Question 1 For which situation(s) below would an organization be more likely to use a process costing system rather than a job-order costing system? a paper mill that processes wood pulp into large rolls of paper a shop that restores old cars to showroom" quality framing shop that builds picture frames to order for individual customers a masonry company that builds customized brick walls, bulkheads, and walkways designed by architects Question 5 Barnett Corporation uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in Department M. Material costs were 100% complete and conversion costs were 75% complete with respect to the 4,000 units in work in process at May 1. Material costs were 100% complete and conversion costs were 50% complete with respect to the 6,000 units in work in process at May 31. During May, 12,000 units were completed and transferred to the next department. An analysis of the costs relating to work in process at May 1 and to production activity for May follows: Materials Work in process, May 1...... $13,800 Costs added during May...... $42.000 Conversion $ 3.740 $26,260 The total equivalent units of production for materials are: 20,000 equivalent units 12.000 equivalent units 18,000 equivalent units 6,000 equivalent units None of the above. Question 6 Which of the following statements about a process costing system is incorrect? In a process costing system, each processing department has a work in process account In a process costing system, equivalent units are often separately computed for materials and for conversion costs. In a process costing system, a cost per equivalent unit is often calculated for both materials and conversion costs. In a process costing system. materials costs are traced to job cost sheets for each customized Job being produced Question 7 Data concerning Bunck Corporation's single product appear below: Per unit Selling price. .....$170 Variable expenses................ 34 Contribution margin......... $136 Percent of Sales 100% 20% 80% Fixed expenses are $ 202,000 per month. The company is currently selling 2,000 units per month. Management is considering using a new component that would increase the unit variable cost by $18. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change? decrease of $47.200 decrease of $11.200 Increase of $23.000 increase of $11.200 Question 8 Hartung Corporation produces and sells a single product. Data concerning that product appear below: Per unit Percent of Sales Selling price. .. ............ $140 Variable expenses....... 42 Contribution margin............ $ 98 100% 30% 70% Fixed expenses are $147,000 per month. The company is currently selling 2,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a sales commission of $13 per unit sold, in addition to the current expenses. In exchange, the sales staff would accept a decrease in their salaries of $22,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 400 units. What should be the overall effect on the company's monthly net operating Income of this change? increase of $16,800 increase of $226,000 Increase of $30,000 decrease of $14,000