Chapter 2 Cases

Multiple Choice Questions
1.Indirect labor is a part of:

A) Prime cost.
B) Conversion cost.
C) Period cost.
D) Nonmanufacturing cost.
2.The salary paid to the president of King Company would be classified on the income statement
as a(n):
A) administrative expense.
B) direct labor cost.
C) manufacturing overhead cost.
D) selling expense.
3.Direct labor cost is a part of:
A)
B)
C)
D)
Conversion cost Prime cost

No
No
No
Yes
Yes
Yes
Yes
No
4.Direct material cost is a:

A)
B)
C)
D)
Conversion cost Prime cost

No
No
No
Yes
Yes
Yes
Yes
No
5.Prime cost and conversion cost share what common element of total cost?
A) Direct materials.
B) Direct labor.
C) Variable overhead.
D) Fixed overhead.
6. The following costs were incurred in January:
Direct materials..............................
Direct labor....................................
Manufacturing overhead................
Selling expenses.............................
$33,00
0
$28,00
0
$69,00
0
$16,00
Administrative expenses................
0
$21,00
0
Conversion costs during the month totaled:

A) $97,000
B) $167,000
C) $102,000
D) $61,000
7.Abair Company's manufacturing overhead is 20% of its total conversion costs. If direct labor is
$38,000 and if direct materials are $35,000, the manufacturing overhead is:
A) $18,250
B) $9,500
C) $8,750
D) $152,000
8.Using the following data for March, calculate the cost of goods manufactured:
Direct materials......................................................
Direct labor............................................................
Manufacturing overhead........................................
Beginning work in process inventory....................
Ending work in process inventory.........................
$29,00
0
$19,00
0
$27,00
0
$11,00
0
$12,00
0
The cost of goods manufactured was:

A) $74,000
B) $86,000
C) $76,000
D) $75,000
9.Last month a manufacturing company had the following operating results:

Beginning finished goods inventory................
Ending finished goods inventory.....................
Sales.................................................................
$72,000
$66,000
$465,00
0
Gross margin....................................................
$88,000
What was the cost of goods manufactured for the month?

A) $371,000
B) $459,000
C) $383,000
D) $377,000
10.The following information is taken from the records of CL Company for last year:
Direct materials......................................................
Total manufacturing costs......................................
Beginning work in process inventory....................
Cost of goods manufactured..................................
$5,000
$6,000
$17,00
0
$1,000
$15,00
0
What are the correct amounts for direct labor and ending work in process inventory?
A)
B)
C)
D)
Direct
Ending Work
Labor
in Process
$12,000
$2,000
$11,000
$2,000
$6,000
$1,000
$6,000
$3,000
11.The following information is taken from the records of DW Company for last year:
Direct materials.............................................
Direct labor...................................................
Manufacturing overhead...............................
Ending work in process inventory................
Cost of goods manufactured.........................
$8,000
$3,000
$11,00
0
$5,000
$19,00
0
The amount of beginning work in process inventory is:

A) $24,000
B) $2,000
C) $22,000
D) $3,000
12. Use the following to answer questions 12-1: 12-4:

The following data (in thousands of dollars) have been taken from the accounting records of
Karsen Corporation for the just completed year.
Sales.......................................................................
Raw materials inventory, beginning......................
Raw materials inventory, ending...........................
Purchases of raw materials.....................................
Direct labor............................................................
Administrative expenses........................................
Selling expenses.....................................................
Work in process inventory, beginning...................
Work in process inventory, ending........................
Finished goods inventory, beginning.....................
Finished goods inventory, ending..........................
$93
0
$70
$40
$19
0
$15
0
$21
0
$90
$12
0
$80
$70
$90
$14
0
Use these data to answer the following series of questions.

12-1. The cost of the raw materials used in production during the year (in thousands of dollars)
was:
A) $230
B) $220
C) $160
D) $260
12-2.The cost of goods manufactured (finished) for the year (in thousands of dollars) was:
A) $590
B) $650
C) $660
D) $570
12-3. The cost of goods sold for the year (in thousands of dollars) was:
A) $680
B) $540
C) $640
D) $730
12-4. The net operating income for the year (in thousands of dollars) was:
A) $180
B) $170
C) $390
D) $190
13. Supply the missing data in the following cases. Each case is independent:
Case 1
Case 2
Case 3
Case 4
Beg. raw materials inventory
2,000
1,500
1,000
Purchases of raw materials
6,000
7,500
4,000
3,000
1,000
1,500
4,500
5,000
3,000
3,000
7,000
4,000
Manufacturing overhead
5,000
4,000
9,000
Total manufacturing cost
18,500
20,000
Beg. work-in-process inventory
2,500
3,000
End. work-in-process inventory
1,000
4,000
3,000
Cost of goods manufactured
18,000
14,000
Sales
30,000
21,000
36,000
40,000
Beg. finished goods inventory
1,000
2,500
2,000
Cost of goods manufactured
17,500
End. finished goods inventory
1,500
4,000
3,500
Cost of goods sold
17,000
18,500
Gross margin
13,000
17,500
3,500
4,000
5,000
9,000
End. Raw materials inventory

Direct materials used in production
Direct labor
Selling expenses
Net operating income

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Multiple Choice Questions

1.Indirect labor is a part of:

Conversion cost Prime cost

4.Direct material cost is a:

Conversion cost Prime cost

Conversion costs during the month totaled:

The cost of goods manufactured was:

9.Last month a manufacturing company had the following operating results:

What was the cost of goods manufactured for the month?

The amount of beginning work in process inventory is:

12. Use the following to answer questions 12-1: 12-4:

Use these data to answer the following series of questions.

Beg. raw materials inventory

Purchases of raw materials

Total manufacturing cost

Beg. work-in-process inventory

End. work-in-process inventory

Cost of goods manufactured

Beg. finished goods inventory

Cost of goods manufactured

End. finished goods inventory

Cost of goods sold

End. Raw materials inventory

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