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Exam 2: Product Costing: Manufacturing Processes, cost Terminology and Cost Flows

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Question 41

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Jones Manufacturing Inc. incurred the following costs in November: $\begin{array} { l r l r } \text { Direct labour } & \$ 50000 & \text { Advertising costs } & \$ 33000 \\\text { Indirect labour } & 20000 & \text { Factory rent } & 10000 \\\text { Administrative salaries } & 25000 & \text { Factory depreciation } & 6000 \\\text { Direct materials purchased } & 23000 & \text { Administrative rent } & 5000 \\\text { Indirect materials used } & 4000 & \text { Administrative depreciation } & 7000\end{array}$ In addition, the following information is also available: $\begin{array}{c}\begin{array}{l}\\ \text { Raw materials }\\ \text { Work-in-process }\\ \text { Finished goods}\\\\ \text { Number of units produced }\\ \text {Number of units sold}\\ \text { (sales price of \$ 25 per unit) }\\\end{array}\begin{array}{rr}\underline{\text { Beginning} } &\underline{ \text { Ending }}\\\$ 5000 & \$ 8000 \\60000 & 55000 \\17250 & 9200 \\& \\& 20000 \text { units } \\\\& 21400 \text { units }\end{array}\end{array}$ -Cost of goods manufactured in November is:

A) $ 91 000
B) $115 000
C) $155 000
D) $143 000

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Question 42

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In a just-in-time environment,the production process often begins when:

A) products are moved from raw materials to work-in-process.
B) a customer places an order.
C) the product is delivered to a customer.
D) products are moved from work-in-process to finished goods.

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Question 43

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Provide specific examples of why accurate product or service costing information is important for internal purposes.

Which of the following is not a type of manufacturing cost?

Which of the following is not an example of a manufacturing overhead cost?

The journal entry to record cost of goods manufactured would include a:

In general,costs incurred in the factory that do not qualify as either direct material or direct labour are called:

Clapton Inc.would like to prepare an income statement for March.Their production department records show that total product costs in March were $225 000 when 50 000 units were produced.Their sales department records show that 46 000 units were sold for $16 each.Monthly administrative and marketing expenses totalled $60 000.What should be net income for March?

Which of the following statements regarding the traditional manufacturing environment is not true?

Products and their costs flow through a production facility in the following order:

The following information is available for the Brown Company for the month ended 31 July: $\begin{array}{lr}\text { Direct materials purchased } & \$21000 \\\text { Direct labour (2500 hrs@\$12) } & 30000 \\\text { Indirect labour } & 3000 \\\text { Indirect materials } & 2500 \\\text { Office supplies expense } & 100 \\\text { Factory equipment depreciation } & 2000 \\\text { Office Equipment depreciation } & 750 \\\text { Administrative expenses } & 20000 \\\text { Office utilities } & 75\\\text { Factory utilities } & 200 \\\text { Marketing expense } & 2500 \\\text { Sales revenue } &150000 \\\text { Sales commissions expense } & 1500\end{array}$ $\begin{array}{lrr}&\underline{\text { Beginning }}&\underline{ \text { Endling} }\\\text { Direct materials inventory } & \$ 27000 & \$ 24500 \\\text { Work in process inventory } & 25000 & 29000 \\\text { Finished Goods inventory } & 22000 & 15000\end{array}$ Required: A. Determine the direct materials used in July. B. Determine cost of goods manufactured in July. C. Determine cost of goods sold for July. D. Prepare an income statement for July. (ignore taxes)

Scott Products manufactures high-quality running shoes. The following information is available for 2009: $\begin{array}{c}\begin{array}{l}\\ \text { Raw materials inventory}\\ \text { Work-in-process inventory}\\ \text { Finished goods inventory}\\\\ \text { Raw materials purchased}\\ \text { Direct labour costs}\\ \text { Factory rent}\\ \text { Factory supplies}\\ \text { Factory utilities}\\ \text { Factory depreciation}\\ \text { Marketing costs}\\ \text { Administrative costs}\\\end{array}\begin{array}{rr}\underline{\text { Beginning} } &\underline{ \text { Ending }}\\\$ 25000 & \$ 82000 \\280000 & 130000 \\90000 & 120000 \\& \\& \$ 250000 \\& 340000 \\&60000 \\&20000 \\& 15000 \\&30000 \\& 25000 \\& 100000\end{array}\end{array}$ In addition, 42 400 pairs were produced in 2009 out of which 40 900 pairs were sold for $70 each. -Cost of goods manufactured for 2009 is:

Briefly compare a traditional manufacturing environment with a lean production and just-in-time (JIT)manufacturing environment.

Which of the following is a characteristic of a traditional production environment but not of a lean production and just-in-time (JIT) manufacturing environment?

Thompson Inc.has the following selected information available for 2009: $\begin{array}{c}\begin{array}{l} \text {Cost of goods manufactured}\\ \text {Cost of goods sold}\\ \text {Direct labour costs incurred}\\ \text {Raw material purchased}\\ \text {Raw material used}\\\\ \text {Beginning work-in-process}\\ \text {Ending work-in-process}\\\end{array}\begin{array}{r}\$180000\\150000\\45000\\90000\\80000\\\\15000\\9000\end{array}\end{array}$ Manufacturing overhead costs in 2009 amounted to:

Which of the following statements is false regarding non-manufacturing costs?

Nate’s Novelties, Inc. has the following information available for July: $\begin{array}{c}\begin{array}{l} \text {Raw materials inventory }\\ \text {Work-in-process inventory}\\ \text { Finished goods inventory}\\\\ \text {Raw materials purchased}\\ \text {Direct labour costs}\\ \text { Overhead costs}\\\end{array}\begin{array}{rr}\$ 12000 & \$ 9000 \\35000 & 20000 \\20000 & 44000 \\& \\& \$ 25000 \\& 55000 \\& 35000\end{array}\end{array}$ -Raw materials used for July is:

Which of the following types of employees would most likely have their wage be classified as indirect labour?

Capital Manufacturing produces a unique souvenir product for various museums around the country.During the year,the company incurred the following costs: $\begin{array}{lr}\text { Direct material used } & \$ 50000 \\\text { Direct labour } & 80000 \\\text { Manufacturing overhead } & 30000 \\\text { Marketing expenses } & 10000 \\\text { Administrative expenses } & 20000\end{array}$ During the year,25 000 units were produced out of which 20 000 units were sold for $15 each. Required: A. Calculate the total product costs incurred for the year. B. What is the product cost per unit? C. What is cost of goods sold for the year? D. What is net income for the year?

Creative Products Inc.incurred the following costs (in alphabetical order)during 2005 related to one of its products: $\begin{array}{lr}\text { Administrative costs } & 2000 \\\text { Advertising costs } & 1000 \\\text { Direct material used } & 8000 \\\text { Direct labour } &20000\\\text { Factory equipment depreciation } & 1000 \\\text { Factory rent } &5000 \\\text { Indirect labour } & 3000 \\\text { Indirect materials } &2000\end{array}$ During the year,3000 units were produced out of which 2750 units were sold for $30 each. Required: A. Calculate the total product costs incurred for the year. B. What is the product cost per unit? C. What is cost of goods sold for the year? D. What is net income for the year?