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1) Indiana
Company incurred the following costs during the past year when planned
production and actual production each totaled 20,000 units:
a. Direct
material used
$280,000
b. Direct
labor
$120,000
c. Variable
manufacturing overhead $160,000
d. Fixed
manufacturing overhead
$100,000
e. Variable
selling and administrative costs $60,000
f. Fixed
selling and administrative costs
$90,000
g. If Indiana
uses variable costing, the total inventorial costs for the year would be:
h. $400,000.
$460,000
$560,000.
$620,000.
$660,000.
2) Garage
Specialty Corporation manufactures joint products P and Q. During a recent
period, joint costs amounted to
$80,000 in the production of 20,000 gallons of P and 60,000 gallons of Q.
Garage can sell P and Q at split-off for $2.20 per gallon and $2.60 per gallon,
respectively. Alternatively, both products can be processed beyond the
split-off point, as follows:
i. P Q
Separable
processing costs
$15,000 $35,000
Sales price (per gallon) if processed beyond split-off
$3 $4
The joint cost allocated to Q under the relative-sales-value
method would be:
b. $40,000
$62,400.
$64,000.
$65,600.
Some other amount.
3) When
allocating joint costs, Weinberg calculates the final sales value of the
various products manufactured and
subtracts appropriate separable costs. The company is using the:
a. Gross
margin at split-off method.
Reciprocal-accounting
method.
relative-sales-value
method.
physical-units
method.
net-realizable-value
method.
4) Which of the
following statements pertain to both variable costing and absorption costing?
a. The income
statement discloses the amount of gross margin generated during the reporting
period.
Fixed selling and
administrative expenses are treated in the same manner as fixed manufacturing
overhead.
Both variable and
absorption costing can be used for external financial reporting.
Variable selling
costs are written-off as expenses of the accounting period.
Fixed manufacturing
overhead is attached to each unit produced.
5) The point in
a joint production process where each individual product becomes separately
identifiable is commonly called the:
a. decision
point.
separation point.
individual product
point.
split-off point.
joint product point.
6) Herbster
manufactures A, B, and C, all of which are joint products, and D, which is
classified as a by-product. If joint manufacturing costs amount to $450,000 and
the company is using a popular accounting method, the firm will:
a. allocate
$450,000 among A, B, and C.
allocate $450,000
among A, B, C, and D.
increase $450,000 by
the net realizable value of D and then allocate the total among A, B, and C.
decrease $450,000 by
the net realizable value of D and then allocate the total among A, B, and C.
7) Martina,
Inc. has two service departments (Human Resources and Building Maintenance) and
two production departments (Machining and Assembly). The company allocates
Building Maintenance cost on the basis of square footage and believes that
Building Maintenance provides more service than Human Resources. The square
footage occupied by each department follows.
Human Resources
6,000
Building Maintenance 13,000
Machining 18,000
Assembly 26,000
Assuming use of the direct method, over how many square feet
would the Building Maintenance cost be allocated (i.e., spread)?
a. 19,000.
44,000.
50,000.
63,000.
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