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Exam 13: Job-Costing

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Question 41

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Red Raiders Company had the following information: $\begin{array}{lr}\text { Budgeted variable factory overhead }&\$66,000\\\text { Budgeted fixed factory overhead }&\$46,500\\\\\text { Actual variable factory overhead }&\$67,500\\\text { Actual fixed factory overhead }&\$52,500\\\\\text { Budgeted cost driver activity levels: }\\\text { Direct- labor hours } & 30,000 \\\text { Direct- labor costs } & \$ 150,000 \\\text { Machine hours } & 60,000 \\\text { Productionsetups } & 15,000\\\\\text { Actual cost driver activity levels: }\\\text { Direct- labor hours } & 31,500 \\\text { Direct-labor costs } & \$ 165,600 \\\text { Machine hours } & 56,190 \\\text { Productionsetups } & 14,280\end{array}$ The budgeted factory- overhead rate using machine hours as the cost driver is:

A) $2.000
B) $2.003
C) $1.875
D) $2.135

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Question 42

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Fighting Irish Company reported the following information about the production and sales of its only product during its first month of operations: $\begin{array}{ll}\text { Sales }(\$ 225 \text { per unit) } & \$ 360,000 \\\text { Direct materials used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable s elling and administrative } & \$ 20,000 \\\text { expenses } &\\\text { Fixed selling and adminis trative expenses }&\$10,000\\\text { Ending inventories: Direct materials }&-0-\\\text { WIP } & -0- \\\text { Finished goods } & \mathbf{4 0 0} \text { units }\end{array}$ were produced.

A) 400 units
B) 1,600 units
C) 1,575 units
D) 2,000 units

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Question 43

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Choosing direct- labor cost rather than direct- labor hours as a cost driver for overhead implies that:

Huskies Company had the following information: $\begin{array}{ll}\text { Budgeted factory overhead } & \$ 85,000 \\\text { Actual factory overhead } & \$ 105,000 \\\text { Budgeted: Direct- labor costs } & \$ 100,000 \\\text { Actual: Direct-labor costs } & \$ 105,000\end{array}$ The budgeted factory- overhead rate using direct- labor costs as the cost driver is:

A company has the following information for its first month of operations: $\begin{array}{ll}\text { R aw materials used } & \$ 25,000 \\\text { S ales }(\$ 65 \text { per unit) } & \$ 78,000 \\\text { Direct lab or } & \$ 42,000 \\\text { V ariable factory overhead } & \$ 17,000 \\\text { Fixed factory overhead } & \text { unknown }\\\text { Variable selling and administrative } & \$ 3,000 \\\text { Fixed selling and administrative } & \$ 5,000 \\\text { Gross profit } & \$ 30,000 \\\text { Contribution margin } & \text { unknown }\end{array}$ The company sold half of the units it produced. _ is the cost of goods sold under absorption costing.

Underapplied and overapplied fixed overhead has two components: (1) a production- volume variance, and (2) a fixed- overhead flexible- budget variance.

The variable- costing income statement uses the contribution- approach format.

is (are) computed for fixed overhead.

Fixed manufacturing overhead is excluded from the cost of products under absorption costing.

The fixed- overhead rate is determined by dividing the budgeted fixed manufacturing overhead by:

Total overhead applied is the result of multiplying the actual amount of the cost driver by the budgeted overhead rate.

Variable costing is more important for external reporting than for internal decision making.

The proration method of disposing of overhead variances assigns the variance in proportion to the sizes of the ending account balances to:

The immediate write- off method subtracts the underapplied overhead amount from Cost of Goods Sold.

In determining the budgeted overhead application rate, the actual amount of the cost driver is used as the numerator.

An unfavorable production- volume variance decreases the manufacturing costs shown on the income statement.

Wilson Company reported the following information about the production and sales of its only product during its first month of operations: $\begin{array} { l l } \text { Sales ( } \$ 225 \text { per unit) } & \$ 360,000 \\\text { Direct materials used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and administrative } & \$ 20,000 \\\text { expenses } & \\\text { Fixed s elling and administrative expenses } & \$ 10,000 \\\text { Endinginventories: Direct materials } & - 0 - \\\text { WIP } & - 0 -\\\text { Finished goods }&400 \text { units }\end{array}$ The gross profit under absorption costing is:

The format for the absorption- costing income statement separates costs into major categories of _ _ and _

is not an inventoriable cost under variable costing.

When actual volume is less than expected volume, fixed overhead is: