Question : 173.Freeze Frame, Inc. produces cameras that require three processes, A, : 1258540

Accounting

173.Freeze Frame, Inc. produces cameras that require three processes, A, B, and C, to complete. Digital camera model #789 is the best-selling of all the many types of cameras produced. Information related to the 550,000 units of digital camera model #789 produced annually is shown below:

Direct materials$450,000

Direct Labor

Department A (7,000 DLH × $21 per DLH)$147,000

Department B (25,000 DLH × $19 per DLH)$475,000

Department C (10,000 DLH × $26 per DLH)$260,000

Machine Hours

Department A42,000 MH

Department B23,000 MH

Department C38,000 MH

Freeze Frame’s total expected overhead costs and related overhead data are shown in the following table:

Department ADepartment BDepartment C

Direct labor hours90,000 DLH75,000 DLH42,000 DLH

Machine hours67,500 MH135,000 MH53,200 MH

Manufacturing overhead costs $540,000$675,000 $399,000

a. Compute a departmental overhead rate for department A based on machine hours. b. How much overhead is associated with model 789 from department A? c. Compute a departmental overhead rate for department B based on direct labor hours. d. How much overhead is associated with model 789 from department B? e. Compute a departmental overhead rate for department C based on machine hours. f. How much overhead is associated with model 789 from department C? g. What is the per unit cost of the 550,000 units of model 789?

174.Outer Limits, Inc. produces fencing units which require two processes, A and B, to complete. The best-selling type of fence is made of pvc. Information related to the 8,000 units of pvc fencing produced annually is shown below.

Direct materials$450,000

Direct labor

Department A (5,000 DLH × $23 per DLH)$115,000

Department B (4,000 DLH × $25 per DLH)$100,000

Machine hours

Department A2,000 MH

Department B3,000 MH

Outer Limits’ total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on machine hours in department A and direct labor hours in department B.

Department ADepartment B

Direct labor hours9,000 DLH7,000 DLH

Machine hours6,500 MH13,000 MH

Manufacturing overhead costs $54,600$67,060

Determine the total amount of overhead assigned to each unit of pvc fencing.

175.A company’s total expected overhead costs and related overhead data are shown below.

Department ADepartment B

Direct labor hours75,000 DLH30,000 DLH

Machine hours3,000 MH6,000 MH

Manufacturing overhead costs??

Departmental overhead rate$2.40 per DLH$36 per MH

a. Compute estimated manufacturing overhead costs for Department A. b. Compute estimated manufacturing overhead costs for Department B. 176.A company’s total expected overhead costs and related overhead data are shown in the following table:

Department ADepartment B

Direct labor hours85,000 DLH72,000 DLH

Machine hours79,050 MH37,395 MH

Manufacturing overhead costs??

Departmental overhead rate$4 per MH$8.31 per DLH

a. Compute estimated manufacturing overhead costs for Department A. b. Compute estimated manufacturing overhead costs for Department B. c. Compute the departmental overhead rate based on direct labor hours for Department A. d. Compute the departmental overhead rate based on machine hours for Department B.

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July 1, 2023

21. The percentage-of-sales procedure arises from the idea that uncollectible amounts will vary with the volume of credit business. The firm estimates the appropriate percentage by studying its own experience or by inquiring into the experience of similar firms. Default rates generally fall within the range of .01% to .02% of credit sales.

22. The percentage-of-completion method measures the proportion of total work carried out during the accounting period either from engineers' estimates of the degree of completion or from the ratio of costs incurred to date to the total costs expected for the entire contract.

23. A common-size income statement expresses each expense and net income as a percentage of
A. assets.
B. revenues.
C. liabilities.
D. expenses.
E. shareholders’ equity.

24. If the firm has received a promise of payment but cannot measure this promise with reasonable reliability,
A. U.S. GAAP would permit revenue to be recognized, but IFRS would not permit revenue to be recognized.
B. U.S. GAAP would not permit revenue to be recognized, but IFRS would permit revenue to be recognized.
C. neither U.S. GAAP nor IFRS would permit revenue to be recognized.
D. U.S. GAAP and IFRS would permit revenue to be recognized.
E. none of the above

25. Which section includes income derived from a firm’s primary business activities as well as from activities peripherally related to operations? (The firm expects these sources of earnings to continue.)
A. income from continuing operations
B. income, gains, and losses from discontinued operations
C. extraordinary gains and losses
D. retained earnings
E. paid-in-capital

26. Operating risks
A. include variability in sales from changing economic conditions (cyclicality risk).
B. include variability in sales from short product life cycles (because of technological change or changes in consumer taste).
C. include variability of earnings that arises when the firm has a high proportion of fixed costs that do not change as sales change.
D. Answers a, b, and c are correct.
E. None of these answer choices is correct.

27. Ulrich Co. sells an asset to a buyer for a total sales price of $6,000 with a payment schedule of $2,000 in year 1, $2,000 in year 2, and $2,000 in year 3. The cost of the asset is $5,000. Under the cost-recovery-first method, what amount of net profit is recognized in year 3?
A. $2,000
B. $1,000
C. $666.67
D. $333.33
E. $0

28. Which of the following is true regarding income recognition?
A. The seller must have substantially performed its obligations to the customer (for example, by transferring ownership of goods to the customer).
B. The seller must have obtained an asset from the customer that it can reliably measure. If the asset is not cash, the seller must be reasonably certain of converting it into cash.
C. The firm recognizes expenses when it consumes assets.
D. If an event or transaction leads to the recognition of revenue, the firm matches the consumption of any assets (the expense), in time, with the revenue recognized.
E. all of the above

29. Cowden Properties

Cowden Properties sold a condominium to Ms. Roberts for $90,000. Cowden originally acquired the condo at a cost of $40,000 and made improvements to the unit totaling $20,000. The contract for sale required Ms. Roberts to pay the $90,000 as follows: