ACC0002: Top Exhaust Pte Ltd (TEPL) Manufactures High-Quality Exhaust Systems for Cars: Cost and Management Accounting Assignment, SIM, Singapore

PART A: Multiple-Choice Questions

1. Managerial Accounting and Financial Accounting differ in the following way:
A. Managerial Accounting emphasizes past performance.
B. Managerial Accounting summarizes information for the company as a whole.
C. Managerial Accounting is private information for company managers.
D. Managerial Accounting emphasizes precision over timeliness.

2. Last month 10,000 units of a product were manufactured, and the total cost per unit was $60. At this level of production, the variable cost is $30 per unit and the fixed cost is $30 per unit. If 10,500 units are manufactured the next month, and the costs remain within the same relevant range
A. total variable cost will remain unchanged
B. fixed costs will increase in total
C. variable cost per unit will increase
D. total cost per unit will decrease

3. Supply costs at First Fitness Corporation’s chain of gyms are listed below:

Management believes that supply cost is a mixed cost that depends on client visits. Using the high-low method to estimate the variable and fixed components of this cost, those estimates would be closest to
A. $2.44 per client-visit; $28,623 per month
B. $1.33 per client-visit; $12,768 per month
C. $0.79 per client-visit; $19,321 per month
D. $0.75 per client-visit; $19,826 per month

4. Hutchinson Inc has provided the data concerning the company’s Manufacturing Overhead account for the month of June. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing The overhead account was $75,000 and the total of the credits to the account was $57,000.

Which of the following statements is true?

A. Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $75,000.
B. Actual manufacturing overhead incurred during the month was $57,000.
C. Manufacturing overhead applied to Work in Process for the month was $75,000.
D. Manufacturing overhead for the month was underapplied by $18,000.

5. Winnz Corporation had $35,000 of raw materials on hand on May 1. During the month, the company purchased an additional $68,000 of raw materials. During May, $92,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $5,000. The debits to the Work in Process account as a consequence of the raw materials transactions in May total _________.
A. $92,000
B. $0
C. $68,000
D. $87,000

6. Lentor Corporation has provided the following data concerning manufacturing overhead for January: The company’s Cost of Goods Sold was $369,000 prior to closing out its Manufacturing Overhead account. The company closes out its Manufacturing Overhead account to Cost of Goods Sold. Which of the following statements is true?

A. Manufacturing overhead was underapplied by $23,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $392,000
B. Manufacturing overhead was underapplied by $23,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $346,000
C. Manufacturing overhead was overapplied by $23,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $346,000
D. Manufacturing overhead was overapplied by $23,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $392,000

7. Wimbledon Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. Last year, the company’s estimated manufacturing overhead was $1,200,000 and its estimated level of activity was 50,000 direct labor hours. The company’s direct labor wage rate is $12 per hour. Actual manufacturing overhead amounted to $1,240,000, with an actual direct labor cost of $650,000.
For the year, manufacturing overhead was
A. overapplied by $60,000
B. underapplied by $60,000
C. overapplied by $40,000
D. underapplied by $44,000

8. SIM Technological Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product

The best estimate of the total cost to manufacture 4,300 units is closest to:
A. $877,200
B. $909,400
C. $901,925
D. $926,650

PART B:
Question 1
Top Exhaust Pte Ltd (TEPL) manufactures high-quality exhaust systems for cars. The company has two production departments: Bending and Welding. In the Bending Department, the sheet metal is cut and bent into shape, using a series of cutting, stamping, and bending machines, and in the Welding Department, the exhaust pipes are welded and packed for shipping.

There are other departments supporting the manufacturing process: Machinery Maintenance, Material Handling, and Quality Control. The budgeted overhead costs and other relevant information for the respective departments for the new financial year are as follows:

There are other departments supporting the manufacturing process: Machinery Maintenance, Material Handling, and Quality Control. The budgeted overhead costs and other relevant information for the respective departments for the new financial year are as follows:

An analysis of the services provided by the support departments indicates that their costs should be apportioned accordingly as per below:

An analysis of the services provided by the support departments indicates that their costs should be apportioned accordingly as per below:

Required:
(Show all workings clearly and round all solutions to 2 decimal places)
(a) Compute the total overhead costs for the Bending Department and Welding
Department after the re-apportionment of the costs from the support departments.

(b) Compute the overhead absorption rates for the two production departments.

(c) With the overhead absorption rates calculated in (b), calculate the total costs for job number #2114, which is expected to commence early next financial year, assuming that it is expected to incur the following direct costs:

• Direct materials  $6,400
• Direct labor  $5,500

and requires:

(d) Assume that at the end of the next financial year, the actual fixed overhead of the Bending Department was $1,100,000 and that the actual machine hours were 30,200 and the actual labor hours were 1,100. Determine the under-applied or over-applied overhead for the year for the Bending Department. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.