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1. The flow of costs through the financial statements is shown below. Balance Sheet Income Statement Assets Liabilities Beginning Balance of Inventory Direct Material -> Product Costs ----> + Increase Owners' Equity Direct Labor - Decrease -> Cost of Goods Sold Manufacturing Overhead Ending Balance of Inventory Non-manufacturing Costs --> Period Costs Operating Expenses In June, Company A incurs the following costs: Direct Material: $55,000 Direct Labor: $40,000 Manufacturing Overhead: $65,000 Non-manufacturing Costs: $60,000 How much is the increase in inventory during the month? (Assuming sales of inventory are not considered) $65,000 O $95,000 O $220,000 $160,0002. Shown below is the flow of costs through financial statements, with the flow through the inventory account broken down a bit further. Balance Sheet Income Statement Beginning Balance of Raw Materials Purchase -.-.=> + Increase Beginning Balance of Work-in-process - Decrease ------(Direct Material)-------> + Increase Beginning Balance of Finished Goods Ending Balance of Raw Materials - Decrease >+ Increase Ending Balance of Work-in-process Decrease --> Cost of Goods Sold Ending Balance of Finished Goods Direct Labor Manufacturing Overhead If the beginning balances of raw materials, work-in-process, and finished goods are all 0, and the ending balances of RM, WIP and FG are all $30,000, which of the following statements is correct? O If product costs are $75,000, then $15,000 of finished goods are sold If $75,000 of inventory is completed and moved to finished goods during the month, then product costs are $45,000 O If direct material is $40,000, then $10,000 of raw materials is purchased during the month O If $75,000 of finished goods are sold, then $45,000 of inventory is completed and moved to finished goods during the month3. TShirt Co. makes two products: A and B. In the cutting department, budgeted information is as follows: Budgeted manufacturing overhead: $400,000 Budgeted machine hours: 80,000 Budgeted units produced: 50,000 The companyr allocates overhead based on machine hours. The actual number of machine hours spent on product B is 30,000 and 10,000 units of product B are produced. How much isthe manufacturing overhead of product B in the cutting department? 0 80,000 0 150,000 0 250,000 0 230,000 4. Running Shorts Co. makes two products: A and B. In the folding department, budgeted information is as follows: Budgeted indirect labor costs in the workshop: $150,000 Budgeted depreciation expenses of equipment: $50,000 Budgeted direct labor costs: $100,000 Budgeted units produced: 50,000 The company allocates indirect labor costs based on direct labor costs and allocates depreciation expenses of equipment based on units produced. The actual direct labor costs for product B are $40,000 and 10,000 units of product B are produced. How much is the manufacturing overhead of product B in the folding department? O 60,000 10,000 O 80,000 70,0005. Elevator Co. makes two product models, A and B, and provides both installation and inspection services for its customers. Budgeted information is as follows: Installation Inspection Total Budgeted overhead 300,000 210,000 510,000 Budgeted labor hours 2,000 3,000 5,000 Product A Product B Total Direct labor hours per unit: 2.0 1.5 5,000 Installation 1.0 0.5 2,000 Inspection 1.0 1.0 3,000 Units 1,000 2,000 3,000 The company uses a departmental method to allocate overhead in each of the two cost pools - installation and inspection. How much overhead per unit is allocated to product B if the company uses direct labor hours as the allocation base? O 225 O 105 O 110 O 1456. Sensor Co. makes two products: A and B. Each product goes through the assembly department and the testing department. Budgeted information is as follows: Assembly Testing Budgeted manufacturing overhead 50,000 80,000 Budgeted direct labor costs 200,000 Budgeted machine hours 40,000 Budgeted overhead rate per direct labor $ 0.25 Budgeted overhead rate per machine hour 2 Actual direct labor costs: Product A 160,000 - Product B 40,000 - Actual machine hours: Product A 30,000 Product B 10,000 The company allocates overhead incurred in the assembly department based on direct labor dollars and allocates overhead in the testing department based on machine hours. How much manufacturing overhead is allocated to product B? O B: 10,000 B: 80,000 O B: 20,000 O B: 30,0007. The controller of Sensor Co., after taking Managerial Accounting, has decided to implement an ABC system in the assembly department. She identifies the following three cost pools and cost drivers: Cost pool Costs Cost driver Product A Product B Setup of machines 10,000 Number of setups 40 60 Parts assembly 20,000 Number of parts 150 250 Receiving and handling of materials 20,000 Pounds of materials 5 5 Total overhead 50,000 What is the allocation rate for the receiving and handling of materials? O 2,000 O 100 20,000 O 508. The controller of Sensor Co., after taking Managerial Accounting, has decided to implement an ABC system in the assembly department. She identifies the following three cost pools and cost drivers: Cost pool Costs Cost driver Product A Product B Setup of machines 10,000 Number of setups 40 60 Parts assembly 20,000 Number of parts 150 250 Receiving and handling of materials 20,000 Pounds of materials 5 5 Total overhead 50,000 What is the total overhead cost in the assembly department for product B? O 10,000 28,500 12,500 6,0009. The controller of Sensor Co. has also decided to implement an ABC system in the testing department. She identifies the following three cost pools and cost drivers: Cost pool Costs Cost driver Product A Product B Setup of machines 15,000 Number of setups 33 42 Quality control 48,000 Machine hours 15,000 25,000 Receiving and handling of materials 17,000 Direct labor hours 450 400 Total overhead 80,000 What is the total overhead cost in the testing department for product A? 15,600 18,000 33,600 27,00010. Accounting firm XYZ provides audit, tax, and general accounting services. It estimates it will have 773 auditing, 500 taxation, and 1,000 other service engagements. The company uses an ABC system with the following three cost pools and cost drivers to allocate its indirect costs: Other Cost pool Costs Cost driver Audit Tax services Length of training sessions x Internal training 150,000 number of conference rooms 640 510 350 overhead occupied IT support 400,000 Number of tickets 1,200 500 300 Researching and interpreting policies and 180,000 Direct labor hours 550 450 200 regulations Total overhead 730,000 How much total overhead cost will be allocated to tax services? O 118,500 C 218,500 O 386,500 151,00011. Accounting firm XYZ provides audit, tax, and general accounting services. It estimates it will have 773 auditing, 500 taxation, and 1,000 other service engagements. The company uses an ABC system with the following three cost pools and cost drivers to allocate its indirect costs: Other Cost pool Costs Cost driver Audit Tax services Length of training sessions x Internal training 150,000 number of conference rooms 640 510 350 overhead occupied IT support 400,000 Number of tickets 1,200 500 300 Researching and interpreting policies and 180,000 Direct labor hours 550 450 200 regulations Total overhead 730,000 What is the overhead cost per engagement for other services? O $65.00 $125.00 $417.21 $95.0012. Company MN is a wholesale distributor. It uses an ABC system to analyze customer profitability for its small- and medium-sized retail customers. The cost pool, cost driver and other relevant information is shown below. Cost pool Costs Cost driver Small retailer Medium retailer Ordering 300,000 Number of orders 8,000 4,000 Delivery 750,000 Number of deliveries 10,800 4,200 Customer Service 1,200,000 Number of products sold 320,000 480,000 Total overhead 2,250,000 What is the average total overhead cost per product sold to small and medium retailers? (Assuming every item sold requires certain involvement of customer service) Small: $3.81; Medium: $0.44 O Small: $3.81; Medium: $2.15 Small: $3.81; Medium: $1.5 Small: $3.81; Medium: $0.21