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GRAND ACC650 MODULE 7 QUIZ/ GRAND ACC650 MODULE 7 QUIZ

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Question 1) Indiana Company incurred the following costs during the past year when planned production and actual production each totaled 20,000 units: Direct material used $280,000 Direct labor $120,000 Variable manufacturing overhead $160,000 Fixed manufacturing overhead $100,000 Variable selling and administrative costs $60,000 Fixed selling and administrative costs $90,000 If Indiana uses variable costing, the total inventorial costs for the year would be: a. $400,000. b. $460,000 c. $560,000. d. $620,000. e. $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)? 19,000. 44,000. 50,000. 63,000. 8) Consider the following comments about absorption- and variable-costing income statements: I. A variable-costing income statement discloses a firm’s contribution margin. II. Cost of goods sold on an absorption-costing income statement includes fixed costs. III. The amount of variable selling and administrative cost is the same on absorption- and variable-costing income statements. Which of the above statements is (are) true? b. I only. II only. I and II. II and III. I, II, and III. 9) Under variable costing, fixed manufacturing overhead is: treated in the same manner as

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