All Extra Credit Questions Up to Exam 1 Day 3 of class 1 Which of the following is not a product cost A Salaries of football players B The cost of furniture that will be sold C Delivery costs paid by Walgreens for shipping Tylenol D The cost of plastic incurred by Coca Cola Answer A Football players aren t a product and their salaries are periodical Furniture Tylenol and Coca Cola are costs related to a product 2 How much Overhead is applied this period Direct Labor Hours DLH cost driver 20 000 hours Budgeted Overhead OH 3 000 000 Actual DLH 22 000 hours Actual OH 3 200 000 Answer 3 300 000 POHR expected OH Cost Driver POHR 3 000 000 20 000 POHR 150 per DLH OHA overhead applied POHR x activity OHA 150 x 22 000 3 300 000 3 What is COGM Prior Period Product Cost Current Period DM DL OH Job 1 100 30 50 20 Job 2 0 60 30 30 Job 3 0 10 20 15 Job 1 was only job in process at beginning of period Jobs 1 2 were finished this period Answer 320 Job 1 and Job 2 were finished this period so all of their costs are incurred this period 100 30 50 20 0 60 30 30 320 4 Which of the following is not used to calculate product cost under the normal costing system A Actual DM B Actual OH C Actual DL D Applied OH Day 4 of class Answer B Normal costing uses actual the prices of DM DL but calculates an applied OH based on a cost driver 1 A company makes guns It takes 6 employees 45 minutes each to make 100 guns Expected overhead is 103 500 Actual overhead is 110 000 Overhead applied is based on direct labor hours It actually takes 8 employees 45 minutes each to make 100 guns What is applied overhead 2 DM 40 of conversion costs DL 20 of conversion costs OH 20 000 what is the total product cost Answer 138 000 DLH is cost driver 6 x 45 60 4 5 hours budgeted 8 x 45 60 6 hours actually used POHR 103 500 4 5 POHR 23 000 OHA 23 000 x 6 138 000 Answer 35 000 Conversion costs DL OH DL 2 DL OH DL 2 DL 20 000 DL 2DL 4 000 8DL 4 000 DL 5 000 DM 4 DL OH DM 4 5 000 20 000 DM 10 000 Total Product Cost DM DL OH TPC 10 000 5 000 20 000 TPC 35 000 3 Period costs that have been expensed can be found can choose more than one or none at all 1 How much OH should be applied to A using Activity Based Costing ABC A Raw Materials B WIP C Inventory D COGS E Selling and Administrative F Operating Expense Answer E F Day 5 of class Shipping Material Weight 100 000 Setups Runs 25 000 General DLH 75 000 Company makes 2 products A and B Product usage A 40 000lbs of Material 50 Runs 10 000 DLH B 80 000lbs of Material 100 Runs 5 000 DLH Answer 91666 POHR Material 100 000 120 000 83 OHA Material 83 x 40 000 33 333 POHR Runs 25 000 150 166 67 OHA Runs 166 67 x 50 8 333 POHR DLH 75 000 15 000 5 OHA DLH 5 x 10 000 50 000 Total OHA 33 333 8 333 50 000 91666 2 Which of the following is manufacturing OH A Wood glue used in manufacturing B Hourly wages of refinery security guards C Depreciation on factory machinery D Plant insurance costs E All of the above Answer E All are involved with the manufacturing of the product but are not DM or DL 3 What are Prime Costs and what are Conversion Costs Answer Prime Costs DM DL Conversion Costs DL OH 4 What is the difference between COGS TMC total manufacturing cost Answer TMC DL DM OH for all goods this period COGS all goods sold this period 5 If you change from traditional costing to ABC costing what will change DM DL Expected OH Actual OH Applied OH Answer Applied OH Day 6 of class 1 In a traditional system compared to a ABC system is Tails over under or accurately costed Two products Tails and Miles Traditional Overhead 35 Tails and 65 Miles Two cost drivers Machine hours and Materials cost Miles uses 20 of machine hours and 45 of materials cost Answer Undercosted Miles Tails Traditional 65 OH 35 OH ABC 45 OH 55 OH Miles ABC calculated OH is based off of 20 of one cost driver and 45 of another cost driver At most miles will have 45 OH This means Tails will have at least 55 OH 55 or greater 35 Under ABC costing tails should actually be 55 of cost at least and in traditional it is 35 It is undercosted 2 What is the Overhead Applied for machine hours to Riddles Two Products Jokes and Riddles Expected Activity Actual Activity Cost pool Expected OH Jokes Riddles Jokes Riddles DLH 800 000 100 000 400 000 105 000 410 000 2 100 000 300 000 700 000 290 000 750 000 Machine Hours Setups 1 600 000 3 000 1 000 4 000 750 Answer 1 575 000 POHR 2 100 000 1 000 000 2 1 hour OHA 2 1 x 750 000 1 575 000 3 What is the effect on each of the following accounts if you mistakenly charging a product cost as a period cost if you finished all products but sold none Inventories COGS Net Income Answer Inventory is too low COGS has no change Net Income is too low Sales Product cost Inventory if sold COGS Period cost Op Exp GM NI 4 For a company that produces back scratchers the cost of wood is a cost A Step Variable B Mixed C Fixed D Variable Answer D 5 Which is not a conversion cost A Metal used in production Wood would be a DM and that would vary depending on volume of units produced B Rent of production facilities C Workers that assemble dolls D Janitors employed only in factories Answer A OH Conversion costs include DL and OH Metal is the only DM cost All others are DL and Day 7 of class 1 How much of indirect costs should be allocated to Cotton Activity based costing ABC Direct Materials Cost Machine Hours Kilowatt hours Material Handling Machine Operation Power Total Feather 1 500 5 100 Indirect Costs 1 000 2 000 800 3 800 Answer 1 850 POHR OH CD x Activity OHA MH 1 000 2 000 x 500 250 MO 2 000 10 x 5 1000 Power 800 400 x 300 600 1 850 2 What is the mixed cost function of the following information and using that formula what are our total costs if we produce 20 000 units Answer TC 9 VC FC TC 280 000 Fixed OH 100 000 Variable OH 3 unit Prime Costs 6 …