Managerial Accounting

Exam 1

Name:
Date:

1. The following information of ABC Inc,

Sales
Gross Profit
Indirect Labor
Indirect Materials
Other factory overhead
Materials
Total manufacturing costs
Materials inventory, end of period
WIP Inventory, end of period
115,000

$775,000
265,000
63,000
32,000
17,500
293,000
610,000
35,000

Using the above information, determine the following:

a. Direct Material Costs (5 points)
b. Direct Labor Costs (5 points)
c. Total Cost of Goods Manufactured (5 points)
Hint: Use the blender chart I showed in class to do this problem.

2. The following events took place for Gantt Company during March:
a.
b.
c.
d.
e.
f.
g.
h.
i.

Purchased $65,000 of materials

Used $50,000 of direct material in production
Incurred $75,000 of direct labor wages
Incurred $105,000 of factory overhead
Transferred $175,000 of work in process to finish goods
Sold goods with a cost of $130,000
Earned Revenues of $350,000
Incurred $80,000 of selling expenses
Incurred $45,000 of administrative expenses

a) Complete the March Income Statement for the company (10 points)

Revenues
- CGS
=Gross Profit
-Expenses (Admin +Selling)
=Net Income

b) Determine the inventories balances of materials, working in process and finished

goods (10 points)

3. The manufacturing costs of Big T Enterprises for the first three months of the year are
provided below:
Month

Total Costs

Production

January

$80,000

800 units

February

140,000

1,600

March

105,000

1,100

Using the high-low method, determine the variable cost per unit and the total fixed cost.
(20 points)

4. In July, the Assembly Department of Pacific Products completed and transferred

153,000 particle board units of production to the next department, (packaging
department). There were 3,000 units in beginning WIP inventory in the assembly
department on July/01, which were 30% completed regarding conversion costs (labor
+ overhead). The end WIP inventory was 15,000 units, which were 60% complete as
to conversion cost. All materials are added at the beginning of the process. For
example, units started in June have 100% of the materials added in June, even though
they may be completed in July. Other Information: Direct materials costs incurred
were $475,000, direct labor costs were $69,720 and factory overhead applied was
$25,320. Determine the following for the Assembly Department:
a)
b)
c)
d)

Equivalent Units for Materials (5 points)

Equivalent Units for Conversion (5 points)
Direct Material Cost per unit (5 points)
Conversion Cost per Unit (5 points)
MATERIALS
COSTS

CONVERTION
COSTS
Units

Units

Equivalent
Units

Beginning
Inventory

Beginning
Inventory

Started and
Completed

Started and
Completed

End
Inventory

End
Inventory
a) Total

c)

d)

b) Total

Equivalent
Units

5. The following events took place at XYZ , Inc during July 2014:
Purchased $165,800 in materials
Department A requested $107,600 of direct materials
Department B requested $40,000 of direct materials
Department C requested $10,000 of direct materials
Department A requested $17,000 of direct labor
Department B requested $4,000 of direct labor
Department C requested $1,000 of direct labor
Department A applied $45,000 of factor overhead into WIP
Department B applied $65,000 of factor overhead into WIP
Department C applied $5,000 of factor overhead into WIP
Department A transferred 130,000 of goods to Department B
Department B transferred 210,000 of goods to Department C
Department C sent $215,000 in goods to the finished goods inventory
Sold $190,000 of goods in the finished goods inventory.
Journalize, or put in T-Accounts* the entries to record the operations listed above.
Assume all entries were done on 07/31/2014
*You may do the entries in the t-accounts excel template provided on Moodle, and then copy the work into this
document. If you prefer do use T-Accounts, you should deleted the journal template below.

Journal
Date
July/31/2014

Accounts

Debit

Credit