation arises.
a. Throughput
b. Automation
c. Backflushing
d. information sharing
d. long production runs and large production lot sizes take advantage of
economies of scale.
15. Which of the following add customer value?
a. setup time
b. storage time
c. idle time
d. processing time
Phelps Company
Phelps Company produces 50,000 units of Product Q and 6,000 units of Product Z
during a period. In that period, four set-ups were required for color changes. All units of
Product Q are black, which is the color in the process at the beginning of the period. A
set-up was made for 1,000 blue units of Product Z; a set-up was made for 4,500 red
units of Product Z; a set-up was made for 500 green units of Product Z. A set-up was
then made to return the process to its standard black coloration and the units of Product
Q were run. Each set-up costs $500.
16. Refer to Phelps Company. If set-up cost is assigned on a volume basis for the
department, what is the approximate per-unit set-up cost for Product Z?
a. $.010.
b. $.036.
c. $.040.
d. None of the responses are correct.
17. Refer to Phelps Company. Assume that Phelps Company has decided to allocate
overhead costs using levels of cost drivers. What would be the approximate per-unit
set-up cost for the blue units of Product Z?
a. $.04.
b. $.25.
c. $.50.
d. None of the responses are correct.
Lafayette Savings and Loan
Lafayette Savings and Loan had the following activities, traceable costs, and
physical flow of driver units:
The above activities are used by the Jennings branch and the Crowley branch:
Jennings Crowley
18. Refer to Lafayette Savings and Loan. What is the cost per driver unit for new account
activity?
a. $0.09 c. $30.00
b. $0.075 d. $50.00
Hazel Company uses activity-based costing. The company produces two products:
coats and hats. The annual production and sales volume of coats is 8,000 units and of
hats is 6,000 units. There are three activity cost pools with the following expected
activities and estimated total costs:
19. Refer to Hazel Company. Using ABC, the cost per unit of coats is approximately:
a. $2.40 c. $ 6.60
b. $3.90 d. $10.59
20. Refer to Hazel Company. Using ABC, the cost per unit of hats is approximately:
a. $2.40 c. $12.00
b. $3.90 d. $15.90
Smithson Company
Smithson Company produces two products (A and B). Direct material and labor costs
for Product A total $35 (which reflects 4 direct labor hours); direct material and labor
costs for Product B total $22 (which reflects 1.5 direct labor hours). Three overhead
functions are needed for each product. Product A uses 2 hours of Function 1 at $10 per
hour, 1 hour of Function 2 at $7 per hour, and 6 hours of Function 3 at $18 per hour.
Product B uses 1, 8, and 1 hours of Functions 1, 2, and 3, respectively. Smithson
produces 800 units of A and 8,000 units of B each period.
21. Refer to Smithson Company If total overhead is assigned to A and B on the basis of
units produced, Product A will have an overhead cost per unit of
a. $ 88.64.
b. $123.64.
c. $135.00.
d. None of the responses are correct.
22. Refer to Smithson Company If total overhead is assigned to A and B on the basis of units
produced, Product B will have an overhead cost per unit of
a. $84.00.
b. $88.64.
c. $110.64.
d. None of the responses are correct.
23. Kerry Company makes small metal containers. The company began December with 250
containers in process that were 30 percent complete as to material and 40 percent
complete as to conversion costs. During the month, 5,000 containers were started. At
month end, 1,700 containers were still in process (45 percent complete as to material
and 80 percent complete as to conversion costs). Using the weighted average method,
what are the equivalent units for conversion costs?
a. 3,450
b 4,560
c. 4,610
d. 4,910
24. Mehta Company Co. uses a FIFO process costing system. The company had 5,000
units that were 60 percent complete as to conversion costs at the beginning of the
month. The company started 22,000 units this period and had 7,000 units in ending
Work in Process Inventory that were 35 percent complete as to conversion costs. What
are equivalent units for material, if material is added at the beginning of the process?
a. 18,000
b. 22,000
c. 25,000
d. 27,000
Ryan Company
Ryan Company adds material at the start to its production process and has the following
information available for March:
25.Refer to Ryan Company. Compute the number of units started and completed in March.
a. 29,500
b. 34,500
c. 36,500
d. 39,000
Maxwell Company
Maxwell Company adds material at the start of production. The following production
information is available for June:
26. Refer to Maxwell Company. How many units must be accounted for?
a. 118,200
b. 128,200
c. 130,000
d. 138,200
Cherub Co.
Beginning inventory (30% complete 700 unit
as to Material B and 60% complete s
for conversion)
Started this cycle 2,000 unit
s
Ending inventory (50% complete as 500 unit
to Material B and 80% complete for s
conversion)
Material A $40,000
Material B 70,000
Conversion 98,100
27. Refer to Cherub Company. Assuming a weighted average method of process costing,
compute EUP units for Materials A and B.
a. 2,700 and 2,280, respectively
b. 2,700 and 2,450, respectively
c. 2,000 and 2,240, respectively
d. 2,240 and 2,700, respectively
28. Refer to Cherub Company Assuming a FIFO method of process costing, compute EUP
units for Materials A and B.
a. 2,700 and 2,280, respectively
b. 2,700 and 2,450, respectively
c. 2,000 and 2,240, respectively
d. 2,450 and 2,880, respectively
29. Refer to Cherub Company Assuming a weighted average method of process costing,
compute EUP for conversion.
a. 2,600
b. 2,180
c. 2,000
d. 2,700
30. A firm estimates that its annual carrying cost for material X is $.30 per lb. If the firm
requires 50,000 lbs. per year, and ordering costs are $100 per order, what is the EOQ
(rounded to the nearest pound)?
a. 5,774 lbs.
b. 4,082 lbs.
c. 1,732 lbs.
d. 1,225 lbs.
31.A company has estimated its economic order quantity for Part A at 2,400 units for the
coming year. If ordering costs are $200 and carrying costs are $.50 per unit per year,
what is the estimated total annual usage?
a. 6,000 units
b. 28,800 units
c. 7,200 units
d. 2,400 units
Douglas Corporation
Douglas Corporation operates its factory 300 days per year. Its annual consumption of
Material Y is 1,200,000 gallons. It carries a 10,000 gallon safety stock of Material Y and
its lead time is 12 business days.
32. Refer to Douglas Corporation. What is the order point for Material Y?
a. 10,000 gallons
b. 38,000 gallons
c. 48,000 gallons
d. 58,000 gallons
33. Atkins Corporation consumes 1,200,000 gallons of Material Y per year. Its order quantity
is 30,000 gallons. It maintains a safety stock of 10,000 gallons and its annual carrying
costs are $0.25 per gallon per year. If the ordering cost is $20 per order, what are the
total annual ordering costs?
a. 600
b. 800
c. 8,300
d. 1,200
Rawson Corporation
Rawson Corporation’s order quantity for Material T is 5,000 lbs. If the company
maintains a safety stock of T at 500 lbs., and its order point is 1,500 lbs.
34. Refer to Rawson Corporation. What is the lead time assuming daily usage is 50 lbs.?
a. 30 days
b. 100 days
c. 10 days
d. 20 days
35. For Raw Material B, a company maintains a safety stock of 5,000 pounds. Its average
inventory (taking into account the safety stock) is 8,000 pounds. What is the apparent
order quantity?
a. 16,000 lbs.
b. 6,000 lbs.
c. 10,000 lbs.
d. 21,000 lbs.
ANSWER KEY:
1. C
2. D
3. D
4. D
5. A
6. A
7. D
8. B
9. D
10. B
11. D
12. B
13. B
14. C
15. D
16. B
Total setup cost: $500 x 4 = $2,000
$2,000/56,000 = $0.0357
17. C
Setup cost for blue units = $500.00
$500/1,000 = $.50
18.D
$50,000 / 1,000 = $50.00 per
account
19. C
Activity Cost Allocation Cost per Unit
1 $20,000 * 100/500 = $ 4,000 / 8,000 $0.50
2 $37,000 * 800/1,000 = $29,600 / 8,000 3.70
3 $91,200 * 800/3,800 = $19,200 / 8,000 2.40
Total Cost per Unit 6.60
20. D
Activity Cost Allocation Cost per Unit
1 $20,000 * 400/500 = $ 16,000 / 6,000 $2.67
2 $37,000 * 200/1,000 = $ 7,400/ 6,000 1.23
3 $91,200 * 3,000/3,800 = $72,000 / 6,000 12.00
Total Cost per Unit 15.90
21. A
Total Overhead
Product A Function Hourly Rate Hours Total
1 $ 10 2 $ 20
2 $ 7 1 $ 7
3 $ 18 6 $ 108
Totals 9 $ 135
1 $ 10 1 $ 10
2 $ 7 8 $ 56
3 $ 18 1 $ 18
Totals 10 $ 84
OH/Unit Units Total
Produced
$ 135 800 $ 108,000
$ 84 8000 $ 672,000
$ 780,000
Total OH Proportion Allocated Units OH per
OH Produced Unit
$ 780,000 0.090909091 $ 70,909.09 800 $ 88.64
(800/8800)
22. B
See #21 for Total Overhead Computations
Total OH Proportion Allocated Units OH per
OH Produced Unit
$ 780,000 0.909090909 $ 709,090.91 8000 $ 88.64
(8000/8800)
23. D
Beginning Work in Process 250 40% 100
+ Completion of Units in Process 250 60% 150
+ Units Started and Completed 3,300 100% 3,300
+ Ending Work in Process 1,700 80% 1,360
Equivalent Units of Production 4,910
24. B
The material is added at the beginning of the process; therefore there are 22,000
equivalent units of material.
25. A
Units started this period 32,000
Less: Ending Work in Process 2,500
Units started and completed this period 29,500
26. C
Beginning Work in Process 10,000
Units Started 120,000
Total Units 130,000
27. B
Weighted Average Material A Material B
Beginning Work in Process 700 700
Units Started and Completed 1500 1500
Ending Work in Process 500 250
EUP Materials 2700 2450
28. C
FIFO Material A Material B
Beginning Work in Process 0 490
Units Started and Completed 1500 1500
Ending Work in Process 500 250
EUP Materials 2000 2240
29. A
Weighted Average
Beginning Work in Process 700
Units Started and Completed 1500
Ending Work in Process 400
2600
30. A
EOQ =
EOQ = 5,774 lbs.
31. C
EOQ = 2,400 units =
AU = 7,200 units
32. D
Order point = (Daily use * Lead time) + Safety Stock
= (4,000 * 12) + 10,000
= 58,000 gallons
33. B
Annual ordering costs = (1,200,000/30,000) *
$20
= 40 orders * $20
= $800
34. D
Order point = (Daily use * Lead time) + Safety Stock
1,500 = (50 * LT) + 500
1,000 = (50 * LT)
20 = LT
35. B
(8,000 - 5,000) lbs * 2 = 6,000
lbs.