Principles of Cost Accounting.docx

Principles of Cost Accounting ACCOUNTING FOR MATERIALS 1. An effective cost control system should include:  A. An established plan of objectives and goals to be achieved. B. Regular reports showing the difference between goals and actual performance. C. Specific assignment of duties and responsibilities. D. All of these are correct.   2. To effectively control materials, a business must maintain:  A. Limited access. B. Combination of duties. C. Safety stock. D. None of these are correct.   3. Janet is the purchasing agent at Frameco Manufacturing.  Her duties include vendor selection and ordering materials. Due to a recent economic downturn and resulting cut backs, Janet has been assigned the additional duty or preparing receiving reports after comparing the goods received to the purchase order.  This is an example of:  A. unlimited access to materials. B. independence of assigned functions. C. misappropriation of assets. D. a lack of segregation of duties.   4. Marley Company hired a consultant to help improve its operations.  The consultant’s report stated that Marley’s inventory levels are excessive and cited several negative consequences to Marley as a result.  Which of the following was not cited in the report?  A. Possible other uses for working capital now tied up in inventory B. Production stoppages due to parts not being available C. Higher property taxes and insurance costs D. Large quantities of obsolete materials   5. The data used to calculate the order point include all of the following except:  A. the costs of placing an order. B. the rate at which the material will be used. C. the estimated time interval between the placement and receipt of an order. D. the estimated minimum level of inventory needed to protect against stockouts.   6. Murphy Company uses 2,000 yards of material each day to make hats.  It usually takes five days from the time Murphy orders the material to when it is received.  If Murphy’s desired safety stock is 6,000 yards, what is Murphy’s order point?  A. 6,000 yards B. 8,000 yards C. 10,000 yards D. 16,000 yards   7. What is the objective of the economic order quantity (EOQ) model for inventory?  A. To minimize order costs or carrying costs, whichever are higher B. To minimize order costs or carrying costs and maximize the rate of inventory turnover C. To minimize the total order costs and carrying costs over a period of time D. To order sufficient quantity to economically meet the next period's demand   8. Order costs would include all of the following except:  A. Receiving clerk’s wages. B. Storeroom keeper’s wages. C. Purchasing department’s telephone bill. D. Transportation in.   9. Expected annual usage of a particular raw material is 1,200,000 units, and standard order size is 10,000 units.  The invoice cost of each unit is $145, and the cost to place one purchase order is $105.  The estimated annual order cost is:  A. $12,000. B. $17,400. C. $12,600. D. $800,000.   10. Carrying costs would include all of the following except:  A. Warehouse rent. B. Inspection employees’ wages. C. Losses due to obsolescence. D. Property taxes.   11. The following data refer to various annual costs relating to the inventory of a single-product company that requires 10,000 units per year:   Cost per unit Order cost $ .05      Transportation-in on purchases .18      Storage .16    Insurance .10        Total per year Interest that could have been earned on alternate investment of funds $800      What is the annual carrying cost per unit?  A. $ .21 B. $ .29 C. $ .34 D. $ .44   12. The following data pertains to Western Company’s materials inventory: Number of pounds required annually 16,000 Cost of placing an order $20 Annual carrying cost per pound of material $4 What is Western Company’s EOQ?  A. 4,000 pounds B. 800 pounds C. 400 pounds D. 200 pounds   13. Expected annual usage of a particular raw material is 180,000 units, and standard order size is 12,000 units. The invoice cost of each unit is $300, and the cost to place one purchase order is $80.  Assuming the company does not maintain safety stock, the average inventory is:  A. 10,000 units. B. 7,500 units. C. 15,000 units. D. 6,000 units.   14. Arwen Company has correctly computed its economic order quantity at 500 units; however, management feels it would rather order in quantities of 600 units.  How should Arwen's total annual order cost and total annual carrying cost for an order quantity of 600 units compare to the respective amounts for an order quantity of 500 units?  A. Higher total order cost and lower total carrying cost B. Lower total order cost and higher total carrying cost C. Higher total order cost and higher total carrying cost D. Lower total order cost and lower total carrying cost   15. The personnel involved in the physical control of materials includes all of the following except the:  A. Purchasing agent. B. Receiving clerk. C. Cost accountant. D. Production department supervisor.   16. The employee who is responsible for preparing purchase requisitions is most likely the:  A. Storeroom keeper. B. Purchasing agent. C. Production supervisor. D. Receiving clerk.   17. Sam Jones works at Seeker, Inc.  Sam’s duties include identifying where materials can be obtained most economically, placing orders and verifying invoices and approving them for payment.  Sam is a(n):  A. receiving clerk. B. accounts payable clerk. C. purchasing agent. D. production supervisor.   18. The form used to notify the purchasing agent that additional materials are needed is known as a:  A. Purchase order. B. Vendor's invoice. C. Receiving report. D. Purchase requisition.   19. The form prepared by the purchasing agent and sent to the vendor to obtain materials is known as a:  A. Materials requisition. B. Purchase requisition. C. Purchase order. D. Vendor's invoice.   20. A receiving report would include all of the following information except:  A. What the shipment contained. B. The purchase order number. C. The customer. D. The date the materials were received.   21. Listed below are steps of purchasing and receiving materials: 1.     The receiving clerk prepares a receiving report. 2.     Purchase requisitions are prepared to notify the purchasing agent that additional                                                             materials are needed. 3.     The purchase of merchandise is recorded by the accounting department. 4.     The purchasing agent completes a purchase order. In which order would these events typically happen?  A. 4, 2, 3, 1 B. 2, 4, 3, 1 C. 2, 4, 1, 3 D. 4, 2, 1, 3   22. Listed below are steps of procuring materials for production: 1.     The receiving clerk checks the quantity and quality of incoming materials. 2.     The purchasing agent issue the purchase order to the vendor. 3.     The production floor supervisor issues a materials requisition. 4.     The storeroom clerk issues a purchase requisition. In which order would these events typically happen?  A. 3, 2, 4, 1 B. 3, 4, 2, 1 C. 2, 1, 3, 4 D. 4, 2, 1, 3   23. The duties of the purchasing agent would include all of the following except:  A. Placing purchase orders. B. Counting and identifying materials received. C. Compiling information that identifies vendors and prices. D. Verifying invoices and approving them for payment.   24. The form that serves as authorization to withdraw materials from the storeroom is known as the:  A. Materials requisition. B. Purchase order. C. Purchase requisition. D. Returned materials report.   25. If a company receives a larger quantity of goods than had been ordered and keeps the excess for future use, a(n)______________ is prepared to notify the vendor of the amount of increase to accounts payable in the invoice.  A. credit memorandum B. return shipping order C. debit memorandum D. additional purchase order   26. The Sully Company uses an industrial chemical, XRG, in a manufacturing process.  Information as to balances on hand, purchases, and requisitions of XRG is given in the following table. Date                       Transaction Number of Kilograms Price per Kilogram   Balance of Kilograms Jan. 1 Beginning balance 1,000 $2.00   1,000     Jan. 24 Purchased  2,500 $2.25   3,500     Feb. 8 Issued 700     2,800     Mar. 16 Issued 1,200     1,600     Jun. 11 Purchased 1,500 $2.75   3,100     Aug. 18 Issued 800     2,300     Sep. 6 Issued 1,600     700     Oct. 15 Purchased 2,000 $2.80   2,700     Dec. 29 Issued 600     2,100     If a perpetual inventory record of XRG is maintained on a FIFO basis, the March 16 issue will consist of:  A. 300 kilograms @ $2.00 and 900 kilograms @ $2.25. B. 1,000 kilograms @ $2.00 and 200 kilograms @ $2.25. C. 1,200 kilograms @ $2.25. D. 700 kilograms @ $2.00 and 500 kilograms @ $2.25.   27. The Benchley Company uses metal grates when assembling appliances.  Information as to balances on hand, purchases, and requisitions of the grates is given in the following table. Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 150 $2.80   150     Jan. 24 Purchased  450 $3.10   600     Feb. 8 Issued 120     480     Mar. 16 Issued 210     270     Jun. 11 Purchased 225 $3.24   495     Aug. 18 Issued 195     300     Sep. 6 Issued 165     135     Oct. 15 Purchased 225 $3.40   360     Dec. 29 Issued 210     150     If a perpetual inventory record of the metal grates is maintained on a FIFO basis, the September 6 issue will consist of:  A. 15 units @ $2.80, 120 units @ $3.10 and 30 units @ $3.24. B. 75 units @ $2.80 and 90 units @ $3.10. C. 165 units @ $3.10. D. 75 units @ $3.10 and 90 units @ $3.24.   28. The Bisset Corporation uses Raw Material A in a manufacturing process.  Information as to balances on hand, purchases, and requisitions of Raw Material A is given in the following table. Raw Material A Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 100 $1.40   100     Jan. 24 Purchased  300 $1.55   400     Feb. 8 Issued 80     320     Mar. 16 Issued 140     180     Jun. 11 Purchased 150 $1.62   330     Aug. 18 Issued 130     200     Sep. 6 Issued 110     90     Oct. 15 Purchased 150 $1.70   240     Dec. 29 Issued 140     100     If a perpetual inventory record of Raw Material A is maintained on a FIFO basis, 200 units on hand on August 18 will consist of:  A. 100 units @ $1.40, 80 units @ $1.55 and 20 units @ $1.62. B. 100 units @ $1.55 and 100 units @ $1.62. C. 150 units @ $1.62 and 50 units @ $1.55. D. 200 units @ $1.55.   29. The Benchley Company uses metal grates when assembling appliances.  Information as to balances on hand, purchases, and requisitions of the grates is given in the following table. Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 150 $2.80   150     Jan. 24 Purchased  450 $3.10   600     Feb. 8 Issued 120     480     Mar. 16 Issued 210     270     Jun. 11 Purchased 225 $3.24   495     Aug. 18 Issued 195     300     Sep. 6 Issued 165     135     Oct. 15 Purchased 225 $3.40   360     Dec. 29 Issued 210     150     If a perpetual inventory record of the metal grates is maintained on a FIFO basis, what costs are assigned to the 150 units in ending inventory?  A. 150 units @ $3.40 B. 15 units @ $3.40 and 135 units @ $3.24. C. 150 units @ $2.80. D. 15 units @ $3.40 and 135 units @ $2.80.   30. The inventory method which results in the prices paid for earliest purchases assigned to cost of goods sold is:  A. First-in, first-out. B. Last-in, first-out. C. Last-in, last-out. D. Moving average.   31. The inventory method which results in the most recent costs being assigned to inventory on hand at the end of the period is:  A. First-in, first-out. B. Last-in, first-out. C. Last-in, last-out. D. Moving average.   32. Filmac, Inc. uses speakers when assembling computers.  Information as to balances on hand, purchases, and requisitions of speakers is given in the following table. Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 200 $14.00   200     Jan. 15 Purchased  100 $16.00   300     Feb. 24 Issued 50     250     Mar. 8 Issued 70     180     Jun. 23 Purchased 100 $17.00   280     Aug. 8 Issued 80     200     Sep. 29 Issued 30     170     Oct. 7 Purchased 100 $19.00   270     Dec. 16 Issued 50     220     If a perpetual inventory record of speakers is maintained on a LIFO basis, the March 8 issue will consist of:  A. 20 units @ $14.00 and 50 units @ $16.00. B. 70 units @ $14.00. C. 50 units @ $16.00 and 20 units @ $14.00. D. 70 units @ $16.00.   33. The Bisset Corporation uses Raw Material A in a manufacturing process.  Information as to balances on hand, purchases, and requisitions of Raw Material A is given in the following table. Raw Material A Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 100 $1.40   100     Jan. 24 Purchased  300 $1.55   400     Feb. 8 Issued 80     320     Mar. 16 Issued 140     180     Jun. 11 Purchased 150 $1.62   330     Aug. 18 Issued 130     200     Sep. 6 Issued 110     90     Oct. 15 Purchased 150 $1.70   240     Dec. 29 Issued 140     100     If a perpetual inventory record of Raw Material A is maintained on a LIFO basis, the September 6 issue will consist of:  A. 80 units @ $1.55, 20 units @ $1.62 and 10 units @ $1.40. B. 110 units @ $1.55. C. 50 units @1.55 and 60 units @ 1.62. D. 20 units @ $1.62 and 90 units @ $1.55.   34. Pierce, Inc. uses sulfuric acid in a manufacturing process.  Information as to balances on hand, purchases, and requisitions of acid is given in the following table. Date                       Transaction Number of Gallons Price per Gallon   Balance of Gallons Jan. 1 Beginning balance 10,000 $.50   10,000     Feb. 24 Purchased  30,000 $.65   40,000     Mar. 8 Issued 8,000     32,000     Apr. 16 Issued 14,000     18,000     May. 11 Purchased 15,000 $.72   33,000     Jul. 18 Issued 13,000     20,000     Oct. 6 Issued 11,000     9,000     Nov. 15 Purchased 15,000 $.78   24,000     Nov. 29 Issued 14,000     10,000     If a perpetual inventory record of Raw Material A is maintained on a LIFO basis, the 20,000 units in inventory at July 18 will consist of:  A. 5,000 units @ $.72 and 15,000 units @ $.65. B. 10,000 units @ $.50 and 10,000 units @ $.65. C. 2,000 units @ $.72, 8,000 units @ $.65 and 10,000 units @ $.50. D. 10,000 units @ $.50, 6,000 units @ $.65 and 4,000 units @ $.72.   35. The inventory method which results in the most recent cost being assigned to cost of goods sold is:  A. First-in, first-out. B. Last-in, first-out. C. Last-in, last-out. D. Moving average.   36. The inventory method which results in the prices paid for the earliest purchases being assigned to inventory on hand at the end of the period is:  A. First-in, first-out. B. Last-in, first-out. C. Last-in, last-out. D. Moving average.   37. The Bisset Corporation uses Raw Material A in a manufacturing process.  Information as to balances on hand, purchases, and requisitions of Raw Material A is given in the following table. Raw Material A Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 100 $1.40   100     Jan. 24 Purchased  300 $1.55   400     Feb. 8 Issued 80     320     Mar. 16 Issued 140     180     Jun. 11 Purchased 150 $1.62   330     Aug. 18 Issued 130     200     Sep. 6 Issued 110     90     Oct. 15 Purchased 150 $1.70   240     Dec. 29 Issued 140     100     If a perpetual inventory record of Raw Material A is maintained on a moving average basis, the 140 units issued on March 16 will have a unit cost of (round to 3 decimal places):  A. $1.513. B. $1.475. C. $1.55. D. $1.438.   38. The Kennedy Company uses throttles in its assembly of lawn mowers.  Information as to balances on hand, purchases, and requisitions of throttles is given in the following table. Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 50 $2.50   50     Jan. 20 Purchased  150 $3.00   200     Feb. 3 Issued 40     160     Mar. 25 Issued 70     90     Jun. 14 Purchased 75 $4.00   165     Aug. 27 Issued 65     100     Sep. 16 Issued 55     45     Oct. 7 Purchased 75 $4.50   120     Dec. 13 Issued 70     50     If a perpetual inventory record of throttles is maintained on a moving average basis, the 165 items in inventory on June 14 will have a unit cost of (rounded to three decimal places):  A. $3.438. B. $3.167. C. $3.386. D. $2.875.   39. In a period of rising prices, the use of which of the following cost flow methods would result in the lowest tax liability?  A. FIFO B. LIFO C. Weighted average cost D. Moving average cost   40. In a period of rising prices, the use of which of the following cost flow methods would result in the lowest cost of goods sold?  A. FIFO B. LIFO C. Weighted average cost D. Moving average cost   41. When selecting a method of inventory costing, a company must consider all of the following except:  A. federal and state income tax regulations. B. current economic conditions. C. the flow of materials. D. its rate of inventory turnover.   42. At the end of the period, the balance in the Materials account should represent  A. the cost of materials purchased. B. the cost of materials on hand. C. the cost of materials issued into production. D. the cost of materials included in Work in Process and Finished Goods.   43. The general ledger entry to record the purchase of materials is:  A. Debit-Purchases Received      Credit-Purchase Orders Outstanding B. Debit-Materials      Credit-Purchase Orders Outstanding C. Debit-Purchases Received      Credit-Accounts Payable D. Debit-Materials      Credit-Accounts Payable   44. The journal entry to record undamaged direct materials returned to the storeroom would be:  A. Debit - Materials      Credit - Finished Goods B. Debit - Factory Overhead      Credit - Work in Process C. Debit - Materials      Credit - Factory Overhead D. Debit - Materials      Credit - Work in Process   45. If the amount of materials on hand at the end of the period is less than the control account balance, the control account balance should be decreased by the following entry:  A. Debit - Work in Process      Credit - Materials B. Debit - Materials      Credit - Factory Overhead C. Debit - Materials      Credit - Work in Process D. Debit - Factory Overhead      Credit - Materials   46. Inventory levels for firms using JIT inventory systems compared to firms not using JIT will be:  A. Higher for both work in process and finished goods. B. Higher for work in process and finished goods but lower for raw materials. C. Lower for raw materials, work in process, and finished goods. D. Higher for finished goods but lower for raw materials and work in process.   47. Just-in-time production techniques:  A. Require inventory buffers between work centers. B. Were first utilized by U.S. manufacturers and later exported to Japan. C. Produce goods for inventory with the hope that demand for these goods will then be created. D. Require a high degree of cooperation and coordination between supplier and manufacturer.   48. In a JIT system, reducing throughput time is possible because:  A. there are fewer materials used in the process. B. there are more workers involved in the process. C. there are more supervisors, so a better job is done of directing plant activities. D. there are fewer operations such as moving and storing inventories that do not add value to the product.   49. Polk, Inc. produces 3,000 hammers each day.  The average number of units in work in process is 4,500, having an average cost of $10,000.  The annual carrying costs relating to inventory are 15%. Consultants have determined that the work in process could be reduced by as much as a third by rearranging the factory floor.  What is the current throughput time?  A. Eight hours B. Sixteen hours C. One day D. One and one half days   50. Harrison Industries produces 4,000 lunch boxes each day.  The average number of units in work in process is 12,000, having an average cost of $60,000.  The annual carrying costs related to inventory are 10%. Consultants have determined that the work in process could be reduced by as much as a third by rearranging the factory floor.  What would the throughput time be if Harrison implements the recommended changes?  A. Twelve hours B. One day C. Two days D. Three days   51. Taft Company produces 5,000 pallets each day.  The average number of units in work in process is 10,000, having an average cost of $35,000.  The annual carrying costs related to inventory are 20%. Consultants have determined that the work in process could be reduced by as much as 25% by rearranging the factory floor.  What would the throughput time be if Harrison implements the recommended changes?  A. Twelve hours B. One day C. One and one-half days D. Two days   52. Harrison Industries produces 4,000 lunch boxes each day.  The average number of units in work in process is 12,000, having an average cost of $60,000.  The annual carrying costs related to inventory are 10%. Consultants have determined that the work in process could be reduced by as much as a third by rearranging the factory floor.  What would the reduction in annual carrying costs be if Harrison is able to implement the recommended changes?  A. $2,000 B. $1,500 C. $6,000 D. $4,000   53. The accounting system used with JIT manufacturing is called:  A. Backflush costing. B. The push system. C. Perpetual inventory costing. D. First-in, first-out.   54. In a backflush accounting system, a single account is used for the following:  A. Work in process and finished goods inventories. B. Finished goods inventories and cost of goods sold. C. Factory overhead and raw materials. D. Raw materials and work in process inventories.   55. In a backflush accounting system, a single account is used for the following:  A. Work in process and finished goods inventories. B. Finished goods inventories and cost of goods sold. C. Factory overhead and raw materials. D. Labor and overhead.   56. Which of the following is not true about backflush costing?  A. Different companies may choose different trigger points. B. Production costs are attached to products as they move through work in process. C. A single account is used for raw and in-process materials because materials are issued to production when received from the supplier. D. Direct labor is usually insignificant in a highly automated system, so is not cost effective to account for it separately.   57. Under a backflush accounting system, the following entry is made when products are completed:  A. Debit-Finished Goods      Credit-Work In Process B. Debit-Cost of Goods Sold      Credit-Raw and In Process      Credit-Conversion Costs C. Debit-Finished Goods      Credit-Raw and In Process      Credit-Conversion Costs D. Debit-Cost of Goods Sold      Credit-Finished Goods   58. All of the following methods may be used to account for the revenue from scrap sales except:  A. Credit Factory Overhead, if the scrap cannot be identified with a specific job. B. Credit Materials, if the scrap would have been able to be recycled. C. Credit Work in Process, if the scrap is identified with a specific job. D. Credit Scrap Revenue, which is included in the “Other Income” section of the income statement.   59. Rowe Co.'s Job 401 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below.  Final inspection of Job 401 disclosed 200 wagons that were sold to a jobber for $6,000. Direct materials $24 Direct labor 18 Factory overhead  14   $56 Assume that the spoilage loss is charged to all production during August.  What would be the journal entry to record the spoilage?   A. Factory Overhead            11,200      Work in Process                11,200 B. Spoiled Goods Inventory      6,000      Work in Process                 6,000 C. Spoiled Goods Inventory      6,000 Factory Overhead             5,200                         Work in Process                11,200             D. Spoiled Goods Inventory     11,200      Factory Overhead               11,200   60. Rowe Co.'s Job 401 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below.  Final inspection of Job 401 disclosed 200 spoiled wagons that were sold to a jobber for $6,000. Direct materials $24 Direct labor 18 Factory overhead  14   $56 Assume that the spoilage loss is attributable to the exacting specifications of Job 401 and is charged to this specific job.  What would be the journal entry to record the spoilage?   A. Factory Overhead             6,000      Work in Process                 6,000 B. Spoiled Goods Inventory      6,000      Work in Process                 6,000 C. Spoiled Goods Inventory      6,000 Factory Overhead             5,200                         Work in Process                11,200             D. Spoiled Goods Inventory      6,000      Factory Overhead                6,000   61. Rowe Co.'s Job 401 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below.  Final inspection of Job 401 disclosed 200 spoiled wagons that were sold to a jobber for $6,000. Direct materials $24 Direct labor 18 Factory overhead  14   $56 Assume that spoilage loss is attributable to the exacting specifications of Job 401 and is charged to this specific job.  What would be the unit cost of the good wagons produced on Job 401?  A. $56.00 B. $58.60 C. $53.00 D. $48.18   62. During March, Hart Company incurred the following costs on Job 122 for the manufacture of 200 motors: Original cost accumulation:      Direct materials $2,600    Direct labor 900    Factory overhead  1,350   $4,850 Direct costs of reworking 10 units:      Direct materials $  100    Direct labor 180      Factory overhead    270   $  550 Assume the rework costs are to be spread over all jobs that go through the production cycle.  What is the journal entry needed to record the rework costs?   A. Work in Process           550      Materials                    100      Payroll                      180      Factory Overhead             270 B. Materials                 100 Payroll                   180 Factory Overhead          270      Work in Process              550 C. Factory Overhead          550      Materials                    100      Payroll                      180      Factory Overhead             270 D. Spoiled Goods Inventory   550      Work in Process              550   63. During April, Hisch Company incurred the following costs on Job A42 for the manufacture of 400 bookcases: Original cost accumulation:      Direct materials $ 4,200    Direct labor 2,500    Factory overhead   4,500   $11,500 Direct costs of reworking 15 units:      Direct materials $   150    Direct labor 90      Factory overhead     180   $   420 If the defects resulted from the exacting specifications of the order, what is the journal entry needed to record the rework costs?   A. Work in Process           420      Materials                    150      Payroll                       90      Factory Overhead             180 B. Materials                 150 Payroll                    90 Factory Overhead          180      Work in Process              420 C. Factory Overhead          420      Materials                    150      Payroll                       90      Factory Overhead             180 D. Spoiled Goods Inventory   420      Work in Process              420   64. During March, Hart Company incurred the following costs on Job 122 for the manufacture of 200 motors: Original cost accumulation:      Direct materials $2,600    Direct labor 900    Factory overhead  1,350   $4,850 Direct costs of reworking 10 units:      Direct materials $  100    Direct labor 180      Factory overhead    270   $  550 The rework costs were attributable to the exacting specifications of Job 122, and the full rework costs were charged to this specific job.  What is the cost per finished unit of Job 122?  A. $25.00 B. $23.50 C. $27.00 D. $24.00   65. Xander Company anticipates that usage of Component T will be 100 units daily, which equates to around 25,000 for the year. The material is expected to cost $5 per unit.  Once an order is placed with its vendor, it takes five days to receive the goods, and the cost of placing each order is $50.  As a result, Xander keeps 1,000 units on hand to avoid stockouts.  The carrying cost associated with each unit is $10. a. Compute the order point. b. Determine the most economical order quantity.             66. The Reddog Company predicts that 3,200 units of material will be used during the year.  The expected daily usage is 15 units, there is an expected lead time of 10 days, and there is a safety stock of 200 units.  The material is expected to cost $4 per unit.  It is estimated that it will cost $25 to place each order.  The annual carrying cost is $1 per unit. a. Compute the order point. b. Determine the most economical order quantity by use of the formula. c. Compute the total cost of ordering and carrying at the EOQ point.             67. For the following materials control forms, please indicate the following: a.  who prepares the form; b.  who receives the form; and c.  the form’s intended purpose. 1.  Purchase Requisition 2.  Materials Requisition 3.  Receiving Report 4.  Purchase Order 5.  Debit/Credit Memo            68. The materials account of the Lankford Company reflected the following changes during January: Balance, January 1 190 units @ $30 Received, January 5 130 units @ $32 Issued, January 18 240 units Received, January 20 210 units @ $35 Issued, January 30 70 units Assuming that Lankford Company maintains perpetual inventory records, calculate the cost of the ending inventory at January 31 and the cost of the units issued in January using the FIFO method.            69. The materials account of Hetzer Industries reflected the following changes during May: Balance, May 1 180 units @ $30 Received, May 2 60 units @ $32 Issued, May 4 80 units Received, May 27 100 units @ $34 Issued, May 31 150 units Assuming that Hetzer maintains perpetual inventory records, calculate the cost of the ending inventory at May 31 and the cost of the units issued in May using the LIFO method.            70. The materials account of the Herbert Company reflected the following changes during August: Balance, August 1 18 units @ $200 Received, August 2 6 units @ $210 Issued, August 8 8 units Received, August 15 10 units @ $222 Issued, August 27 15 units Assuming that Herbert Company maintains perpetual inventory records, calculate the cost of the ending inventory at August 31 and the cost of the units issued in August using the moving average method.            71. The materials account of the Flynn Company reflected the following changes during May: Balance, May 1 500 units @ $10 Received, May 5 300 units @ $12 Issued, May 10 400 units Received, May 15 200 units @ $15 Issued, May 25 300 units Assuming that Flynn Company maintains perpetual inventory records, calculate the ending inventory at May 31 and the cost of the units issued in May using each of the following methods: (a) First in, first out (FIFO) (b) Last in, first out (LIFO) (c) Moving average            72. The following accounts are maintained by the Sprague Manufacturing Company in its general ledger:  Materials, Work in Process, Factory Overhead, and Accounts Payable.  The materials account had a debit balance of $40,000 on November 1. A summary of material transactions for November shows: (1) Materials purchased on account, $62,000 (2) Direct materials issued, $58,500 (3) Direct materials returned to storeroom, $1,200 (4) Indirect materials issued, $3,600 (5) Indirect materials returned to storeroom, $550 (6) Materials on hand were $200 less than the stores ledger balance a. Prepare journal entries to record the materials transactions. b. Post the journal entries to T-accounts. c. What is the balance of the materials account on November 30?             73. The following decisions and transactions were made for the Sanders Company in May: May 1 The production manager informed the storeroom keeper that the forecasted usage of Component X is 3,000 units.  There are 1,500 units on hand, each having a unit cost of $20.  The company maintains a minimum stock of 1,000 units.  The storeroom keeper notifies the purchasing agent that the company will need 2,500 units of X to meet May’s production needs and maintain a minimum inventory of 1,200 units. May 3 The purchasing agent checks with a number of vendors and orders 2,500 units of Component X.  Unfortunately, the price has gone up to $25. May 7 The shipment of Component X is received and inspected.  The units are in good condition and the company received the number of units it ordered. May 9 The invoice covering Component X is received from the vendor and approved for payment. May 21 The May 9 invoice is paid in full. May 31 During the month, 2,950 units of Component X are issued to production.  The company uses FIFO costing and a job order cost system. May 31 An inventory of the storeroom is taken at the end of the day and there are 1,040 units of Component X on hand. (a) Prepare a table to answer the following questions:        (1)What forms, if any, were used?        (2)What entry, if any, was recorded? (b) Calculate the balance in the Materials account at May 31.            74. The Outdoor Manufacturing Company produces sporting equipment. The company maintains a single raw materials inventory account for both direct and indirect materials.  The following information came from the factory ledger accounts for December: Raw Materials, December 1 $ 45,500 Work in Process, December 1 125,000 Finished Goods, December 1 175,000 Raw materials purchases (during December) 623,000 Direct labor 435,000 Repairs and maintenance 37,200 Indirect materials 16,700 Utilities 63,200 Indirect labor 38,200 Supervisors' salaries 18,300 Raw Materials, December 31 43,600 Work in Process, December 31 135,000 Finished Goods, December 31 150,000 Compute the cost of direct materials used during the month of December.            75. Skeeter Company produces 100,000 insect repellent devices each day, and the average number of units in work in process is 150,000, with an average value of $300,000.  The average annual carrying cost percentage is 30%. a.   Determine the throughput time. b.   Compute the annual carrying cost. c.   If the same daily output can be achieved while reducing the work in process by 40%, determine the new throughput time. d.   Compute the annual carrying cost given the information in requirement c.            76. Omari Assembly, Inc., which uses backflush costing, had the following transactions during the month of October: (a) Purchased raw materials on account, $700,000. (b) Requisitioned raw materials to production, $700,000. (c) Distributed direct labor costs, $105,000. (d) Manufacturing overhead incurred, $215,000.  (Use Various Credits for the account in the credit part of the entry.) (e) Completed all goods. (f) Sold goods for $1,500,000 on account. Prepare journal entries to record the above transactions.            77. Gilday Furniture Inc. produces custom furniture.  Wood chips are an inevitable by-product of the cutting process, and are considered scrap.  Gilday is unable to use this scrap; however, the company has an agreement to sell the scrap at market prices to a local company that processes the wood chips to make industrial fillers.  Record the entries required for scrap under each of the following conditions: (a)  The revenue received for scrap is to be treated as other income.  The market value of wood chips is stable and is currently $200 per ton.  The company has seven tons on hand. (b)  The revenue received for scrap is to be treated as a reduction in manufacturing cost, but cannot be identified with a specific job.  A firm price is not determinable for the scrap until it is sold.  It is eventually sold for cash of $800. (c)  The revenue received for scrap is to be treated as a reduction in manufacturing cost, and five tons of scrap are related to a special job where the company made numerous round tables.  The market value of wood chips is stable and is currently $200 per ton.            78. Moreland Corporation manufactures bells and whistles.  In June, 6,000 bells were completed on Job Order No. BX46.  On final inspection, 400 bells were rejected and transferred to the spoiled goods inventory to be sold at $.50 each. Costs recorded on Job Order No. BX46 follow: Direct materials $2,400 Direct labor 2,100 Factory overhead 1,200 Prepare the journal entries to record the following: a. Charges for materials, labor, and factory overhead for Job Order No. BX46 b. Cost of the spoiled work, the transfer of the cost of the good toys to Finished Goods, and the sale of the imperfect toys, if the loss on spoilage is charged to all jobs worked on during the period c. Cost of the spoiled work, the transfer of the cost of the good bells to Finished Goods, and the sale of the imperfect ones, if the loss on spoilage is to be charged to Job Order No. BX46 only.  (Round the new unit cost to the nearest whole cent, and assume part b, above, has not occurred.)             79. Kami company manufactures engine components.  During the previous month, the Company manufactured 12,000 units of Component XRB for Job 3524 and incurred the following unit costs: Direct materials $32.00 Direct labor 9.00 Factory overhead 6.00 When the units were tested after production, 300 units did not meet specifications and needed further polishing work.  The unit cost of correcting the defects was: Direct labor 3.00 Factory overhead 2.00 a.    Prepare the journal entries to record the cost to correct the defective work under each of the following scenarios: 1. If the cost of correcting the defective work is spread over all jobs that go through the production cycle 2. If the defects resulted from the exacting specifications of Job 3524 b.    Under Scenario 2 above, calculate the cost per unit of Job 3524.            ACCOUNTING FOR MATERIALS Key   1. An effective cost control system should include:  A. An established plan of objectives and goals to be achieved. B. Regular reports showing the difference between goals and actual performance. C. Specific assignment of duties and responsibilities. D. All of these are correct.   2. To effectively control materials, a business must maintain:  A. Limited access. B. Combination of duties. C. Safety stock. D. None of these are correct.   3. Janet is the purchasing agent at Frameco Manufacturing.  Her duties include vendor selection and ordering materials. Due to a recent economic downturn and resulting cut backs, Janet has been assigned the additional duty or preparing receiving reports after comparing the goods received to the purchase order.  This is an example of:  A. unlimited access to materials. B. independence of assigned functions. C. misappropriation of assets. D. a lack of segregation of duties.   4. Marley Company hired a consultant to help improve its operations.  The consultant’s report stated that Marley’s inventory levels are excessive and cited several negative consequences to Marley as a result.  Which of the following was not cited in the report?  A. Possible other uses for working capital now tied up in inventory B. Production stoppages due to parts not being available C. Higher property taxes and insurance costs D. Large quantities of obsolete materials   5. The data used to calculate the order point include all of the following except:  A. the costs of placing an order. B. the rate at which the material will be used. C. the estimated time interval between the placement and receipt of an order. D. the estimated minimum level of inventory needed to protect against stockouts.   6. Murphy Company uses 2,000 yards of material each day to make hats.  It usually takes five days from the time Murphy orders the material to when it is received.  If Murphy’s desired safety stock is 6,000 yards, what is Murphy’s order point?  A. 6,000 yards B. 8,000 yards C. 10,000 yards D. 16,000 yards   7. What is the objective of the economic order quantity (EOQ) model for inventory?  A. To minimize order costs or carrying costs, whichever are higher B. To minimize order costs or carrying costs and maximize the rate of inventory turnover C. To minimize the total order costs and carrying costs over a period of time D. To order sufficient quantity to economically meet the next period's demand   8. Order costs would include all of the following except:  A. Receiving clerk’s wages. B. Storeroom keeper’s wages. C. Purchasing department’s telephone bill. D. Transportation in.   9. Expected annual usage of a particular raw material is 1,200,000 units, and standard order size is 10,000 units.  The invoice cost of each unit is $145, and the cost to place one purchase order is $105.  The estimated annual order cost is:  A. $12,000. B. $17,400. C. $12,600. D. $800,000.   10. Carrying costs would include all of the following except:  A. Warehouse rent. B. Inspection employees’ wages. C. Losses due to obsolescence. D. Property taxes.   11. The following data refer to various annual costs relating to the inventory of a single-product company that requires 10,000 units per year:   Cost per unit Order cost $ .05      Transportation-in on purchases .18      Storage .16    Insurance .10        Total per year Interest that could have been earned on alternate investment of funds $800      What is the annual carrying cost per unit?  A. $ .21 B. $ .29 C. $ .34 D. $ .44   12. The following data pertains to Western Company’s materials inventory: Number of pounds required annually 16,000 Cost of placing an order $20 Annual carrying cost per pound of material $4 What is Western Company’s EOQ?  A. 4,000 pounds B. 800 pounds C. 400 pounds D. 200 pounds   13. Expected annual usage of a particular raw material is 180,000 units, and standard order size is 12,000 units. The invoice cost of each unit is $300, and the cost to place one purchase order is $80.  Assuming the company does not maintain safety stock, the average inventory is:  A. 10,000 units. B. 7,500 units. C. 15,000 units. D. 6,000 units.   14. Arwen Company has correctly computed its economic order quantity at 500 units; however, management feels it would rather order in quantities of 600 units.  How should Arwen's total annual order cost and total annual carrying cost for an order quantity of 600 units compare to the respective amounts for an order quantity of 500 units?  A. Higher total order cost and lower total carrying cost B. Lower total order cost and higher total carrying cost C. Higher total order cost and higher total carrying cost D. Lower total order cost and lower total carrying cost   15. The personnel involved in the physical control of materials includes all of the following except the:  A. Purchasing agent. B. Receiving clerk. C. Cost accountant. D. Production department supervisor.   16. The employee who is responsible for preparing purchase requisitions is most likely the:  A. Storeroom keeper. B. Purchasing agent. C. Production supervisor. D. Receiving clerk.   17. Sam Jones works at Seeker, Inc.  Sam’s duties include identifying where materials can be obtained most economically, placing orders and verifying invoices and approving them for payment.  Sam is a(n):  A. receiving clerk. B. accounts payable clerk. C. purchasing agent. D. production supervisor.   18. The form used to notify the purchasing agent that additional materials are needed is known as a:  A. Purchase order. B. Vendor's invoice. C. Receiving report. D. Purchase requisition.   19. The form prepared by the purchasing agent and sent to the vendor to obtain materials is known as a:  A. Materials requisition. B. Purchase requisition. C. Purchase order. D. Vendor's invoice.   20. A receiving report would include all of the following information except:  A. What the shipment contained. B. The purchase order number. C. The customer. D. The date the materials were received.   21. Listed below are steps of purchasing and receiving materials: 1.     The receiving clerk prepares a receiving report. 2.     Purchase requisitions are prepared to notify the purchasing agent that additional                                                             materials are needed. 3.     The purchase of merchandise is recorded by the accounting department. 4.     The purchasing agent completes a purchase order. In which order would these events typically happen?  A. 4, 2, 3, 1 B. 2, 4, 3, 1 C. 2, 4, 1, 3 D. 4, 2, 1, 3   22. Listed below are steps of procuring materials for production: 1.     The receiving clerk checks the quantity and quality of incoming materials. 2.     The purchasing agent issue the purchase order to the vendor. 3.     The production floor supervisor issues a materials requisition. 4.     The storeroom clerk issues a purchase requisition. In which order would these events typically happen?  A. 3, 2, 4, 1 B. 3, 4, 2, 1 C. 2, 1, 3, 4 D. 4, 2, 1, 3   23. The duties of the purchasing agent would include all of the following except:  A. Placing purchase orders. B. Counting and identifying materials received. C. Compiling information that identifies vendors and prices. D. Verifying invoices and approving them for payment.   24. The form that serves as authorization to withdraw materials from the storeroom is known as the:  A. Materials requisition. B. Purchase order. C. Purchase requisition. D. Returned materials report.   25. If a company receives a larger quantity of goods than had been ordered and keeps the excess for future use, a(n)______________ is prepared to notify the vendor of the amount of increase to accounts payable in the invoice.  A. credit memorandum B. return shipping order C. debit memorandum D. additional purchase order   26. The Sully Company uses an industrial chemical, XRG, in a manufacturing process.  Information as to balances on hand, purchases, and requisitions of XRG is given in the following table. Date                       Transaction Number of Kilograms Price per Kilogram   Balance of Kilograms Jan. 1 Beginning balance 1,000 $2.00   1,000     Jan. 24 Purchased  2,500 $2.25   3,500     Feb. 8 Issued 700     2,800     Mar. 16 Issued 1,200     1,600     Jun. 11 Purchased 1,500 $2.75   3,100     Aug. 18 Issued 800     2,300     Sep. 6 Issued 1,600     700     Oct. 15 Purchased 2,000 $2.80   2,700     Dec. 29 Issued 600     2,100     If a perpetual inventory record of XRG is maintained on a FIFO basis, the March 16 issue will consist of:  A. 300 kilograms @ $2.00 and 900 kilograms @ $2.25. B. 1,000 kilograms @ $2.00 and 200 kilograms @ $2.25. C. 1,200 kilograms @ $2.25. D. 700 kilograms @ $2.00 and 500 kilograms @ $2.25.   27. The Benchley Company uses metal grates when assembling appliances.  Information as to balances on hand, purchases, and requisitions of the grates is given in the following table. Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 150 $2.80   150     Jan. 24 Purchased  450 $3.10   600     Feb. 8 Issued 120     480     Mar. 16 Issued 210     270     Jun. 11 Purchased 225 $3.24   495     Aug. 18 Issued 195     300     Sep. 6 Issued 165     135     Oct. 15 Purchased 225 $3.40   360     Dec. 29 Issued 210     150     If a perpetual inventory record of the metal grates is maintained on a FIFO basis, the September 6 issue will consist of:  A. 15 units @ $2.80, 120 units @ $3.10 and 30 units @ $3.24. B. 75 units @ $2.80 and 90 units @ $3.10. C. 165 units @ $3.10. D. 75 units @ $3.10 and 90 units @ $3.24.   28. The Bisset Corporation uses Raw Material A in a manufacturing process.  Information as to balances on hand, purchases, and requisitions of Raw Material A is given in the following table. Raw Material A Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 100 $1.40   100     Jan. 24 Purchased  300 $1.55   400     Feb. 8 Issued 80     320     Mar. 16 Issued 140     180     Jun. 11 Purchased 150 $1.62   330     Aug. 18 Issued 130     200     Sep. 6 Issued 110     90     Oct. 15 Purchased 150 $1.70   240     Dec. 29 Issued 140     100     If a perpetual inventory record of Raw Material A is maintained on a FIFO basis, 200 units on hand on August 18 will consist of:  A. 100 units @ $1.40, 80 units @ $1.55 and 20 units @ $1.62. B. 100 units @ $1.55 and 100 units @ $1.62. C. 150 units @ $1.62 and 50 units @ $1.55. D. 200 units @ $1.55.   29. The Benchley Company uses metal grates when assembling appliances.  Information as to balances on hand, purchases, and requisitions of the grates is given in the following table. Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 150 $2.80   150     Jan. 24 Purchased  450 $3.10   600     Feb. 8 Issued 120     480     Mar. 16 Issued 210     270     Jun. 11 Purchased 225 $3.24   495     Aug. 18 Issued 195     300     Sep. 6 Issued 165     135     Oct. 15 Purchased 225 $3.40   360     Dec. 29 Issued 210     150     If a perpetual inventory record of the metal grates is maintained on a FIFO basis, what costs are assigned to the 150 units in ending inventory?  A. 150 units @ $3.40 B. 15 units @ $3.40 and 135 units @ $3.24. C. 150 units @ $2.80. D. 15 units @ $3.40 and 135 units @ $2.80.   30. The inventory method which results in the prices paid for earliest purchases assigned to cost of goods sold is:  A. First-in, first-out. B. Last-in, first-out. C. Last-in, last-out. D. Moving average.   31. The inventory method which results in the most recent costs being assigned to inventory on hand at the end of the period is:  A. First-in, first-out. B. Last-in, first-out. C. Last-in, last-out. D. Moving average.   32. Filmac, Inc. uses speakers when assembling computers.  Information as to balances on hand, purchases, and requisitions of speakers is given in the following table. Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 200 $14.00   200     Jan. 15 Purchased  100 $16.00   300     Feb. 24 Issued 50     250     Mar. 8 Issued 70     180     Jun. 23 Purchased 100 $17.00   280     Aug. 8 Issued 80     200     Sep. 29 Issued 30     170     Oct. 7 Purchased 100 $19.00   270     Dec. 16 Issued 50     220     If a perpetual inventory record of speakers is maintained on a LIFO basis, the March 8 issue will consist of:  A. 20 units @ $14.00 and 50 units @ $16.00. B. 70 units @ $14.00. C. 50 units @ $16.00 and 20 units @ $14.00. D. 70 units @ $16.00.   33. The Bisset Corporation uses Raw Material A in a manufacturing process.  Information as to balances on hand, purchases, and requisitions of Raw Material A is given in the following table. Raw Material A Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 100 $1.40   100     Jan. 24 Purchased  300 $1.55   400     Feb. 8 Issued 80     320     Mar. 16 Issued 140     180     Jun. 11 Purchased 150 $1.62   330     Aug. 18 Issued 130     200     Sep. 6 Issued 110     90     Oct. 15 Purchased 150 $1.70   240     Dec. 29 Issued 140     100     If a perpetual inventory record of Raw Material A is maintained on a LIFO basis, the September 6 issue will consist of:  A. 80 units @ $1.55, 20 units @ $1.62 and 10 units @ $1.40. B. 110 units @ $1.55. C. 50 units @1.55 and 60 units @ 1.62. D. 20 units @ $1.62 and 90 units @ $1.55.   34. Pierce, Inc. uses sulfuric acid in a manufacturing process.  Information as to balances on hand, purchases, and requisitions of acid is given in the following table. Date                       Transaction Number of Gallons Price per Gallon   Balance of Gallons Jan. 1 Beginning balance 10,000 $.50   10,000     Feb. 24 Purchased  30,000 $.65   40,000     Mar. 8 Issued 8,000     32,000     Apr. 16 Issued 14,000     18,000     May. 11 Purchased 15,000 $.72   33,000     Jul. 18 Issued 13,000     20,000     Oct. 6 Issued 11,000     9,000     Nov. 15 Purchased 15,000 $.78   24,000     Nov. 29 Issued 14,000     10,000     If a perpetual inventory record of Raw Material A is maintained on a LIFO basis, the 20,000 units in inventory at July 18 will consist of:  A. 5,000 units @ $.72 and 15,000 units @ $.65. B. 10,000 units @ $.50 and 10,000 units @ $.65. C. 2,000 units @ $.72, 8,000 units @ $.65 and 10,000 units @ $.50. D. 10,000 units @ $.50, 6,000 units @ $.65 and 4,000 units @ $.72.   35. The inventory method which results in the most recent cost being assigned to cost of goods sold is:  A. First-in, first-out. B. Last-in, first-out. C. Last-in, last-out. D. Moving average.   36. The inventory method which results in the prices paid for the earliest purchases being assigned to inventory on hand at the end of the period is:  A. First-in, first-out. B. Last-in, first-out. C. Last-in, last-out. D. Moving average.   37. The Bisset Corporation uses Raw Material A in a manufacturing process.  Information as to balances on hand, purchases, and requisitions of Raw Material A is given in the following table. Raw Material A Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 100 $1.40   100     Jan. 24 Purchased  300 $1.55   400     Feb. 8 Issued 80     320     Mar. 16 Issued 140     180     Jun. 11 Purchased 150 $1.62   330     Aug. 18 Issued 130     200     Sep. 6 Issued 110     90     Oct. 15 Purchased 150 $1.70   240     Dec. 29 Issued 140     100     If a perpetual inventory record of Raw Material A is maintained on a moving average basis, the 140 units issued on March 16 will have a unit cost of (round to 3 decimal places):  A. $1.513. B. $1.475. C. $1.55. D. $1.438.   38. The Kennedy Company uses throttles in its assembly of lawn mowers.  Information as to balances on hand, purchases, and requisitions of throttles is given in the following table. Date                       Transaction Number of Units Unit Price   Balance of Units Jan. 1 Beginning balance 50 $2.50   50     Jan. 20 Purchased  150 $3.00   200     Feb. 3 Issued 40     160     Mar. 25 Issued 70     90     Jun. 14 Purchased 75 $4.00   165     Aug. 27 Issued 65     100     Sep. 16 Issued 55     45     Oct. 7 Purchased 75 $4.50   120     Dec. 13 Issued 70     50     If a perpetual inventory record of throttles is maintained on a moving average basis, the 165 items in inventory on June 14 will have a unit cost of (rounded to three decimal places):  A. $3.438. B. $3.167. C. $3.386. D. $2.875.   39. In a period of rising prices, the use of which of the following cost flow methods would result in the lowest tax liability?  A. FIFO B. LIFO C. Weighted average cost D. Moving average cost   40. In a period of rising prices, the use of which of the following cost flow methods would result in the lowest cost of goods sold?  A. FIFO B. LIFO C. Weighted average cost D. Moving average cost   41. When selecting a method of inventory costing, a company must consider all of the following except:  A. federal and state income tax regulations. B. current economic conditions. C. the flow of materials. D. its rate of inventory turnover.   42. At the end of the period, the balance in the Materials account should represent  A. the cost of materials purchased. B. the cost of materials on hand. C. the cost of materials issued into production. D. the cost of materials included in Work in Process and Finished Goods.   43. The general ledger entry to record the purchase of materials is:  A. Debit-Purchases Received      Credit-Purchase Orders Outstanding B. Debit-Materials      Credit-Purchase Orders Outstanding C. Debit-Purchases Received      Credit-Accounts Payable D. Debit-Materials      Credit-Accounts Payable   44. The journal entry to record undamaged direct materials returned to the storeroom would be:  A. Debit - Materials      Credit - Finished Goods B. Debit - Factory Overhead      Credit - Work in Process C. Debit - Materials      Credit - Factory Overhead D. Debit - Materials      Credit - Work in Process   45. If the amount of materials on hand at the end of the period is less than the control account balance, the control account balance should be decreased by the following entry:  A. Debit - Work in Process      Credit - Materials B. Debit - Materials      Credit - Factory Overhead C. Debit - Materials      Credit - Work in Process D. Debit - Factory Overhead      Credit - Materials   46. Inventory levels for firms using JIT inventory systems compared to firms not using JIT will be:  A. Higher for both work in process and finished goods. B. Higher for work in process and finished goods but lower for raw materials. C. Lower for raw materials, work in process, and finished goods. D. Higher for finished goods but lower for raw materials and work in process.   47. Just-in-time production techniques:  A. Require inventory buffers between work centers. B. Were first utilized by U.S. manufacturers and later exported to Japan. C. Produce goods for inventory with the hope that demand for these goods will then be created. D. Require a high degree of cooperation and coordination between supplier and manufacturer.   48. In a JIT system, reducing throughput time is possible because:  A. there are fewer materials used in the process. B. there are more workers involved in the process. C. there are more supervisors, so a better job is done of directing plant activities. D. there are fewer operations such as moving and storing inventories that do not add value to the product.   49. Polk, Inc. produces 3,000 hammers each day.  The average number of units in work in process is 4,500, having an average cost of $10,000.  The annual carrying costs relating to inventory are 15%. Consultants have determined that the work in process could be reduced by as much as a third by rearranging the factory floor.  What is the current throughput time?  A. Eight hours B. Sixteen hours C. One day D. One and one half days   50. Harrison Industries produces 4,000 lunch boxes each day.  The average number of units in work in process is 12,000, having an average cost of $60,000.  The annual carrying costs related to inventory are 10%. Consultants have determined that the work in process could be reduced by as much as a third by rearranging the factory floor.  What would the throughput time be if Harrison implements the recommended changes?  A. Twelve hours B. One day C. Two days D. Three days   51. Taft Company produces 5,000 pallets each day.  The average number of units in work in process is 10,000, having an average cost of $35,000.  The annual carrying costs related to inventory are 20%. Consultants have determined that the work in process could be reduced by as much as 25% by rearranging the factory floor.  What would the throughput time be if Harrison implements the recommended changes?  A. Twelve hours B. One day C. One and one-half days D. Two days   52. Harrison Industries produces 4,000 lunch boxes each day.  The average number of units in work in process is 12,000, having an average cost of $60,000.  The annual carrying costs related to inventory are 10%. Consultants have determined that the work in process could be reduced by as much as a third by rearranging the factory floor.  What would the reduction in annual carrying costs be if Harrison is able to implement the recommended changes?  A. $2,000 B. $1,500 C. $6,000 D. $4,000   53. The accounting system used with JIT manufacturing is called:  A. Backflush costing. B. The push system. C. Perpetual inventory costing. D. First-in, first-out.   54. In a backflush accounting system, a single account is used for the following:  A. Work in process and finished goods inventories. B. Finished goods inventories and cost of goods sold. C. Factory overhead and raw materials. D. Raw materials and work in process inventories.   55. In a backflush accounting system, a single account is used for the following:  A. Work in process and finished goods inventories. B. Finished goods inventories and cost of goods sold. C. Factory overhead and raw materials. D. Labor and overhead.   56. Which of the following is not true about backflush costing?  A. Different companies may choose different trigger points. B. Production costs are attached to products as they move through work in process. C. A single account is used for raw and in-process materials because materials are issued to production when received from the supplier. D. Direct labor is usually insignificant in a highly automated system, so is not cost effective to account for it separately.   57. Under a backflush accounting system, the following entry is made when products are completed:  A. Debit-Finished Goods      Credit-Work In Process B. Debit-Cost of Goods Sold      Credit-Raw and In Process      Credit-Conversion Costs C. Debit-Finished Goods      Credit-Raw and In Process      Credit-Conversion Costs D. Debit-Cost of Goods Sold      Credit-Finished Goods   58. All of the following methods may be used to account for the revenue from scrap sales except:  A. Credit Factory Overhead, if the scrap cannot be identified with a specific job. B. Credit Materials, if the scrap would have been able to be recycled. C. Credit Work in Process, if the scrap is identified with a specific job. D. Credit Scrap Revenue, which is included in the “Other Income” section of the income statement.   59. Rowe Co.'s Job 401 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below.  Final inspection of Job 401 disclosed 200 wagons that were sold to a jobber for $6,000. Direct materials $24 Direct labor 18 Factory overhead  14   $56 Assume that the spoilage loss is charged to all production during August.  What would be the journal entry to record the spoilage?   A. Factory Overhead            11,200      Work in Process                11,200 B. Spoiled Goods Inventory      6,000      Work in Process                 6,000 C. Spoiled Goods Inventory      6,000 Factory Overhead             5,200                         Work in Process                11,200             D. Spoiled Goods Inventory     11,200      Factory Overhead               11,200   60. Rowe Co.'s Job 401 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below.  Final inspection of Job 401 disclosed 200 spoiled wagons that were sold to a jobber for $6,000. Direct materials $24 Direct labor 18 Factory overhead  14   $56 Assume that the spoilage loss is attributable to the exacting specifications of Job 401 and is charged to this specific job.  What would be the journal entry to record the spoilage?   A. Factory Overhead             6,000      Work in Process                 6,000 B. Spoiled Goods Inventory      6,000      Work in Process                 6,000 C. Spoiled Goods Inventory      6,000 Factory Overhead             5,200                         Work in Process                11,200             D. Spoiled Goods Inventory      6,000      Factory Overhead                6,000   61. Rowe Co.'s Job 401 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below.  Final inspection of Job 401 disclosed 200 spoiled wagons that were sold to a jobber for $6,000. Direct materials $24 Direct labor 18 Factory overhead  14   $56 Assume that spoilage loss is attributable to the exacting specifications of Job 401 and is charged to this specific job.  What would be the unit cost of the good wagons produced on Job 401?  A. $56.00 B. $58.60 C. $53.00 D. $48.18   62. During March, Hart Company incurred the following costs on Job 122 for the manufacture of 200 motors: Original cost accumulation:      Direct materials $2,600    Direct labor 900    Factory overhead  1,350   $4,850 Direct costs of reworking 10 units:      Direct materials $  100    Direct labor 180      Factory overhead    270   $  550 Assume the rework costs are to be spread over all jobs that go through the production cycle.  What is the journal entry needed to record the rework costs?   A. Work in Process           550      Materials                    100      Payroll                      180      Factory Overhead             270 B. Materials                 100 Payroll                   180 Factory Overhead          270      Work in Process              550 C. Factory Overhead          550      Materials                    100      Payroll                      180      Factory Overhead             270 D. Spoiled Goods Inventory   550      Work in Process              550   63. During April, Hisch Company incurred the following costs on Job A42 for the manufacture of 400 bookcases: Original cost accumulation:      Direct materials $ 4,200    Direct labor 2,500    Factory overhead   4,500   $11,500 Direct costs of reworking 15 units:      Direct materials $   150    Direct labor 90      Factory overhead     180   $   420 If the defects resulted from the exacting specifications of the order, what is the journal entry needed to record the rework costs?   A. Work in Process           420      Materials                    150      Payroll                       90      Factory Overhead             180 B. Materials                 150 Payroll                    90 Factory Overhead          180      Work in Process              420 C. Factory Overhead          420      Materials                    150      Payroll                       90      Factory Overhead             180 D. Spoiled Goods Inventory   420      Work in Process              420   64. During March, Hart Company incurred the following costs on Job 122 for the manufacture of 200 motors: Original cost accumulation:      Direct materials $2,600    Direct labor 900    Factory overhead  1,350   $4,850 Direct costs of reworking 10 units:      Direct materials $  100    Direct labor 180      Factory overhead    270   $  550 The rework costs were attributable to the exacting specifications of Job 122, and the full rework costs were charged to this specific job.  What is the cost per finished unit of Job 122?  A. $25.00 B. $23.50 C. $27.00 D. $24.00   65. Xander Company anticipates that usage of Component T will be 100 units daily, which equates to around 25,000 for the year. The material is expected to cost $5 per unit.  Once an order is placed with its vendor, it takes five days to receive the goods, and the cost of placing each order is $50.  As a result, Xander keeps 1,000 units on hand to avoid stockouts.  The carrying cost associated with each unit is $10. a. Compute the order point. b. Determine the most economical order quantity.   (a) Order point = Expected usage during lead time + Safety stock     = (100 units ´ 5 days) + 1,000     = 1,500 units (b)   66. The Reddog Company predicts that 3,200 units of material will be used during the year.  The expected daily usage is 15 units, there is an expected lead time of 10 days, and there is a safety stock of 200 units.  The material is expected to cost $4 per unit.  It is estimated that it will cost $25 to place each order.  The annual carrying cost is $1 per unit. a. Compute the order point. b. Determine the most economical order quantity by use of the formula. c. Compute the total cost of ordering and carrying at the EOQ point.   (a) Order point = Expected usage during lead time + Safety stock     = (15 units ´ 10 days) + 200     = 350 units (b) (c) Annual ordering cost = Number of orders ´ Cost per order                       = 3,200 Annual usage ´ $25           400 EOQ                         = 8 ´ $25 = $200                           Annual carrying cost = Average inventory ´ Carrying cost per unit                                   Average inventory = (1/2 ´ EOQ) + Safety Stock         = (1/2 ´ 400) + 200 = 400                   Annual carrying cost = 400 ´ $1.00 = $400           67. For the following materials control forms, please indicate the following: a.  who prepares the form; b.  who receives the form; and c.  the form’s intended purpose. 1.  Purchase Requisition 2.  Materials Requisition 3.  Receiving Report 4.  Purchase Order 5.  Debit/Credit Memo  Materials Control Form Preparer Receiver Purpose Purchase requisition Storeroom keeper Purchasing agent Notify purchasing agent that additional materials are needed.         Materials requisition Production department supervisor Storeroom keeper To issue materials to the factory department for production         Receiving report Receiving clerk Purchasing agent To compare the vendor invoice and purchase order to make sure materials ordered were received     Storeroom clerk To ensure all materials are received in the storeroom         Purchase order Purchasing agent Vendor (supplier) Describes materials wanted, stating price and fixing delivery details         Debit/Credit memo Purchasing agent Vendor (supplier) To notify vendor of discrepancies in shipments   68. The materials account of the Lankford Company reflected the following changes during January: Balance, January 1 190 units @ $30 Received, January 5 130 units @ $32 Issued, January 18 240 units Received, January 20 210 units @ $35 Issued, January 30 70 units Assuming that Lankford Company maintains perpetual inventory records, calculate the cost of the ending inventory at January 31 and the cost of the units issued in January using the FIFO method.     Received   Issued   Balance Date Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount 1/1             190 30 5,700 1/5 130 32 4,160       190 30                 130 32 9,860 1/18       190 30 5,700               50 32 1,600 80 32 2,560 1/20 210 35 7,350       80 32                 210 35 7,350 1/30       70 32 2,240 10 32                 210 35 7,670                                         Ending Inventory: 220 units having a total cost of 7,670 (10 units x $32) + (210 units x $210) Cost of Units Issued: 310 units having a total cost of $9,540 (5,700 + 1,600 + 2,240)   69. The materials account of Hetzer Industries reflected the following changes during May: Balance, May 1 180 units @ $30 Received, May 2 60 units @ $32 Issued, May 4 80 units Received, May 27 100 units @ $34 Issued, May 31 150 units Assuming that Hetzer maintains perpetual inventory records, calculate the cost of the ending inventory at May 31 and the cost of the units issued in May using the LIFO method.  Received   Issued   Balance Date Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount 5/1             180 30 5,400 5/2 60 32 1,920       180 30                 60 32 7,320 5/4       20 30 600               60 32 1,920 160 30 4,800 5/27 100 34 3,400       160 30                 100 34 8,200 5/31       50 30 1,500               100 34 3,400 110 30 3,300 Ending Inventory: 110 units having a total cost of $3,300 (110 x $30) Cost of Units Issued: 230 units having a total cost of $7,420 (600 + 1,920 + 1,500 + 3,400)   70. The materials account of the Herbert Company reflected the following changes during August: Balance, August 1 18 units @ $200 Received, August 2 6 units @ $210 Issued, August 8 8 units Received, August 15 10 units @ $222 Issued, August 27 15 units Assuming that Herbert Company maintains perpetual inventory records, calculate the cost of the ending inventory at August 31 and the cost of the units issued in August using the moving average method.  Received   Issued   Balance Date Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount 8/1             18 200.00 3,600 8/2 6 210.00 1,260       24 202.50 4,860 8/8       8 202.50 1,620 16 202.50 3,240 8/15 10 222.00 2,220       26 210.00 5,460 8/27       15 210.00 3,150 11 210.00 2,310 Ending Inventory: 11 units having a total cost of $2,310 Cost of Units Issued: 23 units having a total cost of $4,770 (1,620 + 3,150) Unit cost calculations: 4,860 / 24 = 202.50 5,460 / 26 = 210.00   71. The materials account of the Flynn Company reflected the following changes during May: Balance, May 1 500 units @ $10 Received, May 5 300 units @ $12 Issued, May 10 400 units Received, May 15 200 units @ $15 Issued, May 25 300 units Assuming that Flynn Company maintains perpetual inventory records, calculate the ending inventory at May 31 and the cost of the units issued in May using each of the following methods: (a) First in, first out (FIFO) (b) Last in, first out (LIFO) (c) Moving average  (a) FIFO: Received   Issued   Balance Date Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount 5/1             500 10 5,000 5/5 300 12 3,600       500 10                 300 12 8,600 5/10       400 10 4,000 100 10                 300 12 4,600 5/15 200 15 3,000       100 10                 300 12                 200 15 7,600 5/25       100 10 1,000               200 12 2,400 100 12                 200 15 4,200 Ending Inventory: 300 units having a total cost of $4,200 (100 units x $12) + (15 units x $15) Cost of Units Issued: 700 units having a total cost of $7,400 (4,000 + 1,000 + 2,400) (b) LIFO: Received   Issued   Balance Date Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount 5/1             500 10 5,000 5/5 300 12 3,600       500 10                 300 12 8,600 5/10       100 10 1,000               300 12 3,600 400 10 4,000 5/15 200 15 3,000       400 10                 200 15 7,000 5/25       100 10 1,000               200 15 3,000 300 10 3,000 Ending Inventory: 300 units having a total cost of $3,000 (300 x $10) Cost of Units Issued: 700 units having a total cost of $8,600 (1,000 + 3,600 + 1,000 + 3,000) (b) Moving Average: Received   Issued   Balance Date Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount 5/1             500 10 5,000 5/5 300 12 3,600       800 10.75 8,600 5/10       400 10.75 4,300 400 10.75 4,300 5/15 200 15 3,000       600 12.17 7,300 5/25       300 12.17 3,650 300 12.17 3,650 Ending Inventory: 300 units having a total cost of $3,650 Cost of Units Issued: 700 units having a total cost of $7,950 (4,300 + 3,650) Unit cost calculations: 8,600 / 800 = 10.75 7,300 / 600 = 12.16667   72. The following accounts are maintained by the Sprague Manufacturing Company in its general ledger:  Materials, Work in Process, Factory Overhead, and Accounts Payable.  The materials account had a debit balance of $40,000 on November 1. A summary of material transactions for November shows: (1) Materials purchased on account, $62,000 (2) Direct materials issued, $58,500 (3) Direct materials returned to storeroom, $1,200 (4) Indirect materials issued, $3,600 (5) Indirect materials returned to storeroom, $550 (6) Materials on hand were $200 less than the stores ledger balance a. Prepare journal entries to record the materials transactions. b. Post the journal entries to T-accounts. c. What is the balance of the materials account on November 30?   (a) (1) Materials 62,000          Accounts Payable   62,000             (2) Work in Process 58,500          Materials   58,500             (3) Materials 1,200          Work in Process   1,200             (4) Factory Overhead 3,600          Materials   3,600             (5) Materials 550          Factory Overhead   550             (6) Factory Overhead 200          Materials   200 (b)           Materials                        Accounts Payable        Bal.    40,000 | (2) 58,500                        |  (1) 62,000 (1)     62,000 | (4)  3,600 (3)      1,200 | (6)    200 (5)        550 |                   103,750 |     62,300        Work in Process                     Factory Overhead       (2)     58,500 | (3)  1,200            (4)   3,600 |  (5)   550                                        (6)     200 | (c) The balance of the materials account = $103,750 - $62,300                                          = $ 41,450   73. The following decisions and transactions were made for the Sanders Company in May: May 1 The production manager informed the storeroom keeper that the forecasted usage of Component X is 3,000 units.  There are 1,500 units on hand, each having a unit cost of $20.  The company maintains a minimum stock of 1,000 units.  The storeroom keeper notifies the purchasing agent that the company will need 2,500 units of X to meet May’s production needs and maintain a minimum inventory of 1,200 units. May 3 The purchasing agent checks with a number of vendors and orders 2,500 units of Component X.  Unfortunately, the price has gone up to $25. May 7 The shipment of Component X is received and inspected.  The units are in good condition and the company received the number of units it ordered. May 9 The invoice covering Component X is received from the vendor and approved for payment. May 21 The May 9 invoice is paid in full. May 31 During the month, 2,950 units of Component X are issued to production.  The company uses FIFO costing and a job order cost system. May 31 An inventory of the storeroom is taken at the end of the day and there are 1,040 units of Component X on hand. (a) Prepare a table to answer the following questions:        (1)What forms, if any, were used?        (2)What entry, if any, was recorded? (b) Calculate the balance in the Materials account at May 31.  Date Form Account Debit Credit   May 1 Purchase requisition No entry                   May 3 Purchase order No entry                   May 7 Receiving report No entry                   May 9 None Materials 62,500              Accounts Payable   62,500               May 21 Approved voucher Accounts Payable * 62,500              Cash   62,500               May 31 Materials requisition Work in Process ** 66,250              Materials   66,250               May 31 Inventory report Factory Overhead *** 250              Materials   250   *          2,500 units x $25 = $62,500 **        FIFO Basis: Beginning Inventory 1,500  units @ $20 $30,000 Received 2,500  units @ $25 62,500 Total available 4,000  units 92,500 Issued (2,950 units) (1,500) units @ $20 (30,000)   (1,450) units @ $25 (36,250) Per perpetual records @ 5/31 1,050  units @ $25 26,250 Per physical inventory @ 5/31 1,040  units   Inventory adjustment needed       10  units @ $25   **        (1,500 x $20) + (1,450 x $25) = $66,250 ***       10 x $25 = $250 (b) Units in inventory at May 31 = 1,040 units @ $25 = $26,000 per above   74. The Outdoor Manufacturing Company produces sporting equipment. The company maintains a single raw materials inventory account for both direct and indirect materials.  The following information came from the factory ledger accounts for December: Raw Materials, December 1 $ 45,500 Work in Process, December 1 125,000 Finished Goods, December 1 175,000 Raw materials purchases (during December) 623,000 Direct labor 435,000 Repairs and maintenance 37,200 Indirect materials 16,700 Utilities 63,200 Indirect labor 38,200 Supervisors' salaries 18,300 Raw Materials, December 31 43,600 Work in Process, December 31 135,000 Finished Goods, December 31 150,000 Compute the cost of direct materials used during the month of December.  Raw materials inventory, December 1 $ 45,500 Raw materials purchases  623,000 Total materials available $668,500 Less:  Raw materials inventory, December 31   43,600 Raw materials used $624,900 Less:  Indirect materials used   16,700 Direct materials used $608,200 Instructor Note:  This question relates concepts from chapter 2 to those learned in chapter 1.   75. Skeeter Company produces 100,000 insect repellent devices each day, and the average number of units in work in process is 150,000, with an average value of $300,000.  The average annual carrying cost percentage is 30%. a.   Determine the throughput time. b.   Compute the annual carrying cost. c.   If the same daily output can be achieved while reducing the work in process by 40%, determine the new throughput time. d.   Compute the annual carrying cost given the information in requirement c.  a.   150,000 / 100,000 = 1.5 days b.   $300,000 x 30% = $90,000 c.   150,000 x 40% = 60,000 unit reduction       (150,000 - 60,000) / 100,000 = .9 days d.   30% carrying cost x ((1-.4) x $90,000) = $16,200   76. Omari Assembly, Inc., which uses backflush costing, had the following transactions during the month of October: (a) Purchased raw materials on account, $700,000. (b) Requisitioned raw materials to production, $700,000. (c) Distributed direct labor costs, $105,000. (d) Manufacturing overhead incurred, $215,000.  (Use Various Credits for the account in the credit part of the entry.) (e) Completed all goods. (f) Sold goods for $1,500,000 on account. Prepare journal entries to record the above transactions.  (a) Raw and In-Process 700,000        Accounts Payable   700,000         (b) No entry             (c) Conversion Costs 105,000        Payroll   105,000         (d) Conversion Costs 215,000        Various Credits   215,000         (e) Finished Goods 1,020,000         Raw and In-Process   1,020,000         (f) Accounts Receivable 1,500,000         Sales   1,500,000           Cost of Goods Sold 1,020,000         Finished Goods   1,020,000   77. Gilday Furniture Inc. produces custom furniture.  Wood chips are an inevitable by-product of the cutting process, and are considered scrap.  Gilday is unable to use this scrap; however, the company has an agreement to sell the scrap at market prices to a local company that processes the wood chips to make industrial fillers.  Record the entries required for scrap under each of the following conditions: (a)  The revenue received for scrap is to be treated as other income.  The market value of wood chips is stable and is currently $200 per ton.  The company has seven tons on hand. (b)  The revenue received for scrap is to be treated as a reduction in manufacturing cost, but cannot be identified with a specific job.  A firm price is not determinable for the scrap until it is sold.  It is eventually sold for cash of $800. (c)  The revenue received for scrap is to be treated as a reduction in manufacturing cost, and five tons of scrap are related to a special job where the company made numerous round tables.  The market value of wood chips is stable and is currently $200 per ton.  (a) Scrap Materials 1,400          Scrap Revenue   1,400           Cash (or Accounts Receivable) 1,400          Scrap Materials   1,400         (b) Cash (or Accounts Receivable) 800          Factory Overhead   800         (c) Scrap Materials 1,000          Work in Process   1,000           Cash (or Accounts Receivable) 1,000          Scrap Materials   1,000   78. Moreland Corporation manufactures bells and whistles.  In June, 6,000 bells were completed on Job Order No. BX46.  On final inspection, 400 bells were rejected and transferred to the spoiled goods inventory to be sold at $.50 each. Costs recorded on Job Order No. BX46 follow: Direct materials $2,400 Direct labor 2,100 Factory overhead 1,200 Prepare the journal entries to record the following: a. Charges for materials, labor, and factory overhead for Job Order No. BX46 b. Cost of the spoiled work, the transfer of the cost of the good toys to Finished Goods, and the sale of the imperfect toys, if the loss on spoilage is charged to all jobs worked on during the period c. Cost of the spoiled work, the transfer of the cost of the good bells to Finished Goods, and the sale of the imperfect ones, if the loss on spoilage is to be charged to Job Order No. BX46 only.  (Round the new unit cost to the nearest whole cent, and assume part b, above, has not occurred.)   (a) Work in Process 5,700        Materials   2,400      Payroll (direct labor)   2,100      Factory Overhead   1,200         (b) Spoiled Goods (400 ´ $.50) 200     Factory Overhead 180        Work in Process (400 ´ $.95*)   380           Finished Goods ((6,000 - 400) ´ $.95) 5,320        Work in Process   5,320           Cash 200        Spoiled Goods   200         (c) Spoiled Goods 200        Work in Process   200           Finished Goods (5,600 ´ $.98*) 5,488        Work in Process   5,488           Cash 200        Spoiled Goods   200                   * Cost per unit $5,700 / 6,000 = $.95   ** $5,700 - $200 = $.9821 rounded   5,600   79. Kami company manufactures engine components.  During the previous month, the Company manufactured 12,000 units of Component XRB for Job 3524 and incurred the following unit costs: Direct materials $32.00 Direct labor 9.00 Factory overhead 6.00 When the units were tested after production, 300 units did not meet specifications and needed further polishing work.  The unit cost of correcting the defects was: Direct labor 3.00 Factory overhead 2.00 a.    Prepare the journal entries to record the cost to correct the defective work under each of the following scenarios: 1. If the cost of correcting the defective work is spread over all jobs that go through the production cycle 2. If the defects resulted from the exacting specifications of Job 3524 b.    Under Scenario 2 above, calculate the cost per unit of Job 3524.  (a.) (1.) Factory Overhead (($3.00 + 2.00) x 300) 1,500        Payroll (direct labor) ($3.00 x 300)   900      Factory Overhead ($2.00 x 300)   600         (2.) Work in Process (Job 3524) 1,500        Payroll   900      Factory Overhead   600 (b.) Number of units produced 12,000 Original cost per unit ($32.00 + 9.00 + 6.00)   $  47.00 Total original cost $564,000 Plus cost of correcting defective work   1,500 Total cost of Job 3524 $565,500     Cost per unit of Job 3524 ($565,500 / 12,000) $ 47.125