Managerial Accounting - Quiz 8

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Managerial Accounting

Quiz 8

 

                                                       FILL-IN-THE-BLANK—PRINCIPLES AND TERMINOLOGY

 

INSTRUCTIONS: Complete each of the following statements by writing the appropriate words or amount in the Answers column.

 

 

 

For

 

Answers

Scoring

         0.... The greatest advantage of using a single plant-wide overhead rate is that it is.....................................................................................................................

 

simple


   0. ____

         1.... When a plant-wide factory overhead rate is used, the total overhead costs allocated to all products will be (the same, different)

 


   1. ____

         2.... A plant-wide factory overhead rate is computed by dividing total budgeted factory overhead costs by the

 

   2. ____

      3-5.... The three overhead allocation methods are .................................................

 

 

          

        3.    1. ....................................................................................................................

 

 

  3. ____

           

         4.... 2.  ...................................................................................................................

 

 

  4. ____

           

         5.... 3.  ...................................................................................................................

 

 

  5. ____

         6.... When the multiple production department factory overhead rate method is used to allocate factory overhead to products, each department uses (the same, a different) overhead rate ..................................................................

 



   6. ____

         7.... Multiple production department factory overhead rates are more accurate than are plant-wide overhead rates.  (Answer, “true” or “false”) ...................

 

 


   7. ____

         8.... Cost accumulations associated with a given activity are called ...................

 

   8. ____

    9-10.... Estimated factory overhead costs for the year are $420,000.  All products are processed on the same manufacturing line in a similar manner.  Direct labor for the year is estimated to be $120,000 (8,000 hours).

 



              

        9.    A plant-wide overhead rate based on direct labor cost would be ..................

 

  9. ____

       10.... A plant-wide overhead rate based on direct labor hours would be ...............

  $

10. ____

  11-13.... Waxon Company produces tables and chairs in two departments, Fabrication and Assembly.  The Fabrication Department overhead budget is $240,000, and the Assembly Department overhead budget is $60,000.  Direct labor hours budgeted for each department are 16,000 and 5,000 respectively.

 


              

      11.    If a departmental overhead rate is established based on direct labor hours, the Fabrication Department overhead rate will be ........................................

$

 

11. ____

       12.... If a departmental overhead rate is established based on direct labor hours, the Assembly Department overhead rate will be...........................................

$


12. ____

       13.... A plant-wide overhead rate based on direct labor hours would be (round up to the next cent).............................................................................................

$

              

13. ____

       14.... The danger of product cost distortion is that it can lead to bad decisions and flawed .....................................................................................................

 


14. ____

       15.... Activity-based costing for a hospital might use, as an activity base for its radiological department, the number of ........................................................

 


15. ____

Note: Each blank is worth one point.

 

PROBLEM 1—PROBLEMS

 

INSTRUCTIONS:  Solve the following problems and record the answers in the Answers column.

 

 

 

For

 

Answers

Scoring

         0.... If Product A used 20 direct labor hours and the plantwide factory overhead rate is $5 per dlh, the factory overhead allocated to A is ........................................................................


$100 per unit

              

  0. ____

         1.... If the budgeted factory overhead is $1,620,000 and the direct labor hours budgeted is 72,000, what is the plantwide factory overhead rate per direct labor hour? .......................................



      $



   1. ____

         2.... If it takes 23 direct labor hours to complete one unit of Product C, how much would the factory overhead cost per unit be if the factory overhead rate computed in Question 1 is used? .......................................................................................



      $



   2. ____

         3.... Compute the factory overhead rate per kilowatt hour if the estimated allocation base is 1,800,000 kilowatt hours and the budgeted factory overhead is $400,000 (round to the nearest cent)..........................................................................................



      $



   3. ____

         4.... If Product C used 22,000 kilowatt hours in the Machining Department, how much Machining Department factory overhead would be allocated to Product C if the rate computed in Question 3 is used? ............................................



      $



   4. ____

         5.... Compute the activity rate per machine hour if the activity base is 15,000 machine hours and the factory overhead is $600,000 ..................................................................................


      $


   5. ____

         6.... If Product D used 37 machine hours in the Assembly Department, how much factory overhead would be allocated to Product D if the activity rate computed in Question 5 is used? .......................................................................................



      $



   6. ____

   7–10.... Assume that two products, X and Y, each require one direct labor hour to produce a unit and have a demand of 1,000 units each. Product X is produced in batches of 5, or 200 setups, while Product Y is produced in batches of 20, or 50 setups. If factory overhead only includes setup at $6,000:

 

 

         7.... What is the total factory overhead for Produce X, using conventional allocation? ..........................................................


      $


   7. ____

         8.... What is the total factory overhead for Product X, using activity–based allocation? ........................................................


      $


   8. ____

         9.... What is the total factory overhead for Product Y, using activity–based allocation? ........................................................


      $


   9. ____

       10.... What is the factory overhead per unit of Product Y, using activity–based allocation? ........................................................


      $


10. ____


Note: Each blank is worth one point.

 

                                                       FILL-IN-THE-BLANK—PRINCIPLES AND TERMINOLOGY

 

INSTRUCTIONS: Complete each of the following statements by writing the appropriate words or amount in the Answers column.

 

 

 

For

 

Answers

Scoring

         0.... Just-in-time manufacturing is sometimes called .....................

 lean manufacturing

  0. ____

         1.... A business philosophy that focuses on eliminating time, cost, and poor quality within manufacturing and nonmanufacturing processes is called short-cycle processing or .........................

 



  1. ____

        2.    A company moving from traditional manufacturing methods to just-in-time will probably see (an increase or a decrease) in the number of its suppliers.

 

 

  2. ____

        3.    The lead time that a product waits in inventories, moves unnecessarily, and waits during machine breakdowns is called ........................................................................................

 

 

  3. ____

         4.... In short-cycle operations, production planners do not make forecasts of estimated orders but base the schedule of manufacturing on firm orders from customers. This system is called ........................................................................................

 



  4. ____

         5.... The production scheduling approach based on replacing depleted inventories rather than producing to fill a customer order is called (answer “make-to order” or “make-to-stock”) ..

 



  5. ____

   6–9. Answer “agree” or “disagree” for each of the following statements:

 

 

         6.... The just-in-time environment relies on nonfinancial measures of performance. .......................................................................

 


  6. ____

         7.... The just-in-time philosophy embraces a product-oriented layout in order to reduce move distances and setups. ............

 


  7. ____

         8.... A critical feature of the just-in-time philosophy is to maintain safety stocks of product to allow for maintenance downtimes. ..................................................................................................

 


  8. ____

        9.    To minimize the impact of set-up time on a production run, just-in-time manufacturers produce extra units for future orders. ......................................................................................

 

 

  9. ____

       10.... The time that each unit in a batch spends waiting its turn to be worked on is called ..................................................................

 


10. ____

       11.... Organizing work around products is called product-oriented layout or ...................................................................................  

 

11. ____

       12.... The management approach that grants employees the responsibility and authority to make decisions about operations is called ...................................................................

 


12. ____

      13.    The process of instruction employees to operate all the equipment located in their production cells is called ................

 

 

13. ____

      14.    The primary emphasis in any just-in-time system is a never-ending effort to improve product .............................................

 

 

14. ____

       15.... A bar chart that shows the totals of a particular attribute for a number of categories is a ........................................................

 

 

15. ____

 

Note: Each blank is worth one point.

 

PROBLEM 2—PROBLEMS

 

INSTRUCTIONS:  Solve the following problems and record the answers in the Answers column.

 

 

 

For

 

Answers

Scoring

         0.... If materials used was $10,000, direct labor was $15,000 and factory overhead was $20,000, in a just-in-time manufacturing company, raw and in-process inventory would be debited for ...


$45,000

              

  0. ____

     1–2.... The product cell for Samantha Company has budgeted conversion costs of $540,000 for the month. The cell is planned to be available for production for 200 hours. The cell produced 800 units. The budgeted cell time per unit is 4.5 minutes. The materials cost per unit is $50.







         1.... What is the cost debited to Raw and In Process Inventory for the period?

      $

   1. ____

         2. .. What is the cost debited to Finished Goods for the period? ........

      $

   2. ____

     3–4.... A machine with annual budgeted costs of $430,000 for depreciation, $160,000 for maintenance, and $190,000 supporting labor has 600 planned operating machine hours per year.


     


              

         3.... The total annual budgeted costs are ...........................................

      $

   3. ____

         4.... The cell conversion cost rate per machine hour is .....................

      $

   4. ____

         5.... In performance reporting for the XY–05 production cell for a manufacturer, what would be the cell conversion cost rate if $850,000 were budgeted for conversion costs and these costs supported 400 hours of production? ............................................

 


      $

 


   5. ____

   6-10.   Given the following schedule of activity costs, compute the answers below

              Quality Control Activities                       Activity Costs

              Process audits                                            $55,000

              Training of machine operators                      26,000

              Processing of returned products                   18,000

              Disposal of scrap                                           29,000

              Rework                                                            8,000

              Preventative maintenance                            30,000

              Product design                                              46,000

              Warranty work                                               12,000

              Finished goods inspection                             22,000

 

 

       6.     Based on the above, the value added costs were ……………………………

      $

   6. ____

       7.     Based on the above, the nonvalue added costs were .………………………

      $

   7. ____

       8.    Based on the above, the internal failure costs were …………………………

     $

  8. ____

       9.    Based on the above, the external failure costs were…….... …………………

      $

  9. ____

     10.    Based on the above, the percentage of nonvalue added costs was ………

                     %

10. ____

 

 

Note: Each blank is worth one point.

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