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(WIP) ACC 350 Exam 1 Study Material

Work in Process

12.7-4 gas 6. Conversion

12.7-4 gas 6. Conversion costs equal direct materials and manufacturing overhead costs. FALSE - Conversion Costs = DL plus MOH 7. Non-manufacturing costs include selling and administrative costs, which are not used to produce products. TRUE –these are considered period costs 8. Tracing costs is generally considered a more accurate method of cost assignment than allocating costs. TRUE –allocating is usually based on some arbitrary method CONCEPTUAL MULTIPLE CHOICE QUESTIONS 9. Which of the following should be considered part of a manufacturing company's direct labor cost? A) Factory supervisor's salary B) Receiving forklift operator's hourly wages C) Employer-paid health insurance on factory assemblers' wages D) Cost of idle time E) None of the above “C” is correct. A, B and D would be considered indirect labor which is part of manufacturing overhead. 10. Wages paid to supervisors in the factory are typically classified as: A) Direct manufacturing labor costs B) Manufacturing overhead costs C) Prime costs D) Period costs “B” is correct. 11. Prime costs are the same as: A) Manufacturing overhead costs. B) Indirect labor costs. C) Total manufacturing costs. D) Direct labor and direct materials used. E) Direct labor and direct materials purchased. “D” is correct (based on discussion in class) 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. “B” is correct.

P . be 7-5 COMPUTATIONAL QUESTION 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? + Purchases 12,000 Include freight-in - Indirect RM Issues 1,000 - Increase in RM Inventory 3,000 DM used in Production $8,000 DL 5,000 Manufacturing Overhead 11,000 RM Supplies + Depr on plant + Plant Mgr Salary + Quality Inspector salary Total Manufacturing Costs $24,000 + Beginning WIP 0 - Ending WIP 0 No Change Cost of Goods Manufactured $24,000 + Reduction in FG 8,000 Cost of Goods Sold $32,000 The following items are SG&A Expenses: Freight-out Depreciation on office equipment Marketing manager’s salary Sales commissions