Question

17).ABP Co. reported the following per unit amounts in the current fiscal year: $75 sales price; $12.50 variable selling expense; $8.75 direct material; $14.50 direct labor; $16.25 manufacturing overhead. They also reported $26,250 in fixed selling expenses. How much is cost of goods sold?

a).$75.00 b).$52.00 c).$39.50 d).$127.00

18).The sales budget reported the following sales in units for fiscal year 5. The company wants to maintain a desired ending finished goods inventory in the current quarter equal to 20% of the next quarter’s production. They began the first quarter of year 5 with 2,400 units in the beginning finished goods inventory.

Sales (in units) Q1 12,000; Q2 13,100; Q3 15,000; Q4 14,500

What is total production in units for quarter 2?

a).13,100 b).16,100 c).13,480 d).13,700

19).StayWalk Co produces exercise machines. They wants an ending raw material inventory equal to 10% of the next quarter’s total material needs in pounds are Q1 15,000 lbs; Q2 12,000 lbs; Q3 13,300 lbs; and Q4 9,600. The beginning raw materials inventory for Q1 is 1,500 lbs. What is the quarter 2 beginning raw materials inventory?

a).1,200 lbs b).960 lbs c).1,500 lbs d).1,330 lbs

20).Rookwood Pottery produces a commemorative Indian wedding vase. Each vase requires 12 direct labor hours to produce. The average direct labor pay rate is $25 per hour. Production in units is Q1 225; Q2 160; Q3 185; and Q4 210. What are the total direct labor costs for quarter 2?

a).$48,000 b).$4,000 c).$25 d).$55,500

21).LeFemme sold 1,200 units at $12 each. Cost incurred were: $0.50 direct material; $2 direct labor; $1.50 overhead; $1 variable selling expenses and $6,300 fixed selling expenses per year. How much is total net income?

a).$2,100 b).$9,600 c).$14,400 d).$4,800

Answer 1

17. Cost of goods sold = Direct material + Direct labor + Manufacturing overhead

= $8.75 + $14.5 + $16.25

= $39.5

The answer is c.

18. Total production in units for quarter 2 = Sales in units + Desired ending inventory - Beginning inventory

= 13,100 + (15,000*20%) - (13,100*20%)

= 13,100 + 3,000 - 2,620

= 13,480

The answer is c.

19. Quarter 2 beginning raw materials inventory = 10% of quarter 2 material needs

= 12,000 * 10%

= 1,200

The answer is a.

20. Total direct labor costs for quarter 2 = 160 units * 12 direct labor hours per unit * $25 per hour

= $48,000

The answer is a.

21. Net income = Sales - Direct material - Direct labor - Overhead - Variable selling expenses - Fixed selling expenses

= (1,200 * $12) - (1,200 * $0.5) - (1,200 * $2) - (1,200 * $1.5) - (1,200 * $1) - $6,300

= $2,100

The answer is a.