Sunnybrook Orange Groves processes a variety of fresh juices. The company has the following expenses for July:

Depreciation expense on bottling machines $ 63,000

Glass juice bottles $ 54,000

Commissions for salespeople $ 27,000

Salaries of nutrition researchers $ 89,000

Costs of maintaining website used for customer orders $ 4,000

Wages of factory workers $ 75,000

Freshness seals/caps for juice bottles $ 3,000

Reconfiguring the factory layout $102,000

Customer help line $ 2,000

Costs of refrigerated trucks used to deliver juice $ 17,000

What is the total cost for the production category of the value chain?

a. $436,000

b. $ 54,000

c. $195,000

d. $293,000

ACC241 Review Questions-Exam One True/False Indicate whether the statement is true or false. 1. Costs can be either direct or indirect, depending upon the cost object. 2. Advertising is a product cost as long as it promotes specific products. 3. If the finished goods inventory decreases between the beginning and the end of a period, then the cost of goods manufactured for the period is larger than the cost of goods sold 4. Predetermined overhead rates are based on actual cost and activity data. 5. In activity-based costing, a separate activity rate (i.e., predetermined overhead rate) is computed for each activity cost pool by dividing the estimated overhead cost in the activity cost pool by the total expected activity for the activity cost pool. Multiple Choice Identify the choice that best completes the statement or answers the question. 6. Ethics deals with the moral quality, fitness, or propriety of a course of action that may injure or benefit people. I can make an ethical decision while taking the exam by: a. Relying upon my own efforts in completing this exam b. Using only approved resources (i.e. calculator vs cell phones) while taking this exam c. Refraining from looking at my neighbor's exam for answers d. All of the above 7. Which of the following statements correctly distinguishes between financial and managerial accounting? a. Managerial accounting uses both financial and non-financial measures of performance b. Financial accounting is oriented toward the future c. Financial accounting is primarily concerned with providing information for internal users d. Financial accounting is oriented toward the planning and control aspects of management. e. Managerial accounting focuses on the whole organization 8. Product costs differ from period expenses because a. period expenses are not considered part of operating expenses for a manufacturing company b. period expenses reduce reported income whereas product costs do not c. product costs may appear on the balance sheet as assets d. product costs are expenses for manufacturing companies and period expenses are expenses for service organizations. Copyright 2016, School of Accountancy, Arizona State University 9. Which of the following is not a characteristic of job-order costing? a. Wide variety of distinct products b. Unit cost is computed by dividing process costs of the period by the units produced in the period c. Unit cost computed by dividing total job costs by units produced on that job d. Costs accumulated by job e. Typically, the cost of one job is different from that of another job 10. Sunnybrook Orange Groves processes a variety of fresh juices. The company has the following expenses for July: Depreciation expense on bottling machines Glass juice bottles Commissions for salespeople Salaries of nutrition researchers Costs of maintaining website used for customer orders Wages of factory workers Freshness seals/caps for juice bottles Reconfiguring the factory layout Customer help line Costs of refrigerated trucks used to deliver juice $ 63,000 $ 54,000 $ 27,000 $ 89,000 $ 4,000 $ 75,000 $ 3,000 $102,000 $ 2,000 $ 17,000 What is the total cost for the production category of the value chain? a. $436,000 b. $ 54,000 c. $195,000 d. $293,000 11. Products and their costs flow through a production facility in the following order: a. Finished goods, work-in-process, cost of goods sold b. Raw materials, work-in-process, finished goods, cost of goods sold c. Work-in-process, raw materials, cost of goods sold, finished goods d. Raw materials, finished goods, work-in-process, cost of goods sold Copyright 2016, School of Accountancy, Arizona State University 12. The following is selected financial data from Nick Manufacturing for the most recent year. Ending raw materials inventory Ending work in process inventory Ending finished goods inventory Amount of underallocated (underapplied) manufacturing overhead Cost of goods sold for year Cost of raw materials purchased during year Cost of direct materials requisitioned during year Cost of indirect materials requisitioned during year Cost of goods completed during year Manufacturing overhead allocated Manufacturing overhead % of direct labor cost $ $ $ 19,000 42,000 54,100 $ $ $ $ 3,100 81,000 45,300 41,700 $ $ $ 7,100 110,000 60,000 125% What is the beginning finished goods inventory? a. $135,100 b. $ 75,100 c. $ 25,100 d. $ 6,100 13. Blanca Corp has the following information: Additional information for the year is as follows: Actual overhead $85,000 Compute the unadjusted cost of goods sold. (Blanca uses a normal costing system) a. b. c. d. $133,000 $242,000 $252,000 $255,000 Copyright 2016, School of Accountancy, Arizona State University 14. James Company's costs for the month of August were as follows: direct materials, $27,000; direct labor, $34,000; selling, $14,000; administrative, $12,000; and manufacturing overhead, $44,000. The beginning work in process inventory was $16,000 and the ending work in process inventory was $9,000. What was the cost of goods manufactured for the month? a. $105,000 b. $132,000 c. $138,000 d. $112,000 15. Last month Dallas Manufacturing Company had the following operating results: What was the cost of goods manufactured for the month? a. $350,000 b. $385,000 c. $377,000 d. $323,000 16. The actual manufacturing overhead incurred at Jeffry Corporation during January was $73,000, while the manufacturing overhead applied to Work in Process was $78,000. The company's Cost of Goods Sold was $349,000 prior to closing out its Manufacturing Overhead account. The company closes out its Manufacturing Overhead account to Cost of Goods Sold. Which of the following statements is true? a. Manufacturing overhead was overapplied by $5,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $354,000 b. Manufacturing overhead was underapplied by $5,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $344,000 c. Manufacturing overhead was underapplied by $5,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $354,000 d. Manufacturing overhead was overapplied by $5,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $344,000 17. Dallas, Inc. an appliance manufacturer, is developing a new line of ovens that uses controlled-laser technology. The research and testing costs associated with the new ovens is said to arise from a: a. unit-level activity. b. batch-level activity c. product-level activity d. facility-level activity e. competitive-level activity Copyright 2016, School of Accountancy, Arizona State University 18. Diane Clothing Co.'s accounts reflect the following: Cost of Goods Manufactured Beg. Finished Goods Inventory End. Finished Goods Inventory Cost of Goods Sold Applied overhead Actual overhead $550,000 $300,000 $350,000 ? $220,500 $200,000 If Sales were $800,000 and the company closes the over/under applied overhead balance to cost of goods sold, how much gross profit would the company report (after the overhead adjustment)? a. $250,000 b. $279,500 c. $300,000 d. $320,500 19. H.K. Corporation has provided the following data from its activity-based costing system: Data concerning the company's product P58Z appear below: According to the activity-based costing system, the unit product cost of product P58Z is closest to: a. $113.33 per unit b. $58.30 per unit c. $123.40 per unit d. $118.30 per unit 20. Volume-based (traditional, plant-wide)) cost systems tend to a. Under-cost low-volume products and under-cost high-volume products b. Under-cost low-volume products and over-cost high-volume products c. Over-cost low-volume products and under-cost high-volume products. d. Over-cost low-volume products and over-cost high-volume products. Copyright 2016, School of Accountancy, Arizona State University 21. Non-value-added activities are: a. also called waste activities b. activities that neither enhance the customer's image of the product or service nor provide a competitive advantage c. activities that could be reduced or removed from the process with no ill effect on the end product or service d. all of the above 22. Geiger Construction currently uses traditional costing where overhead is applied based on direct labor hours. Using traditional costing, the applied overhead rate is $20 per direct labor hour. They are considering a switch to activity-based costing (ABC). The company controller has come up with preliminary overhead rates for each of the following activities: Activity Material delivery and handling Inspections Supervision Purchasing Allocation Base Number of deliveries Number of inspections Hours of supervisor time Number of purchase orders Overhead rate $100 per delivery $75 per inspection $30 per supervisor hour $60 per purchase order One of the company's current jobs has the following information available: Direct labor hours --------------------------------------------Number of deliveries ----------------------------------------Number of inspections --------------------------------------Hours of supervisor time -----------------------------------Number of purchase orders --------------------------------- 50 hours 2 3 2 5 Which of the following statements is true when comparing the total overhead allocated (applied) to the job using traditional (plantwide) versus ABC costing? a. ABC costing will yield $215 less in overhead cost being allocated to the job b. ABC costing will yield $735 less in overhead cost being allocated to the job. c. ABC costing will yield $545 more in overhead cost being allocated to the job. d. ABC costing will yield $785 more in overhead cost being allocated to the job. 23. Costs incurred when products and services fail to conform to requirements or satisfy customer needs after being delivered to customers are: a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs. e. a different category of quality related costs. 24. The cost of warranty work is an example of a(n): a. prevention cost b. appraisal cost c. internal failure cost d. external failure cost Copyright 2016, School of Accountancy, Arizona State University 25. Which terms would make the following sentence true? Manufacturing companies that benefit the most from activity-based costing are those where overhead costs are a _________ percentage of total product cost and where there is ___________ diversity among the various products that they produce. a. low, little b. low, considerable c. high, little d. high, considerable Copyright 2016, School of Accountancy, Arizona State University