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Exam 2: Product Costing: Manufacturing Processes, cost Terminology and Cost Flows

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Question 31

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Manufacturing costs typically consist of:

A) direct materials,direct labour,and administrative costs.
B) production and shipping costs.
C) direct materials,direct labour,and manufacturing overhead.
D) manufacturing overhead and selling costs.

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Question 32

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Which of the following is a disadvantage of lean production and just-in-time (JIT) manufacturing systems?

A) Increased customer delivery time
B) Increased product defects
C) Decreased flexibility of manufacturing facilities
D) Increased reliance on fewer suppliers

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Question 33

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Lean production is focused on eliminating waste associated with all of the following except:

A traditional manufacturing environment does not have which of the following?

Which of the following is not an example of manufacturing overhead costs?

Product costs that transfer into finished goods inventory are called:

Which of the following decreases the work-in-process account?

Pearce Manufacturing Inc.incurred the following costs in February: $\begin{array}{lrll}\text { Direct labour } & \$ 40000 & \text { Advertising costs } & \$ 1000 \\\text { Indirect labour } & 15000 & \text { Factory rent } & 4000 \\\text { Administrative salaries } & 8000 & \text { Factory depreciation } &2000\\\text { Raw materials purchased } & 10000 & \text { Administrative rent }&3000 \\\text { Indirect materials used } & 4000 & \text { Administrative depreciation } & 1000\end{array}$ In addition,the following information is also available: $\begin{array}{c}\begin{array}{l}\\ \text { Raw materials }\\ \text { Work-in-process }\\ \text { Finished goods}\\\\ \text { Number of units produced}\\ \text { Number of units sold}\\ \text { (sales price of \$ 25 per unit) }\\\end{array}\begin{array}{rr}\underline{\text { Beginning} } &\underline{ \text { Ending }}\\\$ 2000 & \$ 4000 \\25000 & 18000 \\4000 & 12000 \\\\& 10000 \text { units } \\\\& 9000 \text { units }\end{array}\end{array}$ Required: A. Calculate total period costs. B. Calculate raw materials used. C. Calculate cost of goods manufactured. D. Calculate the product cost per unit. E. Calculate cost of goods sold. F. Calculate net income. (ignore taxes)

Which of the following is an advantage of lean production and just-in-time (JIT) manufacturing systems?

Hudson Inc. has the following information available for September: $\begin{array}{c}\begin{array}{l}\\ \text { Raw materials }\\ \text { Work-in-process }\\ \text { Finished goods}\\\\ \text { Raw materials purchased}\\ \text { Direct labour costs}\\ \text { Manufacturing overhead costs}\\ \text { Administrative costs}\\ \text { Marketing costs}\\\end{array}\begin{array}{rr}\underline{\text { Beginning} } &\underline{ \text { Ending }}\\8000 & \$ 5000 \\30000 & 40000 \\7000 & 3000 \\\\& 25000 \\& 70000 \\& 30000 \\& 12000 \\& 6000 \end{array}\end{array}$ -Sales revenue for September totalled $400 000.Net income for September is:

Nate’s Novelties, Inc. has the following information available for July: $\begin{array}{c}\begin{array}{l} \text {Raw materials inventory }\\ \text {Work-in-process inventory}\\ \text { Finished goods inventory}\\\\ \text {Raw materials purchased}\\ \text {Direct labour costs}\\ \text { Overhead costs}\\\end{array}\begin{array}{rr}\$ 12000 & \$ 9000 \\35000 & 20000 \\20000 & 44000 \\& \\& \$ 25000 \\& 55000 \\& 35000\end{array}\end{array}$ -Cost of goods sold for July is:

Johnson Manufacturing has the following selected information available for the year: $\begin{array}{lr} \text { Direct material purchased } &\$40000\\ \text { Direct material used } &45000\\ \text { Direct labour incurred } &75000\\ \text {Manufacturing overhead incurred } &50000\\ \text { Cost of goods manufactured} &100000\\\end{array}$ In addition,the cost of the finished goods inventory increased by $10 000 from the beginning to the end of the year.Cost of goods sold for the year is:

Product costs that transfer out of finished goods are called:

Which of the following statements is true about manufacturing companies over the past 20 years?

Jones Manufacturing Inc. incurred the following costs in November: $\begin{array} { l r l r } \text { Direct labour } & \$ 50000 & \text { Advertising costs } & \$ 33000 \\\text { Indirect labour } & 20000 & \text { Factory rent } & 10000 \\\text { Administrative salaries } & 25000 & \text { Factory depreciation } & 6000 \\\text { Direct materials purchased } & 23000 & \text { Administrative rent } & 5000 \\\text { Indirect materials used } & 4000 & \text { Administrative depreciation } & 7000\end{array}$ In addition, the following information is also available: $\begin{array}{c}\begin{array}{l}\\ \text { Raw materials }\\ \text { Work-in-process }\\ \text { Finished goods}\\\\ \text { Number of units produced }\\ \text {Number of units sold}\\ \text { (sales price of \$ 25 per unit) }\\\end{array}\begin{array}{rr}\underline{\text { Beginning} } &\underline{ \text { Ending }}\\\$ 5000 & \$ 8000 \\60000 & 55000 \\17250 & 9200 \\& \\& 20000 \text { units } \\\\& 21400 \text { units }\end{array}\end{array}$ -Net income for November is: (ignore taxes)

A 'manufacturing cell' is defined as:

Which of the following types of organisations is most likely to have a raw materials inventory account?

Hillsborough Street Manufacturing Inc. incurred the following costs in 2009: $\begin{array} { l r } \text { Direct materials used } & \$ 37000 \\\text { Direct labour costs } & 45000 \\\text { Factory rent and utilities } & 18000 \\\text { Factory equipment depreciation } & 10000 \\\text { Marketing expenses } & 3000 \\\text { Administrative expenses } & 9000\end{array}$ 50 000 units were produced during the year out of which 40 000 units were sold for $10 each. There was no beginning or ending raw materials or work-in-process inventory. -What is net income for the year?

Franklin Street Manufacturing has the following cost information available for 2009: $\begin{array}{lr}\text { Direct materials used } & \$ 10000 \\\text { Direct labour costs } & 25000 \\\text { Factory overhead } & 20000 \\\text { Marketing expenses } & 4000 \\\text { Administrative expenses } & 6000\end{array}$ 20 000 units were produced during the year out of which 19 000 units were sold for $10 each. -What is net income for 2009?

Which of the following is a product cost?