8/13/2019 ACC 345 Answer Key (Exam #1)

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1 C OH control used to record "expenses" in a factory

2 A the allocated was under by $28,000 allocated $606,000

under by 28,000

actually used $634,000

3 A WIP contains actual prime costs + allocated overhead

4 D fixed cost because higher denominator -- variable cost per unit never changes

5 C the $140,000 ($14 * 10,000 units) not divided over 20,000 units

6 A the paper becomes the actual book

7 C $420 DL to WIP -- straight time 42 hours at $10 each

10 2 hours of overtime premium at $5 per hour8 B that's the definition of finished goods

9 C use the actual prime costs so only overhead is allocated

10 A the total is given, so if one product has smaller cost, something must have higher cost

11 B DL and DM are recorded in WIP, all other "expenses" are recorded in overhead control

12 C product costs are recorded in COGS on the Inc. Stmt. Upon sale -- before they're on the Bal Sht as inventory

13 B see below

14 B see below

15 A WIP is goods being manufactured

#13 as given #14 as given

beg WIP $15 beg FG $36,000

DM used COGM 246,000DL 30 GAS 282,000

overhead 45 less end FG (34,000)

total mfg. costs 90 COGS $248,000

end WIP (20)

COGM $70 NEED $30 MORE

beg WIP $15

DM used 30 PLUG

DL 30

overhead 45

120

end WIP (20)COGM $100

8/13/2019 ACC 345 Answer Key (Exam #1)

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#1 a $257,000 beg FG $80,000 beg FG $80,000

COGM PLUG COGM 257,000

GAS 80,000 GAS 337,000

end FG (67,000) end FG (67,000)

COGS $13,000 NEED $257,000 more COGS $270,000

b sales $500,000 finished goods

COGS (270,000) 80,000 270,000

GM $230,000 257,000

67,000

#2 DM beg $45,000 beg FG $85,000

purchases 112,000 COGM 378,000

157,000 GAS 463,000

DM ending (42,000) end FG (92,000)

DM used $115,000 COGS b $371,000

DL 119,000

overhead 150,000

current year costs 384,000

beg WIP 12,000

end WIP (18,000)

COGM a $378,000

c DL $119,000 d DM used $115,000

OH 150,000 DL 119,000

conversion costs c $269,000 prime costs d $234,000

e sales $650,000

COGS (371,000)

GM e $279,000 SINCE THIS WASN'T LABELLED AS "e" , WON'T COUNT

#3 a budgeted rate: $150,000 20,000 $7.50 per hour worked

b $187,500 $7.50 * 25,000 actual hours worked

c WIP 187,500

overhead allocated 187,500

d overhead allocated 187,500

COGS 7,500

overhead control [actual] 180,000

#4 a WIP 12,000 d FG 11,000

salary expense 4,000 WIP 11,000

Sal. Pay. or cash 16,000

e AR 14,250

b WIP 9,000 sales 14,250

overhead allocated 9,000 --- and---

COGS 9,000

c OH cont. 900 FG 9,000

prepaid rent 900

8/13/2019 ACC 345 Answer Key (Exam #1)

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#5 Standard Deluxe total

375/600 225/600

a $37,500 $22,500 $60,000 allocate the $60,000 using hours

Standard Deluxe total

22/50 28/50

$8,800 $11,200 $20,000 allocate $20,000 using setups

8/20 12/20

$16,000 $24,000 $40,000 allocate $40,000 using components

b $24,800 $35,200 $60,000 Total OH allocated to each product

c When Barnes used the functional system Standard had too much overhead and Deluxe had too little.

By switching to ABC method the overhead will be allocated more realistically.

With better product costing information Barnes will be able to make more rational pricing

and other decisions.