12. (Maximum Grade: 4.0 points-Suggested Time: 4.0 minutes) The production line
ID: 2511432 • Letter: 1
Question
12. (Maximum Grade: 4.0 points-Suggested Time: 4.0 minutes) The production line workers at Star Communication Company are paid for 8 hours every day that they are at work. The factory is open 52 weeks every year and 5 days each week day. Workers are given 3 weeks of holidays each year. Each day workers are allowed two 15 minute breaks each day. Because the production activities are high risk the government requires that each year employees must be given two days of safety training. Which of the following is closest to the labour hour annual pratical capacity for each worker? a. 1,823 b. 1,838 c. 1,950 d. 2,080 13. (Maximum Grade: 2.5 points- Suggested Time: 2.5 minutes) At the end of each accounting period the accountant will usually find that the amount of manufacturing overhead applied to production will be different from the manufacturing overhead actually incurred. Which of the following is one of the alternatives that the text suggests for dealing with the difference between the two amounts? Allocate the entire difference to cost of goods sold Prorate the entire difference between cost of goods sold and raw materials inventory Prorate the entire difference between work in process inventory and finished goods Do nothing since in the long run the differences will likely reverse. a. b. c. d.Explanation / Answer
The production line workers at Star Communication Company are paid for 8 hours every day that they are at work. The factory is open 52 weeks every year and 5 days each week day. Workers are given 3 weeks of holidays each year. Each day workers are allowed two 15 minute breaks each day. Because the production activities are high risk the government requires that each year employees must be given two days of safety training. Which of the following is closest to the labour hour annual pratical capacity for each worker? a. 1,823 b. 1,838 c. 1,950 d. 2,080 Number of Labor Hours = Number of hours per Day x Number of Weeks Per Year x Number of days per Week Number of Labor Hours =( (8hours - 1/2hour.) x (52 weeks - 3 weeks) x 5) - (7.5 hours x 2 days) 1822.5 Correct option is b = 1,823 hours At the end of each accounting period the accountant will usually find that the amount of manufacturing overhead applied to production will be different from the manufacturing overhead actually incurred. Which of the following is one of the alternatives that the text suggests for dealing with the difference between the two amounts? Allocate the entire difference to cost of goods sold Prorate the entire difference between cost of goods sold and raw materials inventory Prorate the entire difference between work in process inventory and finished goods Do nothing since in the long run the differences will likely reverse. a. b. c. d. Allocate the entire difference to cost of goods sold The over or under-applied manufacturing overhead is disposed off by either allocating it among work in process, finished goods and cost of goods sold accounts or transferring the entire amount to cost of goods sold account.
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