1. MegaRock produces quick setting concrete mix.

Production of 206,860 tons was started in

April, and 194,760 tons were completed. Material costs were $3,251,680 for the month while
conversion costs were $593,800. There was no beginning work-in-process, and the ending
work-in-process was 70% complete. What is the material cost of the product that remains in
work-in-process?

A. $715,600
B. $158,515
C. $135,520
D. $226,490

Equivalent production = 194,760 + [70% × 12,100 (206,860 − 194,760)] = 203,230 tons.

Material cost per unit = $3,251,680 ÷ 203,230 = $16
Costs remaining in WIP = (70% × 12,1000) × $16 = $135,520

2. MegaRock produces quick setting concrete mix. Production of 200,000 tons was started in April,
and 190,000 tons were completed. Material costs were $3,152,000 for the month while conversion
costs were $591,000. There was no beginning work-in-process, and the ending work-in-process was
70% complete. What is the cost of the product that was completed and transferred to finished
goods?

A. $3,610,000
B. $3,555,850
C. $2,994,400
D. $3,743,000

Equivalent production = 190,000 + [70% × (200,000 − 190,000)] = 197,000 tons.

Cost per unit = ($3,152,000 + $591,000) ÷ 197,000 = $19
Costs transferred = 190,000 × $19 = $3,610,000

3. Morton Incorporated has provided the following data for the month of November. The
balance in the Finished Goods inventory account at the beginning of the month was $49,000
and at the end of the month was $45,000. The cost of goods manufactured for the month
was $226,000. The actual manufacturing overhead cost incurred was $74,000 and the
manufacturing overhead cost allocated to Work in Process was $70,000. The adjusted cost
of goods sold that would appear on the income statement for November is:

A. $226,000.
B. $230,000.
C. $222,000.
D. $234,000.

FG INVENTORY = $49,000 + $226,000 - $45,000 = COGS = $230,000

MOH:DR $74,000; MOH CR= $70,000; MOH UNDERAPPLIED BY $4,000

ADJUSTING ENTRY: DR COGS 4,000 CR MOH 4,000; ADJUSTED COGS = $234,000

 4. Refresh, Incorporated produces soft drinks and sodas. Production of 100,000 liters was
started in February, and 85,000 liters were completed. Material costs were $38,220 for the
month while conversion costs were $16,380. There was no beginning work-in-process, and
the ending work-in-process was 40% complete. What is the cost of the product that remains
in work-in-process?

A. $16,380
B. $51,000
C. $3,600
D. $9,000

Equivalent production = 85,000 + [40% × (100,000 − 85,000)] = 91,000 units.

Cost per unit = ($38,220 + $16,380) ÷ 91,000 = $0.60
Costs in ending WIP = [40% × (100,000 − 85,000)] × $0.60 = $3,600

5. Buster Corporation, a manufacturing company, has provided data concerning its operations
for September. The beginning balance in the raw materials account was $37,000 and the
ending balance was $29,000. Raw materials purchases during the month totaled $57,000.
Manufacturing overhead cost incurred during the month was $102,000, of which $2,000
consisted of raw materials classified as indirect materials. The direct materials cost for
September was:

A. $63,000.
B. $57,000.
C. $65,000.
D. $49,000.

Direct materials cost = Beginning raw materials inventory + Raw materials purchases
− Ending raw materials inventory
= $37,000 + $57,000 − $29,000
= $65,000 materials cost, IF $2,000 IS INDIRECT THEN THE REMAINING $63,000 IS DM USED.
 6. Under Pierre Company's job-order costing system, manufacturing overhead is allocated to
Work in Process inventory using a predetermined overhead rate. During January, Pierre's
transactions included the following:
Direct materials issued to production $ 90,000

Indirect materials issued to production $ 8,000

Manufacturing overhead cost incurred $ 125,000

Manufacturing overhead cost

allocated
$ 113,000

Direct labor cost incurred $ 107,000

Pierre Company had no beginning or ending inventories. What was the cost of goods manufactured
for January? (CMA adapted)

A. $302,000
B. $310,000
C. $322,000
D. $330,000

Cost of goods manufactured = Beginning Work in Process inventory + Direct materials + Direct labor
+ Allocated manufacturing overhead − Ending Work in Process inventory
= $0 + $90,000 + $107,000 + $113,000 − $0
= $310,000 cost of goods manufactured
 7. The following data relates to the production of Product B-09 for the current period:

Direct materials $ 2,391

Direct labor-hours 69 labor-hours
Direct labor wage
rate
$ 13 per labor-hour
Machine-hours 129 machine-hours

The company allocates manufacturing overhead on the basis of machine-hours. The predetermined
overhead rate is $14 per machine-hour. The total cost for Product B-09 for the current period would
be:

A. $3,288.
B. $5,094.
C. $4,254.
D. $2,418.

Direct materials $ 2,391

Direct labor (69 direct labor-hours × $13.00 per direct-labor hour) 897

Overhead (129 machine-hours × $14.00 per machine-hour) 1,806

Total manufacturing cost for Product B-09 $ 5,094

8. The following direct labor information pertains to the manufacture of product Glaze:
Time required to make one unit 3 direct labor hours

Number of direct workers 25

Number of productive hours per week, per

worker
36

Weekly wages per worker $ 1,550

Workers’ benefits treated as direct labor costs 30% of wages

What is the standard direct labor cost per unit of product Glaze? (CPA adapted)

A. $43.07
B. $56.00
C. $129.17
D. $167.92

DL/unit = [$1,550 + ($1,550 × 0.30)] ÷ (36 ÷ 3) = $167.92

 9. Spring Corporation bases its predetermined overhead rate on the estimated machine-hours
for the upcoming year. Data for the upcoming year appear below:
Estimated machine-hours 70,000

Estimated variable manufacturing overhead $ 6.68 per machine-hour

Estimated total fixed manufacturing

overhead
$ 1,283,800

The predetermined overhead rate for the upcoming year is closest to:

A. $6.68.
B. $25.02.
C. $25.59.
D. $18.34.

Estimated total manufacturing overhead = $1,283,800 + ($6.68 per machine-hour × 70,000 machine-
hours) = $1,751,400
Predetermined overhead rate = $1,751,400 ÷ 70,000 machine-hours = $25.02 per machine-hour
 10. The Crater Company uses predetermined overhead rates to allocate manufacturing
overhead to products. The predetermined overhead rate is based on labor cost in
Department A and machine-hours in Department B. At the beginning of the year, the
company made the following estimates:
Department A Department B

Direct labor cost $ 65,000 $ 42,000

Manufacturing
overhead
$ 91,000 $ 48,000

Direct labor-hours 8,000 10,000

Machine-hours 3,000 12,000

What predetermined overhead rates would be used in Department A and Department B,

respectively?

A. 71% and $4.00

B. 140% and $4.00
C. 140% and $4.80
D. 71% and $4.80

Department A
Predetermined overhead rate = Manufacturing overhead ÷ Direct labor cost.
= $91,000 ÷ $65,000
= 140% of direct labor cost

Department B
Predetermined overhead rate = Manufacturing overhead ÷ Machine-hours.
= $48,000 ÷ 12,000 machine-hours
= $4 per machine-hour
 11. The following direct labor information pertains to the manufacture of product Glaze:
Time required to make one unit 3 direct labor hours

Number of direct workers 25

Number of productive hours per week, per worker 36

Weekly wages per worker $ 700

Workers’ benefits treated as direct labor costs 30% of wages

What is the standard direct labor cost per unit of product Glaze? (CPA adapted)

A. $19.44
B. $25.28
C. $58.33
D. $75.83

DL/unit = [$700 + ($700 × 0.30)] ÷ (36 ÷ 3) = $75.83

12. The predetermined overhead rate for manufacturing overhead for Ashland Corporation was
$8.00 per direct labor hour. The estimated labor rate was $10.00 per hour. If the estimated
direct labor cost was $150,000, what was the estimated manufacturing overhead?

A. $93,750
B. $75,000
C. $120,000
D. $15,000

$150,000 ÷ $10 = 15,000 hours × $8 per hour = $120,000

13. Ashland Corporation estimates its manufacturing overhead costs to be $160,000 and its
direct labor costs to be $320,000 for 2023. The actual manufacturing labor costs were
$80,000 for Product 1, $120,000 for Product 2 and $160,000 for Product 3 during 2023.
Manufacturing overhead is allocated to Products on the basis of direct labor costs using a
predetermined overhead rate. The actual manufacturing overhead cost for the year was
$172,000.

The amount of overhead assigned to Product 3 during 2023 was:

A. $80,000.
B. $320,000.
C. $160,000.
 D. $71,110.

Predetermined rate = $160,000 ÷ $320,000 = 50% of DL cost; $160,000 × 0.50 = $80,000

14. Trippett Industries manufactures cleaning products. During the year, the company spent
$600,000 on chemicals and $728,000 on conversion costs. Overhead is allocated at a rate of
180% of direct labor costs. How much did the company spend on manufacturing overhead
during the year?

A. $260,000
B. $468,000
C. $128,000
D. $404,444

DL + 1.80DL = $728,000; DL = $260,000; OH = $728,000 − $260,000 = $468,000

15. Markham Corporation uses a job-order costing system. The following data are for last year:
Estimated direct labor-hours 12,000

Estimated manufacturing overhead

costs
$ 45,000

Actual direct labor-hours 11,600

Actual manufacturing overhead costs $ 43,000

Markham allocates overhead using a predetermined rate based on direct labor-hours. What
predetermined overhead rate was used last year?

A. $3.88 per direct labor-hour

B. $3.75 per direct labor-hour
C. $3.58 per direct labor-hour
D. $3.71 per direct labor-hour

Predetermined overhead rate = Estimated manufacturing overhead ÷ Estimated direct labor-hours

= $45,000 ÷ 12,000 direct labor-hours = $3.75 per direct labor-hour

16. The predetermined manufacturing overhead rate for the year was 140% of direct labor cost;
employees were paid $17.50 per hour. If the estimated direct labor hours were 15,000, what
was the estimated manufacturing overhead?

A. $210,000
B. $187,500
C. $262,500
D. $367,500

(15,000 × $17.50) × 140% = $367,500

 17. Flare Corporation manufactures textiles. Among Flare's 2023 manufacturing costs were the
following salaries and wages:
Loom operators $ 120,000

Factory foremen 45,000

Machine
mechanics
30,000

What was the amount of Flare's 2023 indirect labor? (CPA adapted)

A. $75,000
B. $165,000
C. $150,000
D. $120,000

Factory foremen + Machine Mechanics = indirect labor = $45,000 + $30,000 = $75,000

18. Flare Corporation manufactures textiles. Among Flare's 2023 manufacturing costs were the
following salaries and wages:
Loom operators $ 120,000

Factory foremen 45,000

Machine
mechanics
30,000

What was the amount of Flare's 2023 direct labor? (CPA adapted)

A. $195,000
B. $165,000
C. $150,000
D. $120,000 Direct Labor = loom operators

19. The Titan Enterprises Company manufactures cleaning spray for public schools. During
2023, the company spent $600,000 on prime costs and $800,000 on conversion costs.
Overhead is allocated at a rate of 150% of direct labor costs. How much did the company
allocate for manufacturing overhead during 2023?

A. $480,000
B. $360,000
C. $320,000
 D. $300,000

DL + 1.50DL = $800,000; DL = $320,000; OH = $800,000 − $320,000 = $480,000

20. The following information has been gathered for Catalyst Legal Services for its fiscal year
ending December 31:
Actual office overhead costs $ 1,275,500

Actual billable labor hours 44,600

Actual billable labor costs $ 3,960,000

Estimated office overhead costs $ 1,080,000

Estimated billable labor hours 48,000

Estimated billable labor costs $ 4,320,000

What is the predetermined office overhead rate per billable labor dollar?

A. 118.10%
B. 25.00%
C. 32.21%
D. 400.00%

$1,080,000 ÷ $4,320,000 = 25%