5.Pilgrim Company applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period: Estimated annual overhead cost $1,200,000
Actual annual overhead cost $1,150,000
Estimated machine hours 300,000
Actual machine hours 280,000
A. $1,120,000 applied and $30,000 underapplied.
B. $1,120,000 applied and $30,000 overapplied.
C. $1,150,000 applied and neither under- nor overapplied.
D. $1,200,000 applied and $30,000 overapplied.

6.The following data has been collected for use in analyzing the behavior of maintenance costs of Sterling Corporation:
Month Maintenance Costs Machine Hours
January $121,000 20,000
February 125,000 23,000
March 128,000 24,000
April 159,000 34,000
May 168,000 36,000
June 178,000 38,000
July 181,000 40,000
Using the high-low method to separate the maintenance costs into their variable and fixed cost components, these components are:
A. $4 per hour plus $41,000.
B. $5 per hour plus $30,000.
C. $3 per hour plus $61,000.
D. $5 per hour plus $20,000.

7.Given the following data for Carlson Company, compute (A) total manufacturing costs and (B) costs of goods manufactured:
Direct materials used $120,000 Beginning work in process $20,000
Direct labor 50,000 Ending work in process 10,000
Manufacturing overhead 150,000 Beginning finished goods 25,000
Operating expenses 175,000 Ending finished goods 15,000
(A) (B)
$310,000 $330,000

(A) (B)
$320,000 $310,000

(A) (B)
$320,000 $330,000

(A) (B)
$330,000 $340,000

8.The production cost report shows both quantities and costs. Costs are reported in three sections: (1) costs accounted for, (2) unit costs, and (3) costs charged to department. The sections are listed in the following order:
A. (1), (3), (2).
B. (1), (2), (3).
C. (2), (1), (3).
D. (2), (3), (1).

9.The starting point of a master budget is the preparation of the:
A. cash budget.
B. production budget.
C. budgeted balance sheet.
D. sales budget.

10.The most useful measure for evaluating the performance of the manager of an investment center is:
Question 10 options:
A. return on investment.
B. contribution margin.
C. controllable margin.
D. income from operations.

5. Pilgrim Company

A. $1,120,000 applied and $30,000 underapplied.

6. Sterling Corporation:

The variable and fixed cost components are:

C. $3 per hour plus $61,000.

7. Carlson Company

(A) total manufacturing costs and (B) costs of goods manufactured:

(A) (B)

$330,000 $340,000

8. The production cost report shows both quantities and costs. Costs are reported in three sections: (1) costs accounted for, (2) unit costs, and (3) costs charged to department. The sections are listed in the following order:

D. (2), (3), (1).

9. The starting point of a master budget is the preparation of the:

D. sales budget.

10. The most useful measure for evaluating the performance of the manager of an investment center is:

A. return on investment.

Explanation:

a) Data and Calculations:

Estimated annual overhead cost $1,200,000

Actual annual overhead cost $1,150,000

Estimated machine hours 300,000

Actual machine hours 280,000

Overhead rate = $1,200,000/300,000 = $4

Overhead applied = $4 * 280,000 = $1,120,000

Underapplied overhead = $1,150,000 = $1,120,000 = $30,000

6. Sterling Corporation:

Month       Maintenance Costs   Machine Hours

January               $121,000               20,000

February              125,000               23,000

March                   128,000               24,000

April                      159,000               34,000

May                      168,000               36,000

June                     178,000               38,000

July                       181,000               40,000

High-low method:

July                      $181,000               40,000

January               $121,000               20,000

Difference           $60,000               20,000

Variable cost per unit = $60,000/20,000 = $3

Fixed cost = $61,000

7. Carlson Company

Beginning work in process    $20,000

Direct materials used              120,000

Direct labor                               50,000

Manufacturing overhead       150,000  

Ending work in process          (10,000)

Total manufacturing costs $330,000

Beginning finished goods  $25,000

Total manufacturing costs 330,000

Ending finished goods        (15,000)

Cost of goods sold         $340,000

Operating expenses        175,000

the new gas bill will be 0

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