Question 1

Which of the following is a product cost?

Group of answer choices

Direct labor

Indirect materials

All answers are correct.

Direct materials

Question 2

For the month of September, the manufacturing overhead account shows that $100,000 was recorded as a debit to the account and $125,000 was recorded as a credit to the account. This means that manufacturing overhead was _____ for the period.

Group of answer choices

not used

underapplied

overapplied

None of the answers are correct.

Question 3

Production LLC uses a normal costing system for allocating manufacturing overhead to products. Total estimated overhead for the coming year is expected to be $1,000,000, estimated machine hours is 250,000 hours. Assume the company allocates overhead using machine hours as the base, and 18,000 machine hours were used for the month of January. The total amount of overhead applied to products for the month of January was:

Group of answer choices

$90,000

None of the answers are correct.

$72,000

$83,333

Question 4

Which of the following is a nonvalue-added activity for an automobile manufacturer?

Group of answer choices

Storing car seats in the warehouse.

Fixing a car that has a cracked windshield coming off the assembly line.

Waiting for the engine control unit to arrive from a supplier.

All answers are correct.

Question 5

Sierra Company sells high end custom bicycles. Three activities are used to allocate overhead with the following predetermined rates:

Purchasing materials: $200 per purchase order

Running machines: $40 per machine hour

Inspecting finished bicycles: $30 per inspection hour

Assume one custom bike required 3 purchase orders, 10 machine hours, and 2 inspection hours. How much total overhead was assigned to this custom bike?

Group of answer choices

$60

$1,060

$600

$1,000

Question 6

Laguna LLC has established the following estimates for the coming year:

Sales price per unit: $100

Variable cost per unit: $25

Total fixed cost for the year: $220,000

Expected number of units produced and sold for the year: 30,000 units

Based on this information, what is the expected total contribution margin for Laguna LLC? (Hint: This is different than total operating profit.)

Group of answer choices

$3,000,000

$2,030,000

$2,250,000

$2,780,000

Question 7

Laguna LLC has established the following estimates for the coming year:

Sales price per unit: $100

Variable cost per unit: $25

Total fixed cost for the year: $220,000

Expected number of units produced and sold for the year: 30,000 units

Based on this information, what is the expected operating profit for Laguna LLC? (Hint: This is different than total contribution margin.)

Group of answer choices

$2,250,000

$3,000,000

$2,780,000

$2,030,000