Wiley CPA excel Exam Review 2014 Study Guide, Business Environment and Concepts

Appendix C: 2013 Released AICPA Questions for Business Environment and Concepts

1. On January 1 Maples had two jobs in process: #506 with assigned costs of $10,500 and #507 with assigned costs of $14,250. During January three new jobs, #508 through #510, were started and three jobs, #506, #507, and #508, were completed. Materials and labor costs added during January were as follows:

Job number	Materials	Labor
506	$0	$2,000
507	0	1,500
508	4,000	3,600
509	3,800	2,000
510	2,600	3,100

Manufacturing overhead is assigned at the rate of 200 percent of labor. What is the January cost of goods manufactured and transferred from work-in-process?

a. $25,300

b. $35,850

c. $42,950

d. $50,050

1. (d) The requirement is to determine the cost of goods manufactured and transferred from work-in-process. Answer (d) is correct because the amount of costs transferred is equal to $50,050 as calculated below:

BWIP	$24,750
DM used	10,400
DL	12,200
OH applied (200% of DL)	24,400
Costs to account for	$71,750
Less EWIP ($3,800 + 2,600 + (2,000 + 3,100 + 4,000 + 6,100)	(21,700)
Costs transferred	$50,050

Answers (a), (b), and (c) are incorrect because they are incorrect computations of the costs transferred.

2. Which of the following choices shows the proper treatment of sales commissions and abnormal spoilage charges when calculating a manufactured good’s inventoriable cost?

Sales commissions	Abnormal spoilage
a.	Include	Include
b.	Include	Exclude
c.	Exclude ...