Assignment: Problems -Week 3

Adnan

International American University

ACC 500: Accounting for Managers

Professor Dr. Joseph P. Siegmund

September 14, 2023

Chapter 5
Multiple Choice 5-1 through 5-21

5-1 Which of the following statements is true?

Ans: d. The job cost sheet is a subsidiary to the work-in-process account.

5-2 The ending balance of which of the following accounts is calculated by summing the totals
of the open (unfinished) job-order cost sheets?
Ans: c. Work in Process

5-3 In a normal costing system, the cost of a job includes

Ans: a. actual direct materials, actual direct labor, and estimated (applied) overhead

5-4 The predetermined overhead rate equals

Ans: b. estimated overhead divided by estimated activity level for a period

5-5 The predetermined overhead rate is

Ans: e. calculated at the beginning of the year.

5-6 Applied overhead is

Ans: a. an important part of normal costing.

5-7 The overhead variance is underapplied if

Ans: b. actual overhead is more than applied overhead.

5-8 Which of the following is typically a job-order costing firm?

Ans: b. pharmaceutical manufacturer
5-9 Which of the following is typically a process-costing firm?
Ans: a. Paint manufacturer

5-10 When materials are requisitioned for use in production in a job-order costing firm, the cost
of materials is added to the
Ans: b. work-in-process account.

5-11 When a job is completed, the total cost of the job is

Ans: c. added to the finished goods account

5-12 The costs of a job are accounted for on the

Ans: e. job-order cost sheet.

5-13 Wilson Company has a predetermined overhead rate of $5 per direct labor hour. The job
order cost sheet for Job 145 shows 500 direct labor hours costing $10,000 and materials
requisitions totaling $7,500. Job 145 had 1,000 units completed and transferred to Finished
Goods. What is the cost per unit for Job 145?
Ans: b. $17.50

5-14 (Appendix 5A) When a job costing $2,000 is finished but not sold, the following journal
entry is made:
Ans: d. Work in Process 2,000 Finished Goods 2,000

5-15 (Appendix 5B) Those departments responsible for creating products or services that are sold
to customers are referred to as
Ans: b. production departments.

5-16 (Appendix 5B) Those departments that provide essential services to producing departments
are referred to as
Ans: b. support departments
5-17 (Appendix 5B) An example of a producing department is
Ans: d. assembly

5-18 (Appendix 5B) An example of a support department is

Ans: e. all of these.

5-19 (Appendix 5B) The method that assigns support department costs only to producing
departments in proportion to each department’s usage of the service is known as
Ans: d. the direct method.

5-20 (Appendix 5B) The method that assigns support department costs by giving partial
recognition to support department interactions is known as
Ans: a. the sequential method

5-21 (Appendix 5B) The method that assigns support department costs by giving full recognition
to support department interactions is known as
Ans: c. the reciprocal method.
Chapter 6
Cornerstone exercises 6-21 through 6-25

Cornerstone Exercise 6.21

1.

MixingCooking Pac aging

Direct materials $275000 125000 110000

Direct labor 40000 25000 60000
Applied overhead 50000 27500 77500
Transferred cost 365000 542500
-------- --------- -----------
Total cost 365000 542500 790000

2.

Journal

Date Description Debit Credit

Work in process- cooking 36500

Work in process- mixing 365000

Work in process- packaging 542500

Work in process- cooking 542500

Finished goods 790000

Work in process- packaging 790000
Cornerstone Exercise 6.22

Equivalent units
Units Completed 50000
EWIP (0.40*7500) 3000
--------------
Output 53000

Cornerstone Exercise 6.23

1.

Equivalent units
Units Completed 42000
EWIP (0.60*15000) 9000
-------------
Output 51000

Unit Cost = ($612000/51000) = $12.00

2.

Cost of Goods Transferred Out ($12*42000) = $504000

Cost of EWIP ($12*9000) = 108000

Cornerstone Exercise 6.24

1.

Equivalent units
Units Completed 240000
EWIP (0.40*75000) 30000
---------
Output for January 270000
2.

Unit Cost = ($54000+351000) / 270000 = $1.5

3.

Cost of Unit Transferred Out = ($1.50 * 240000) = $360000

EWIP = ($1.50 * 30000) = 45000

Cornerstone Exercise 6.25

Physical flow schedule:

Units in BWIP (80% complete) 100000

Units started 475000
-----------
Totals units to account for 575000

Units completed and transferred out:

Units started and completed 475000
Units completed from BWIP 100000
---------
575000
Units in EWIP (60% complete) 75000
---------
Total units accounted for 650000