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(WIP) ACC 350 Exam 1 Study Material

Work in Process

e. 7-2 P. 12. Which of

e. 7-2 P. 12. Which of the following describes the formula for cost of goods manufactured? A) Direct materials used plus direct labor plus overhead minus beginning inventory of work- in-process plus ending inventory of work- in -process. B) Direct materials used plus direct labor plus overhead plus beginning inventory of work- in- process minus ending inventory of work- in- process. C) Beginning inventory of raw materials plus purchases of raw materials less ending inventory raw materials. D) Beginning inventory of finished goods plus purchases of direct materials less ending inventory of finished goods. COMPUTATIONAL PROBLEM 13. Pringlay Company had the following transactions last month: Purchased Raw Materials - $10,000 Issues RM as supplies - $1,000 Incurred Direct labor costs - $5,000 Paid freight-in - $2,000 Paid freight-out - $7,000 Depreciation on plant - $6,000 Depreciation on office equipment - $4,000 Plant manager’s salary - $2,500 Quality Inspector’s salary - $1,500 Marketing Manager’s salary - $3,500 Sales Commissions – 5% of sales Sales - $65,000 Ending Raw Materials Inventory increased $3,000 from beginning of the month Ending WIP Inventory did not change from beginning of the month Ending FG Inventory decreased $8,000 from the beginning of the month What was COGS for last month?

P . 7 per - 3 solutions Ch. 2 Review Problem Solutions 1. FALSE 2. TRUE 3. TRUE 4. FALSE 5. FALSE 6. FALSE 7. TRUE 8. TRUE 9. C 10. B 11. D 12. B 13. $32,000 TRUE / FALSE QUESTIONS 1. Product costs become expenses in the period they are purchased. FALSE –product costs become expenses in the period they are SOLD 2. Cost of goods sold does not include the costs of selling merchandise. TRUE – selling costs are nonmanufacturing or period costs and are not included in COGS 3. Factory heating and air conditioning should be considered a product cost in a manufacturing operation. TRUE –costs related to the plant or factory are manufacturing costs. Factory heating and air conditioning would be considered MOH (which is a product cost). 4. Depreciation of office equipment is a manufacturing overhead cost at Dell Computer, a large manufacturer of personal computers. FALSE –costs related to the office are considered nonmanufacturing costs 5. Overtime premium costs should theoretically be considered part of direct labor cost. FALSE – overtime premium costs are considered part of MOH