Accounting

1. 

(TCO 6) MedicalTechnical, Inc. manufactures surgical instruments to the exacting specifications of various customers. During April 2005, Job 911 for the production of 4,500 instruments was completed at the following costs per unit.

Direct materials$   60

Direct manufacturing labor20

Allocated manufacturing overhead      80

 $160

Final inspection of Job 911 disclosed 100 defective units and 50 spoiled units. The defective instruments were reworked at a total cost of $12,000, and the spoiled instruments were sold to a jobber for $3,000.

What would be the unit cost of the good units produced on Job 911?

(Points : 6) 

        $160

        $162

        $164

        $168

Question 2. 2. 

(TCO 6) Walbreck Company had the following production for the month of August.

 Units

Work in process, August 1 6,000

Started during August24,000

Completed and transferred to finished goods18,000

Abnormal spoilage incurred3,000

Work in process, August 31   9,000

Materials are added at the beginning of the process. Regarding conversion cost, work in process was 20% complete at the beginning and 70% complete at the end of the month. Spoilage is detected at the end of the process.

Assume the manufacturing cost of the spoiled goods is $6,000. The journal entry to record the spoilage is which of the following?

(Points : 6) 

        Manufacturing Overhead Control                                      6,000

              Work in Process                                                                                  6,000

        Materials Control                                                            6,000

              Work in Process                                                                                  6,000

        Loss from Abnormal Spoilage                                              6,000

              Work in Process                                                                                  6,000

        Finished Goods                                                                           6,000

             Work in Process                                                                                   6,000

Question 3. 3. (TCO 6) Spoilage from a manufacturing process was discovered during an inspection of work in process. In a process-costing system, the cost of the spoilage would be added to the costs of good units produced if the spoilage is

               Normal                  Abnormal (Points : 6) 

        Yes                           Yes

        Yes                            No

        No                            No

        No                            Yes

Question 4. 4. (TCO 6) Libations Corporation manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $50. There are no flag displays on hand, but Libations had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Libations Corporation has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous.

If Libations Corporation were to schedule 30 equal production runs of the flag display for the coming year, instead of 60 equal runs, the sum of carrying costs and set-up costs for the coming year would increase (decrease) by (Points : 6) 

        $(166).

        $-0-.

        $166.

        $1,500.

Question 5. 5. 

(TCO 6) Blaster began operations in June 20XX. Blaster manufactures vehicle seat covers using a just-in-time production system supported by a backflush costing system. This system has two trigger points: (1) the purchase of raw materials, and (2) the sale of finished good units. Standard unit costs are $40 for raw materials and $25 for conversion costs. Blaster writes off any underallocated or overallocated conversion costs immediately. The following data were available for June 20XX.

Production of good units19,800

Sales of good units19,750

Purchases of raw materials [20,000 units at $40]$800,000

Conversion costs incurred$496,000

The June ending total for all inventory balances is

(Points : 6) 

        $16,250.

        $12,250.

        $11,250.

        $10,000.