Variable Cost and Contribution Margin Essay

2053 Words Apr 12th, 2011 9 Pages
1. Cost of goods manufactured will usually include:
A. only direct labor and direct materials costs.
B. some costs incurred during the prior period as well as costs incurred during the current period.
C. only costs incurred during the current period.
D. some period costs as well as some product costs.

2. During the month of August, direct labor cost totaled \$13,000 and direct labor cost was 20% of prime cost. If total manufacturing costs during August were \$88,000, the manufacturing overhead was:
A. \$52,000
B. \$75,000
C. \$65,000
D. \$23,000

0.20 x Prime cost = Direct labor
0.20 x Prime cost = \$13,000
Prime cost = \$65,000
Prime cost = Direct materials + Direct labor
\$65,000 = Direct materials + \$13,000
Direct materials
Job No. 50, the only job still in process at the end of April, has been charged with manufacturing overhead of \$2,250. The amount of direct materials charged to Job No. 50 was:
A. \$2,250
B. \$2,500
C. \$4,250
D. \$9,000

The following partially completed T-accounts summarize last year's transactions for Kelshaw Company.

At the end of the year, the company closes out the balance in the Manufacturing Overhead account to Cost of Goods Sold.

Garrison - Chapter 003 12. The indirect labor cost is:
A. \$35,000
B. \$5,000
C. \$12,000
D. \$15,000
Journal entry (4):

The debit to Manufacturing Overhead (\$5,000) represents the indirect labor cost.

13. The cost of goods sold (after adjustment for underapplied or overapplied overhead) is:
A. \$56,000
B. \$55,000
C. \$51,000
D. \$54,000

The \$1,000 debit balance represents underapplied overhead; the \$1,000 will be added to the original \$55,000 Cost of Goods Sold to arrive at an adjusted Cost of Goods Sold of \$56,000.

14. The cost of direct materials used is:
A. \$15,000
B. \$20,000
C. \$11,000
D. \$12,000
Journal entry (2):

The debit to Work in Process (\$12,000) represents the direct materials used.

15. Black Company uses the weighted-average method in its process costing system. The company's ending work in process inventory consists of 5,000 units, 80%