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121.Value-added activities a.should be reduced or eliminated. b.involve resource usage customers are willing to pay for. c.add cost to a product without affecting selling price. d.cannot be differentiated from non-value-added activities.               122.All of the following are examples of a value-added activity in a service company except a.delivering packages by a delivery service. b.ordering supplies. c.performing surgery. d.providing legal.
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MULTIPLE CHOICE QUESTIONS               31.Which of the following is not typical of traditional costing systems? a.Use of a single predetermined overhead rate. b.Use of direct labor hours or direct labor cost to assign overhead. c.Assumption of correlation between direct labor and incurrence of overhead cost. d.Use of multiple cost drivers to allocate overhead.               32.In traditional.
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              21.Not all activities labeled non-value-added are totally wasteful, nor can they be totally eliminated.               22.The overall objective of installing ABC in service firms is no different than it is in a manufacturing company.               23.What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion.
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108.The last department in a production process shows the following information at the end of the period:    Units  Beginning Work in Process25,000 Started into Production175,000 Ending Work in Process50,000 How many units have been transferred out to finished goods during the period? a.175,000. b.200,000. c.225,000. d.150,000.               109.A process began the month with 3,000 units in the beginning work.
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              81.Which would be an appropriate cost driver for the ordering and receiving activity cost pool? a.Machine setups b.Purchase orders c.Machine hours d.Inspections               82.As compared to a high-volume product, a low-volume product a.usually requires less special handling. b.is usually responsible for more overhead costs per unit. c.requires relatively fewer machine setups. d.requires use of direct labor hours as.
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Ex. 175 Sycamore Manufacturing Company has gathered the following information. Units in beginning work in process-0- Units started into production54,000 Units in ending work in process9,000 Percent complete for conversion costs in ending work in process40% Costs incurred: Direct materials$  81,000 Direct labor$  99,000 Overhead$119,700 Instructions (a)Compute equivalent units of production for materials and for conversion costs. (b)Determine the unit costs of production. (c)Show.
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Ex. 184 Wasserman Manufacturing—Jackson Division is a new state of the art production facility that manufactures landing gears for airplanes. The ending September 30th work in process is comprised of labor and overhead and is approximately 60% complete. All materials are assumed to be 100% complete. Total materials costs during the.
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Ex. 183 The Assembly Department of Colson, Inc. has the following production and cost data at the end of May, 2012. Production:30,000 units started into production; 25,000 units transferred out and 5,000 units 100% completed as to materials and 40% completed as to conversion costs. Manufacturing Costs:Materials added at beginning of process, $90,000;.
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131.Which of the following is not a unit-level activity? a.Drilling b.Cutting c.Sanding d.Inspecting               132.Which of the following is a unit-level activity? a.Painting b.Purchase ordering c.Inspection d.Material handling               133.Which of the following is a batch-level activity? a.Assembling b.Product design c.Engineering changes d.Purchase ordering               134.Which of the following is a product-level activity? a.Equipment setups b.Product design c.Property taxes d.Utilities               135.Which of the following is a facility-level activity? a.Engineering changes b.Product.
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Ex. 169 The Assembly Department uses a process cost accounting system and a weighted-average cost flow assumption. The department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. During July, $190,000 of materials costs and $135,000 in conversion costs were charged to the department..
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EXERCISES Ex. 159 Prior Manufacturing Company produces a product in two departments: (1) Mixing and (2) Finishing. The company uses a process cost accounting system. (a)Purchased raw materials for $50,000 on account. (b)Raw materials requisitioned for production were: Direct materials Mixing department$20,000 Finishing department14,000 (c)Incurred labor costs of $64,000. (d)Factory labor used: Mixing department$39,000 Finishing department25,000 (e)Manufacturing.
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              51.A well-designed activity-based costing system starts with a.identifying the activity-cost pools. b.computing the activity-based overhead rate. c.assigning manufacturing overhead costs for each activity cost pool to products. d.analyzing the activities performed to manufacture a product.               52.Which of the following is not an example of an activity cost pool? a.Setting up machines b.Machining c.Inspecting d.Machine hours               53.An example.
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Ex. 162 Reymont Manufacturing Industries uses a process cost system. Products are processed first by Department A, second by Department B, and then they are transferred to the finished goods warehouse. Shown below is the cost information for Department B during the month of October: Costs of units transferred in$120,000 Manufacturing costs added.
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Ex. 160 Nieland Industries has two production departments: Fabricating and Finishing. Beginning inventories are: Work in Process—Fabricating, $6,030; Work in Process—Finishing, $4,100; and Finished Goods, $5,600. During the month the following transactions occurred: 1.Purchased $40,000 of raw materials on account. 2.Incurred $65,000 of factory labor. Wages are unpaid. 3.Incurred $35,000 of manufacturing overhead; $30,000.
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MATCHING 196.Match the items in the two columns below by entering the appropriate code letter in the space provided. A.Total manufacturing cost per unit              E.Cost reconciliation schedule B.Equivalent units of production              F.Units transferred out C.Total units accounted for              G.              Unit production costs D.Production cost report              H.              Physical units ____              1.A summary of both production quantity and.
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BE 152 Strickland Company has the following production data for March.  Ending Work in Process  Month Beginning Work in Process Units Transferred Out Units % Complete as to Conversion Cost March 1,200 7,100 800 20%   Instructions Compute the physical units for March. BE 153 Hernandez Drilling Company has the following production data for June: units transferred out 50,000, and ending work in process 6,000 units that are 100%.
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BE 157 Logging and Lumber Industries has the following production data for March: Beginning work in process, 2,000 units, which are 30% complete for conversion costs Units transferred out, 42,000 Units in ending work in process, 6,000, which are 80% complete for conversion costs Materials are added only at the beginning of the process. aBE 157(Cont.) Instructions Compute.
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151.The use of activity-based costing in service industries a.has the same objective as in manufacturing. b.results in improved costing of services provided. c.uses cost pools to assign overhead. d.all of these.               a152.Just-in-time processing a.is based on a just-in-case philosophy. b.results in a push approach. c.minimizes inventory storage and waiting time. d.all of these.               a153.An element of just-in-time processing.
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Ex. 172 Given below are the production data for Department No. 1 for the first month of operation: Costs charged to Department 1: Materials$15,000 Labor2,600 Overhead17,000 During this first month of operations, 3,000 units were started into production; 2,500 units were transferred out; and the remaining 500 units are 100% completed with respect to materials and.
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Ex. 174 Morgan, Player, and Associates, a law firm, employs ABC. The following budgeted data for each of the activity cost pools is provided for the year 2012. EstimatedExpected Use of Activity Cost PoolsOverheadCost Drivers per Activity Researching legal issues$     28,800     900 research hours Meeting with clients  1,760,000  8,800 professional hours Preparing legal documents     480,00030,000 pages During.
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              71.Addison Manufacturing Company manufactures two products, Regular and Supreme. Addison’s overhead costs consist of machining, $2,000,000; and assembling, $1,000,000. Information on the two products is: RegularSupreme Direct labor hours10,00015,000 Machine hours10,00030,000 Number of parts90,000160,000 Overhead applied to Supreme using activity-based costing is a.$860,000. b.$1,200,000. c.$1,800,000. d.$2,140,000.               72.Teller, Inc. produces 3 products: P1, Q2, and R3. P1 requires 400.
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118. A department had the following information for the month: Total materials costs$150,000 Conversion cost per unit$3.00 Total manufacturing cost per unit$5.00 What are the equivalent units of production for materials? a.75,000. b.50,000. c.30,000. d.Cannot be determined               119.Mountain King Manufacturing decided to analyze certain costs for June of the current year. Units started into production equaled 28,000 and.
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Ex. 178 Viking Manufacturing Company’s total materials costs are $50,000 and total conversion costs are $39,000. Equivalent units of production for materials are 10,000, and 6,000 for conversion costs. Instructions Compute the unit costs for materials, conversion costs, and total manufacturing costs for the month. Ex. 179 Dotson Company has the following production data for.
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a              128.The Wrapping Department’s output during the period consists of 15,000 units completed and transferred out, and 900 units in ending work in process that were 75% complete as to materials and conversion costs. Beginning inventory was 1,200 units that were 30% complete as to materials and conversion costs. Under.
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              41.Ordering materials, setting up machines, assembling products, and inspecting products are examples of a.cost drivers. b.overhead cost pools. c.direct labor costs. d.nonmanufacturing activities.               42.An “Ordering and Receiving Materials” cost pool would most likely have as a cost driver: a.machine hours. b.number of setups. c.number of purchase orders. d.number of inspection tests.               43.Daffodil Company produces two products, Flower.
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              61.To use activity-based costing, it is necessary to know the a.cost driver for each activity cost pool. b.expected use of cost drivers per activity. c.expected use of cost drivers per product. d.all of the above.               62.To assign overhead costs to each product, the company a.multiplies the activity-based overhead rates per cost driver by the.
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BE  167 Dolan Tires manufactures tires for dune buggies and has two different products, nubby tires and smooth tires. The company produces 5,000 nubby tires and 10,000 smooth tires each year and incurs $171,000 of overhead costs. The following information is available:     Activity   Total Cost    Cost Driver     Materials handling$60,000Number of requisitions Machine setups54,000Number of setups Quality inspections57,000Number.
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Ex. 181 Peanut Company uses a process cost system. The Molding Department adds materials at the beginning of the process and conversion costs are incurred uniformly throughout the process. Work in process on May 1 was 75% complete and work in process on May 31 was 40% complete. Instructions Complete the Production Cost.
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111.Which of the following is a value-added activity? a.Inventory control b.Inspections c.Packaging d.Repair of machines 112.Which of the following is a non-value-added activity? a.Inventory control b.Machining c.Assembly d.Painting 113.Which of the following is a non-value-added activity? a.Painting b.Finishing c.Packaging d.Building maintenance               114.A non-value-added activity in a service enterprise is a.providing legal research. b.delivering packages. c.consulting. d.bookkeeping. 115.A value-added activity in a service enterprise is a.performing landscaping services. b.reception. c.billing. d.ordering supplies.               116.Non-value-added activities a.should.
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TRUE-FALSE STATEMENTS               1.Traditional costing systems use multiple predetermined overhead rates.               2.Traditionally, overhead is allocated based on direct labor cost or direct labor hours.               3.Current trends in manufacturing include less direct labor and more overhead.               4.Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using.
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101.Which of the following is not a benefit of activity-based costing? a.More accurate product costing b.Enhanced control over overhead costs c.Better management decisions d.Less costly to use               102.Each of the following is a limitation of activity-based costing except that a.it can be expensive to use. b.it is more complex than traditional costing. c.more cost pools are used. d.some.
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Ex. 168 The general ledger of Ferry Company has the following work in process account. WORK IN PROCESS—FINISHING 6/1Balance8,0006/30Transferred out? 6/30Materials1,800 6/30Labor2,400 6/30Overhead2,800 6/30Balance? Production records show that there were 2,000 units in beginning inventory, 50% complete; 4,000 units started, and 3,500 units transferred out. The beginning work in process had conversion costs of $3,300. The units in.
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COMPLETION STATEMENTS               187.Process cost systems are used to apply costs to similar products that are ____________ in a ____________ fashion.               188.Separate _________________ accounts are maintained for each production department or manufacturing process in a process cost system.               189.In a process cost system, manufacturing costs are summarized in a ________________ report.
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              91.Berg Company incurs $240,000 overhead costs each year in its three main departments, setup ($15,000), machining ($165,000), and packing ($60,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Berg’s two.
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141.Activity-based costing is used by a.accounting firms. b.law firms. c.consulting firms. d.all of the above.               142.Austin Accounting Services estimates for next year revenues of $1,000,000, direct labor of $200,000, and overhead of $350,000. Under traditional costing, overhead is applied to audit jobs using the rate of a.35% of revenues. b.20% of revenues. c.56% of direct labor. d.175% of.
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Exercises Ex. 172 Hayward Industries manufactures dining chairs and tables. The following information is available: Dining ChairsTablesTotal Cost Machine setups200600$36,000 Inspections250470$54,000 Labor hours2,6002,400 Hayward is considering switching from one overhead rate based on labor hours to activity-based costing. Instructions Perform the following analyses for these two components of overhead: a.Compute total machine setups and inspection costs assigned to each product,.
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Ex. 178 Two of the activity cost pools for Kinney Company are (a) machining ($300,000) and (b) inspections ($42,000). Possible cost drivers are direct labor hours (2,550), machine hours (12,500), square footage (2,000), and number of inspections (200). Instructions Compute the overhead rate for each activity. Ex. 179 Holmes Industries produces two models of televisions,.
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BRIEF Exercises BE 163 Instant Access Services Inc. leases access to high-speed computers to small businesses. It provides the following information for the year: BudgetedActual Overhead cost$2,000,000$1,900,000 Computer hours     100,000       90,000 Direct labor hours     200,000     180,000 Overhead is applied on the basis of computer hours. Instructions a. Compute the predetermined overhead rate. b. Determine the amount of overhead applied for.
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Ex. 171 Holmgren Manufacturing uses a process cost system and the weighted-average cost flow assumption. Production begins in the Fabricating Department where materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. On March 1, the beginning work in process inventory consisted of.
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Ex. 164 Brandon Graf Company has the following production data for March. Ending Work in Process BeginningUnits   % Complete as to    MonthWork in ProcessTransferred OutUnitsConversion Cost March3,00042,0005,00080% Instructions Compute equivalent units of production for March for both materials and conversion costs. Materials are entered at the beginning of the process. Ex. 165 The Silver Plating Department of Botosan Manufacturing began.
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Ex. 170 The Finishing Department of Maverick Industries has the following production and cost data for July: 1.Transferred out, 3,000 units. 2.Started 2,000 units that are 40% completed at July 31. 3.Materials added, $30,000; conversion costs incurred, $19,000. Materials are entered at the beginning of the process. Conversion costs are incurred uniformly during the process. Ex..
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              11.ABC usually results in less appropriate management decisions.               12.ABC is generally more costly to implement than traditional costing.               13.ABC eliminates all arbitrary cost allocations.               14.ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.               15.ABC is particularly useful when overhead costs are an insignificant portion.
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Ex. 166 At Margaret Avery Manufacturing, materials are entered at the beginning of each process. Work in process inventories, with the percentage of work done on conversion, and production data for its Painting Department in selected months are as follows: Beginning Work In ProcessEnding Work In Process PercentageUnits CompletedPercentage MonthUnitsCompletedand Transferred OutUnitsCompleted July-0-—10,00050090% Sept.2,50020%9,0002,00070% Instructions (a)Compute the physical.
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  BRIEF EXERCISES BE 147 Workman Shoe Company has the following production data for January: Beginning work in process, 0 units Units transferred out, 35,000 Units in ending work in process, 6,000, which are 30% complete for conversion costs Materials are added only at the beginning of the process. Instructions Compute equivalent units of production for both materials and.
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aEx. 186 Chinook Manufacturing uses a process cost system and the FIFO cost flow assumption. Production begins in the Crafting Department where materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. On November 1, the beginning work in process inventory consisted of.
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Ex. 182 Coldwell Winery manufactures a fine wine in two departments, Fermenting and Bottling. In the Fermenting Department, grapes are aged in casks for a period of 30 days. In the Bottling Department, the wine is bottled and then sent to the finished goods warehouse. Labor and overhead are incurred uniformly.
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138Equivalent units of production are a measure of a.units completed and transferred out. b.units transferred out. c.units in ending work in process. d.the work done in a period expressed in fully completed units. 139.Total physical units to be accounted for are equal to the units a.started (or transferred) into production. b.started (or transferred) into production plus the.
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SHORT-ANSWER ESSAY QUESTIONS S-A E  197 Why do some companies need a cost accounting system while others do not?  What are the determining characteristics or factors that influence the type of cost accounting system that is appropriate for a company? S-A E  198 The production cost report summarizes the activities that have taken place.
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Ex. 173 The ledger of Wiseman & Shin Company has the following work in process account. Work in Process—Painting 5/1 5/31 5/31 5/31 Balance Materials Labor Overhead 5,390 7,740 4,110 2,470 5/31 Transferred out ? 5/31 Balance ? Production records show that there were 700 units in the beginning inventory, 30% complete, 2,300 units started, and 2,500 units transferred. The beginning work in process had materials cost of $3,060 and conversion.
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Ex. 177 The Polishing Department of Garrison Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process. Production: Beginning inventory 2,000 units that are 100% complete as to materials and 30% complete as to conversion costs; units started during the period are.
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