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Tutorial 17827

Ivenson Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recen...


Ivenson Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

   Beginning work in process inventory: 

  Units in beginning work in process inventory    850    

  Materials costs                $8,000    

  Conversion costs            $15,800    

  Percent complete with respect to materials      75% 

  Percent complete with respect to conversion   50% 

  Units started into production during the month               7,800    

  Units transferred to the next department during the month     5,400    

  Materials costs added during the month             $125,848    

  Conversion costs added during the month         $238,200    

  Ending work in process inventory:         

  Units in ending work in process inventory          3,250    

  Percent complete with respect to materials      95% 

  Percent complete with respect to conversion   30% 

What are the equivalent units for conversion costs for the month in the first processing department? (Round your response to the nearest whole number.)

a)            4,870

b)            6,375

c)            8,650

d)            975




Madtack Company\'s beginning and ending inventories for the month of November were as follows:

                November 1       November 30

  Direct Materials              $68,000                 $60,500 

  Work in Process              $145,000              $157,000 

  Finished Goods               $86,100                 $78,000 


Production data for month follow:

  Direct labor cost incurred           $216,000 

  Actual manufacturing overhead cost incurred   $122,600 

  Direct materials purchases         $165,200 

 Madtack applies manufacturing overhead cost to jobs at the rate of 60% of direct labor cost incurred. The company does not close underapplied or overapplied manufacturing overhead to Cost of Goods Sold until the end of the year.

Madtack Company\'s total manufacturing cost for November was:

a)            $172,700

b)            $388,700

c)            $518,300

d)            $302,300



Kumanu, Inc. is considering investing in new FMS equipment for its factory. This equipment will cost $80,000, is expected to last 6 years, and is expected to have a $10,000 salvage value at the end of 6 years. The new equipment is expected to generate cost savings of $20,000 per year in each of the 6 years. Kumanu\'s discount rate is 16%. What is the net present value of this equipment?

a)            $(34,950)

b)            $3,700

c)            $(2,200)

d)            $20,500























The Adams Company, a merchandising firm, has budgeted its activity for November according to the following information:

•             Sales at $470,000, all for cash

•             Merchandise inventory on October 31 was $200,000.

•             The cash balance November 1 was $23,000.

•             Selling and administrative expenses are budgeted at $58,400 for November and are paid for in cash.

•             Budgeted depreciation for November is $24,500.

•             The planned merchandise inventory on November 30 is $246,000.

•             The cost of goods sold is 68% of the selling price.

•             All purchases are paid for in cash.


The budgeted cash disbursements for November are:

a)            $424,000

b)            $378,000

c)            $332,000

d)            $528,400




Geneva Steel Corporation produces large sheets of heavy gauge steel. The company showed the following amounts relating to its production for the year just completed:

  Direct materials used in production       $111,900 

  Direct labor costs for the year  $54,200 

  Work in process, beginning       $22,700 

  Finished goods, beginning         $45,500 

  Cost of goods available for sale                $288,200 

  Cost of goods sold         $239,400 

  Work in process, ending             $14,900 

Cost of goods manufactured for the year was:

a)            $242,700

b)            $159,700

c)            $247,200

d)            $170,700




Austin Manufacturing had the following operating data for the year just ended.

Selling price per unit       $60 per unit

Variable expense per unit            $22 per unit

Fixed expense  $504,000

Management plans to improve the quality of its only product by: (1) replacing a component that costs $3.50 with a higher-grade component that costs $5.50; and (2) renting a packing machine for $18,000 a year. If the desired target profit is $288,000, the company must sell:

a)            21,316 units

b)            19,300 units

c)            22,500 units

d)            20,842 units




Brittman Corporation makes three products that use the current constraint-a particular type of machine. Data concerning those products appear below:

                                                                IP                            NI                           YD

Selling price per unit                       $183.57 $207.74 $348.15

Variable cost per unit                     $144.42 $155.04 $269.50

Minutes on the constraint           2.90                        3.40                        5.50  

Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized.

a)            YD,IP,NI

b)            IP,YD,NI

c)            YD,NI,IP

d)            NI,YD,IP




Witherington Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 7,840 units, but its actual level of activity was 7,880 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June:

  Data used in budgeting:                              

                Fixed element per month            Variable element per unit

  Revenue                     0                     $37.60           

  Direct labor       $0           $4.10           

  Direct materials              0              18.00           

  Manufacturing overhead           49,100                   1.20           

  Selling and administrative expenses          26,400                   .60           

  Total expenses               $75,500                 $23.90           

  Actual results for June:               

  Revenue            $307,300 

  Direct labor       $34,370 

  Direct materials              $152,250 

  Manufacturing overhead           $55,170 

  Selling and administrative expenses      $31,910 

The net operating income in the flexible budget for June would be closest to (round your answer to the nearest dollar amount):

a)            $32,456

b)            $33,600

c)            $20,330

d)            $31,908




Lucena Corporation purchased a machine 7 years ago for $339,500 when it launched product X05K. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 360 machine costing $354,700 or by a new model 280 machine costing $332,700. Management has decided to buy the model 280 machine. It has less capacity than the model 360 machine, but its capacity is sufficient to continue making product X05K. Management also considered, but rejected, the alternative of dropping product X05K and not replacing the old machine. If that were done, the $332,700 invested in the new machine could instead have been invested in a project that would have returned a total of $426,100.

In making the decision to buy the model 280 machine rather than the model 360 machine, the sunk cost was:

a)            $339,500

b)            $332,700

c)            $426,100

d)            $354,700




Superior Industries\' sales budget shows quarterly sales for the next year as follows:

Quarter                                Sales (units)

First                                       10,000

Second                                 8,000

Third                                      12,000

Fourth                                  14,000

Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter\'s sales. Budgeted production for the second quarter should be:

a)            8,000 units

b)            8,800 units

c)            7,200 units

d)            8,400 units