PRACTICE QUESTIONS

JOB ORDER
8) Lancelot Manufacturing is a small textile manufacturer using machine-hours as the
single indirect-cost rate to allocate manufacturing overhead costs to the various jobs
contracted during the year. The following estimates are provided for the coming year for
the company and for the Case High School band jacket job.

CompanyCase High School Job

Direct materials $67,000 $2,400
Direct labor $32,000 $800
Manufacturing overhead costs $55,000
Machine-hours 100,000 mh 800 mh

Calculate the amount of manufacturing overhead costs that will be allocated to this job?

9) Lancelot Manufacturing is a small textile manufacturer using machine-hours as the

single indirect-cost rate to allocate manufacturing overhead costs to the various jobs
contracted during the year. The following estimates are provided for the coming year for
the company and for the Case High School band jacket job.
Company Case High School Job
 Direct materials $67,000 $2,400
Direct labor $32,000 $800
Manufacturing overhead costs $55,000
Machine-hours 100,000mh 800mh
Calculate the total manufacturing costs of this job?

10) Chief Manufacturing is a small textile manufacturer using machine-hours as the single
indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted
during the year. The following estimates are provided for the coming year for the company
and for the Somerset High School Science Olympiad Jacket job.

CompanySomerset High School Job

Direct materials $25,000 $600
Direct manufacturing labor $5,000 $200
Manufacturing overhead costs $20,000
Machine-hours 40,000mh 800mh
Required:
a. Determine the annual manufacturing overhead cost-allocation rate for Chief Manufacturing.
b. Determine the amount of manufacturing overhead costs allocated to the Somerset High
School job.
c. Determine the estimated total manufacturing costs for the Somerset High School job.
11) A company has $25,000 of depreciation on plant assets and paid $12,000 for repairs also
to plant assets. Show the required journal entries

12) River Falls Manufacturing uses a normal cost system and had the following data
available for 2020:
Direct materials purchased on account $159,000
Direct materials requisitioned 81,000
Direct labor cost incurred 129,000

Factory overhead incurred 142,000

Cost of goods completed 289,000
Cost of goods sold 260,000

Beginning direct materials inventory 26,000

Beginning WIP inventory 66,000
Beginning finished goods inventory 55,000
Overhead application rate, as a percent of direct-labor costs is 140 percent
Calculate the ending balance of work-in-process inventory.

13) Job-cost records for Boucher Company contained the following data:
 Total Cost
Date Date Date of Job
Job No. Started Finished Sold at June 30
220 May 18 June 12 June 20 $6,000
221 May 20 June 19 June 21 4,000
222 June 7 July 5 July 12 7,000
223 June 10 June 28 July 1 6,500
224 June 19 July 16 July 25 8,000
Required:
a. Compute WIP inventory at June 30.
b. Compute finished goods inventory at June 30.
c. Compute cost of goods sold for June.

PROCESS COSTING
14) Charlie Chairs Inc., manufactures plastic moldings for car seats. Its costing system
utilizes two cost categories, direct materials and conversion costs. Each product must pass
through Department A and Department B. Direct materials are added at the beginning of
production. Conversion costs are allocated evenly throughout production.

Data for Department A for February 2020

are:
Work in process, beginning
inventory, 40% converted 320 units
Units started during February 900 units
Work in process, ending inventory 120 units

Costs for Department A for February 2020

are:
Work in process, beginning
inventory:
Direct materials $160,000
Conversion costs $203,000
Direct materials costs added during
February $601,000
Conversion costs added during
February $427,000
How many units were completed and transferred out of Department A during February?

15) Big Bernard Corporation was recently formed to produce a semiconductor chip that
forms an essential part of the personal computer manufactured by a major corporation. The
direct materials are added at the start of the production process while conversion costs are
added uniformly throughout the production process. June is Big Bernard's first month of
operations, and therefore, there was no beginning inventory. Direct materials cost for the
month totaled $950,000, while conversion costs equaled $4,625,000. Accounting records
indicate that 475,000 chips were started in June and 425,000 chips were completed.
Ending inventory was 50% complete as to conversion costs.
Required:
a. What is the total manufacturing cost per chip for June?
b. Allocate the total costs between the completed chips and the chips in ending inventory.

16) Sodius Chemical Inc. placed 220,000 liters of direct materials into the mixing process. At
the end of the month, 5,000 liters were still in process, 30% converted as to labor and
factory overhead. All direct materials are placed in mixing at the beginning of the process
and conversion costs occur evenly during the process. Sodius uses weighted-average
costing.
Required:
a. Determine the equivalent units in process for direct materials and conversion costs,
assuming there was no beginning inventory.
b. Determine the equivalent units in process for direct materials and conversion costs,
assuming that 12,000 liters of chemicals were 40% complete prior to the addition of the
220,000 liters.

17) Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing
system uses two cost categories, direct materials and conversion costs. Each product must
pass through the Assembly Department and the Testing Department. Direct materials are
added at the beginning of the production process. Conversion costs are allocated evenly
throughout production. Timekeeper Inc. uses weighted-average costing.
Data for the Assembly Department for June
2020 are:
Work in process, beginning inventory 380 units
Direct materials (100% complete)
Conversion costs (60% complete)

Units started in June 960 units

Work in process, ending inventory: 210 units
Direct materials (100% complete)
 Conversion costs (75% complete)

Costs for June 2020:

Work in process, beginning
inventory:
Direct materials $92,500
Conversion costs $136,500
Direct materials costs added during
June $604,000
Conversion costs added during June $402,500
What amount of direct materials costs is assigned to the ending Work-in-Process account
for June?

18) Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing
system uses two cost categories, direct materials and conversion costs. Each product must
pass through the Assembly Department and the Testing Department. Direct materials are
added at the beginning of the production process. Conversion costs are allocated evenly
throughout production. Timekeeper Inc. uses weighted-average costing.

Data for the Assembly Department for June

2020 are:
 Work in process, beginning inventory 350 units
Direct materials (100% complete)
Conversion costs (50% complete)

Units started in June 1040units

Work in process, ending inventory: 220 units
Direct materials (100% complete)
Conversion costs (85% complete)

Costs for June 2020:

Work in process, beginning
inventory:
Direct materials $90,000
Conversion costs $137,000
Direct materials costs added during
June $603,000
Conversion costs added during June $400,500
What amount of conversion costs is assigned to the ending Work-in-Process account for
June?
CVP ANALYSIS

1) Tally Corp. sells software during the recruiting seasons. During the current year, 11,000
software packages were sold resulting in $440,000 of sales revenue, $120,000 of variable
costs, and $52,000 of fixed costs.
What happens to operating income if sales increase by $100,000?

2) Orion Company sells several products. Information of average revenue and costs is as
follows:
Selling price per unit $21
Variable costs per unit:
Direct material $6
Direct manufacturing labor $1.80
Manufacturing overhead $0.50
Selling costs $2
Annual fixed costs $96,000
The company sells 12,000 units at the end of the year.

What happens to the contribution margin if direct labor and direct material costs increase
by $1 each?
3) Family Furniture sells a table for $1,000. Its fixed costs are $35,000, while its variable
costs are $700 per table. It currently plans to sell 180 tables this month.
What is the budgeted operating income for the month assuming that Family Furniture sells
180 tables?

4) Sparkle Jewelry sells 500 units resulting in $80,000 of sales revenue, $30,000 of variable
costs, and $26,000 of fixed costs.
What is the breakeven point in units?

5) Sparkle Jewelry sells 500 units resulting in $75,000 of sales revenue, $32,000 of variable
costs, and $20,000 of fixed costs.
Calculate the number of units that must be sold to achieve $41,000 of operating income.

6) Rosewood Company sells wooden carvings for $390 each. The direct materials cost per
unit is $150 and the direct labor is 2 hours at a rate of $30 per hour. Manufacturing
overhead is applied on the basis of labor hours at a rate of $38 per hour. Rosewood makes
and sells 1,900 units per period. How many units must Rosewood sell to breakeven?

7) Kmax Inc. wants to make a $1,500,000 operating income during the upcoming period.
The forecast is for sales of 15,000 units. The variable cost per unit is $55 and the total fixed
costs are $1,875,000. What is the target selling price per unit?