FATİH UNIVERSITY

FACULTY OF ECONOMIC AND ADMINISTRATIVE SCIENCES

DEPARTMENT OF MANAGEMENT

MAN 305 COST ACCOUNTING

MIDTERM EXAM

Instructor: ALI COSKUN

Duration: 90 Minutes December 10, 2003

QUESTIONS

QUESTION 1. (15 points)

Kline Company manufactures two products, X and Y. Three activities have been identified as cost drivers and the related costs pooled together to arrive at the following information:

Number of Number of Number of

Material Product Orders

Product Requisitions Inspections Shipped

X 46 75 420

Y 62 75 280

Costs per pool $32,400 $33,750 $17,500

Required:

Assuming activity-based costing is used, allocate each cost pool to each model.

QUESTION 2. (20 points)

Faboski Company uses a normal costing system with a single manufacturing overhead cost pool and direct labor hours as the cost allocation base. The following data are available for the year ended December 31, 2002.

Budgeted manufacturing overhead $1,125,000

Actual manufacturing overhead $1,100,000

Budgeted machine hours 12,500 machine hours

Actual machine hours 13,100 machine hours

Budgeted direct labor hours 1,875 labor hours

Actual direct labor hours 1,750 labor hours

Required:

a. Determine the budgeted manufacturing overhead rate.

b. What is the manufacturing overhead allocated?

c. Compute over-or under allocated manufacturing overhead in 2002.

d. What is the proper journal entry to write off the over-or under allocated manufacturing overhead to cost of goods sold.

QUESTION 3. (20 points)

Forever Corporation uses a job-order costing system. Summary of the transactions during 2002 as follows:

a. Materials purchased, $100,000.

b. Direct materials used, $75,000 and indirect material used, $12,500.

c. Manufacuring overhead incurred, $ 21,500.

d. Direct labor incurred, 1,000 direct labor hours at $75 per hour and indirect manufacturing labor was $4,250, wages will be paid in 2003

e. Manufacturing overhead allocated $ 19 per direct labor hour.

f. Costs of goods manufactured, $200,000.

g. Costs of goods sold, $185,000.

Required:

Prepare journal entries to summarize transactions in 2002.

QUESTION 4. (20 points)

Campaign Printing has two service departments, S1 and S2, and two production departments, P1 and P2.

The data for June 2002 were as follows:

Services provided to:

Activity Costs S1 S2 P1 P2

S1 $90,000 10% 40% 50%

S2 60,000 20% 55% 25%

Fixed Costs

P1 $360,000

P2 $520,000

Required:

What are the allocation of costs of service departments, S1 and S2, to production departments, P1 and P2 using the reciprical method?

QUESTION 5. (25 points)

Makuson Company had the following account balances:

For specific date For year 2002

Direct materials, December 31 2002 $ 17,000 Administration salaries $ 14,000

Direct materials, January 1, 2002 22,000 Depreciation, factory building 17,000

Finished goods inventory, Dec. 31, 2002 16,500 Direct materials, purchased 81,000

Finished goods inventory, Jan. 1, 2002 13,000 Factory utilities 7,500

Work-in-process, December 31, 2002 11,000 Indirect manufacturing labor 13,000

Work-in-process, January 1, 2002 9,000 Direct manufacturing labor 50,000

Indirect materials 7,000

Marketing expenses 35,000

Miscellaneous factory overhead 4,000

Revenues 225,000

Required:

Prepare the income statement and supporting schedule of cost of goods manufactured for Makuson Company for the year 2002?