Chapter 3B - Test Bank.doc

8/14/2019 Chapter 3B - Test Bank.doc

1/27

Appendix 3B - Further Classification of Labor Costs

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3B-1


2/27


3/27


+. #ally #mith is employed in the production of various electronic products& and earns , perhour. #he is paid time-and-a-half for or! in excess of * hours per ee!. )urin$ a $ivenee! she or!ed *+ hours and had no idle time. /o much of her ee!0s a$es ould bechar$ed to manufacturin$ overhead

A. ,2B. ,"C. ,*). ,

2. ames Andersen& an operator of a machine on the assembly line& receives time-and-a-halffor any time or!ed in excess of * hours per ee!. /is rate of pay is ,1" per hour. /omuch should be char$ed to manufacturin$ overhead if he or!ed *2 hours last ee! and hadno idle time

A. ,B. ,4"C. ,32). ,1

4. An assembly line or!er is paid ," per hour and an extra ,1 per hour for every hour over* that is or!ed in a $iven ee!. %f this or!er or!s ** hours in a $iven ee!& ho muchof her a$e should be included in manufacturin$ overhead costA. ,

B. ,*C. ,). ,1"

5endy or!s on the assembly line of a manufacturin$ company here she installs acomponent part for one of the company0s products. #he is paid ," per hour for re$ular timeand time and a half for all or! in excess of * hours per ee!.

3B-3


4/27


. 5endy or!s *+ hours durin$ a ee! in hich there as no idle time. The allocation of5endy0s a$es for the ee! beteen direct labor cost and manufacturin$ overhead costould be(

A. 6ption AB. 6ption BC. 6ption C). 6ption )

7. 5endy or!s *2 hours in a $iven ee! but is idle for * hours durin$ the ee! due toe8uipment brea!dons. The allocation of 5endy0s a$es for the ee! beteen direct laborcost and manufacturin$ overhead cost ould be(

A. 6ption AB. 6ption BC. 6ption C

). 6ption )

3B-*


5/27


1. 5endy0s employer offers frin$e benefits that cost the company ,3 for each hour ofemployee time 9both re$ular and overtime:. )urin$ a $iven ee!& 5endy or!s *" hours butis idle for 3 hours due to material shorta$es. The company treats all frin$e benefits as part ofmanufacturin$ overhead. The allocation of 5endy0s a$es and frin$e benefits for the ee!

beteen direct labor cost and manufacturin$ overhead ould be(


11. 5endy0s employer offers frin$e benefits that cost the company ,3 for each hour ofemployee time 9both re$ular and overtime:. )urin$ a $iven ee!& 5endy or!s *" hours butis idle for 3 hours due to material shorta$es. The company treats all frin$e benefits relatin$ todirect labor as added direct labor cost and the remainder as part of manufacturin$ overhead.The allocation of 5endy0s a$es and frin$e benefits for the ee! beteen direct labor costand manufacturin$ overhead ould be(


Chuc! is a 8uality inspector on the assembly line of a manufacturin$ company. /e is paid,12 per hour for re$ular time and time and a half for all or! in excess of * hours per ee!.

/e is classified as a direct labor or!er.

3B-+


6/27


1". Chuc! or!s *" hours durin$ a ee! in hich there as no idle time. The allocation ofChuc!0s a$es for the ee! beteen direct labor cost and manufacturin$ overhead cost ouldbe(


13. Chuc! or!s *4 hours in a $iven ee! but is idle for 3 hours durin$ the ee! due toe8uipment brea!dons. The allocation of Chuc!0s a$es for the ee! beteen direct laborcost and manufacturin$ overhead cost ould be(

A. 6ption AB. 6ption BC. 6ption C

). 6ption )

3B-2


7/27


1*. Chuc!0s employer offers frin$e benefits that cost the company ,+ for each hour ofemployee time 9both re$ular and overtime:. )urin$ a $iven ee!& Chuc! or!s *+ hours butis idle for " hours due to material shorta$es. The company treats all frin$e benefits as part ofmanufacturin$ overhead. The allocation of Chuc!0s a$es and frin$e benefits for the ee!



1+. Chuc!0s employer offers frin$e benefits that cost the company ,+ for each hour ofemployee time 9both re$ular and overtime:. )urin$ a $iven ee!& Chuc! or!s *+ hours butis idle for " hours due to material shorta$es. The company treats all frin$e benefits relatin$ todirect labor as added direct labor cost and the remainder as part of manufacturin$ overhead.The allocation of Chuc!0s a$es and frin$e benefits for the ee! beteen direct labor costand manufacturin$ overhead ould be(


Essay Questions

3B-4


8/27


12. Broo!e Foster is employed by 5on$ Laboratories& %nc.& and is directly involved inpreparin$ and pac!a$in$ the company0s leadin$ sleep aid& ;est5ell. Broo!e0s basic a$e rateis ,1+ per hour& and she is paid time and a half for any or! in excess of * hours per ee!.Additionally& 5on$ Laboratories provides a frin$e benefit pac!a$e that costs the company ,+

for each hour of employee time 9re$ular or overtime:. )urin$ a recent ee!& Broo!e or!ed*7 hours but as idle for 3 hours due to materials shorta$es.;e8uired(a. Assume that 5on$ Laboratories treats all frin$e benefits as part of manufacturin$overhead. Compute Broo!e0s total a$es and frin$e benefits for the ee! and indicate homuch of her a$es and frin$e benefits for the ee! ould be allocated to direct labor andho much ould be allocated to manufacturin$ overhead.b. Assume that 5on$ Laboratories treats the part of frin$e benefits related to direct labor as acomponent of direct labor cost. Compute Broo!e0s total a$es and frin$e benefits for theee! and indicate ho much of her a$es and frin$e benefits ould be allocated to directlabor and ho much ould be allocated to manufacturin$ overhead.

14. A direct labor or!er at


9/27


1. A direct labor or!er at )amann Corporation is paid ,"* per hour for re$ular time andtime and a half for all or! in excess of * hours per ee!. This employee or!s * hours ina $iven ee! but is idle for 3 hours durin$ the ee! due to e8uipment brea!dons.;e8uired(

)etermine ho much of the or!er0s a$es for the ee! ould be classified as direct laborcost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

17. A direct labor or!er at Co$sell Corporation is paid ,"" per hour for re$ular time and

time and a half for all or! in excess of * hours per ee!. The company0s frin$e benefitscost ,4 for each hour of employee time 9both re$ular and overtime:. Last ee! this employeeor!ed *3 hours but as idle for 3 hours due to material shorta$es. The company treats allfrin$e benefits relatin$ to direct labor as added direct labor cost and the remainder as part ofmanufacturin$ overhead.;e8uired()etermine ho much of the or!er0s a$es for the ee! ould be classified as direct laborcost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

3B-7


10/27


". A direct labor or!er at Bla$$ Corporation is paid ,1* per hour for re$ular time and timeand a half for all or! in excess of * hours per ee!. The company0s frin$e benefits cost ,*for each hour of employee time 9both re$ular and overtime:. Last ee! this employee or!ed*+ hours but as idle for " hours due to material shorta$es. The company treats all frin$e

benefits as part of manufacturin$ overhead.;e8uired()etermine ho much of the or!er0s a$es for the ee! ould be classified as direct laborcost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

3B-1


11/27


Appendix 3B Further Classification of Labor Costs Anser =ey

True / False Questions

1. The overtime premium paid to factory or!ers is usually considered to be part of directlabor cost.FALSE

AACSB: Reflective ThinkingAICPA BB: Critical Thinking

AICPA FN: Measurement

Bloom's: no!le"ge

#earning $%&ective: ()* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime

#evel: 0as/

3B-11


12/27


". #ome companies classify labor frin$e benefits for direct labor or!ers as part of the directlabor cost and some classify these costs as manufacturin$ overhead.T!E

AACSB: Reflective Thinking

AICPA BB: Critical Thinking


Bloom's: no!le"ge#earning $%&ective: ()* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime

#evel: 0as/

Multiple Choice Questions

3. %f schedulin$ delays occur& and a particular 'ob must be or!ed on durin$ an overtime

period& the overtime premium cost ould most li!ely be char$ed to(A.the 'ob or!ed on durin$ the overtime period.B"manufacturin$ overhead.C.finished $oods inventory.).or! in process.



Bloom's: no!le"ge


#evel: 0as/

3B-1"


13/27


*. The overtime premium paid to or!ers is usually included as a part of(A.sellin$ cost.B.direct labor cost.C.administrative cost.

#"manufacturin$ overhead cost.



Bloom's: Com,rehension


#evel: Me"ium

+. #ally #mith is employed in the production of various electronic products& and earns , perhour. #he is paid time-and-a-half for or! in excess of * hours per ee!. )urin$ a $iven

ee! she or!ed *+ hours and had no idle time. /o much of her ee!0s a$es ould bechar$ed to manufacturin$ overheadA.,2B","C.,*).,

>anufacturin$ overhead for overtime premium ? + hours .+ , per hour ? ,"

AACSB: Anal/ticAICPA BB: Critical Thinking


Bloom's: A,,lication#earning $%&ective: ()* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime

#evel: Me"ium

3B-13


14/27


2. ames Andersen& an operator of a machine on the assembly line& receives time-and-a-halffor any time or!ed in excess of * hours per ee!. /is rate of pay is ,1" per hour. /omuch should be char$ed to manufacturin$ overhead if he or!ed *2 hours last ee! and hadno idle time

A.,B.,4"C",32).,1

>anufacturin$ overhead for overtime premium ? 2 hours .+ ,1" per hour ?,32

AACSB: Anal/tic



Bloom's: A,,lication

#earning $%&ective: ()* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime#evel: Me"ium

4. An assembly line or!er is paid ," per hour and an extra ,1 per hour for every hour over* that is or!ed in a $iven ee!. %f this or!er or!s ** hours in a $iven ee!& ho muchof her a$e should be included in manufacturin$ overhead costA.,B",*C.,).,1"

>anufacturin$ overhead for overtime premium ? * hours .+ ," per hour ? ,*

AACSB: Anal/tic





5endy or!s on the assembly line of a manufacturin$ company here she installs a

component part for one of the company0s products. #he is paid ," per hour for re$ular timeand time and a half for all or! in excess of * hours per ee!.

3B-1*


15/27


. 5endy or!s *+ hours durin$ a ee! in hich there as no idle time. The allocation of5endy0s a$es for the ee! beteen direct labor cost and manufacturin$ overhead costould be(

A.6ption AB.6ption BC.6ption C#"6ption )

)irect labor ? *+ hours ," per hour ? ,7

>anufacturin$ overhead for overtime premium ? + hours .+ ," per hour ? ,+

AACSB: Anal/tic


AICPA FN: MeasurementBloom's: A,,lication


#evel: Me"ium

3B-1+


16/27


7. 5endy or!s *2 hours in a $iven ee! but is idle for * hours durin$ the ee! due toe8uipment brea!dons. The allocation of 5endy0s a$es for the ee! beteen direct laborcost and manufacturin$ overhead cost ould be(

A.6ption AB"6ption BC.6ption C).6ption )

AACSB: Anal/tic

AICPA BB: Critical ThinkingAICPA FN: Measurement



#evel: Me"ium

3B-12


17/27


1. 5endy0s employer offers frin$e benefits that cost the company ,3 for each hour ofemployee time 9both re$ular and overtime:. )urin$ a $iven ee!& 5endy or!s *" hours butis idle for 3 hours due to material shorta$es. The company treats all frin$e benefits as part ofmanufacturin$ overhead. The allocation of 5endy0s a$es and frin$e benefits for the ee!


A.6ption AB"6ption BC.6ption C).6ption )

AACSB: Anal/tic





3B-14


18/27


11. 5endy0s employer offers frin$e benefits that cost the company ,3 for each hour ofemployee time 9both re$ular and overtime:. )urin$ a $iven ee!& 5endy or!s *" hours butis idle for 3 hours due to material shorta$es. The company treats all frin$e benefits relatin$ todirect labor as added direct labor cost and the remainder as part of manufacturin$ overhead.

The allocation of 5endy0s a$es and frin$e benefits for the ee! beteen direct labor costand manufacturin$ overhead ould be(

A.6ption AB.6ption BC"6ption C).6ption )

AACSB: Anal/tic




Chuc! is a 8uality inspector on the assembly line of a manufacturin$ company. /e is paid,12 per hour for re$ular time and time and a half for all or! in excess of * hours per ee!./e is classified as a direct labor or!er.

3B-1


19/27


1". Chuc! or!s *" hours durin$ a ee! in hich there as no idle time. The allocation ofChuc!0s a$es for the ee! beteen direct labor cost and manufacturin$ overhead cost ouldbe(

A.6ption AB.6ption BC"6ption C).6ption )

)irect labor ? *" hours ,12 per hour ? ,24"

>anufacturin$ overhead for overtime ? " hours .+ ,12 per hour ? ,12

AACSB: Anal/tic




#evel: Me"ium

3B-17


20/27


13. Chuc! or!s *4 hours in a $iven ee! but is idle for 3 hours durin$ the ee! due toe8uipment brea!dons. The allocation of Chuc!0s a$es for the ee! beteen direct laborcost and manufacturin$ overhead cost ould be(

A.6ption AB.6ption BC.6ption C#"6ption )





#evel: Me"ium

3B-"


21/27


1*. Chuc!0s employer offers frin$e benefits that cost the company ,+ for each hour ofemployee time 9both re$ular and overtime:. )urin$ a $iven ee!& Chuc! or!s *+ hours butis idle for " hours due to material shorta$es. The company treats all frin$e benefits as part ofmanufacturin$ overhead. The allocation of Chuc!0s a$es and frin$e benefits for the ee!


A"6ption AB.6ption BC.6ption C).6ption )

AACSB: Anal/tic



#evel: Me"ium

3B-"1


22/27


1+. Chuc!0s employer offers frin$e benefits that cost the company ,+ for each hour ofemployee time 9both re$ular and overtime:. )urin$ a $iven ee!& Chuc! or!s *+ hours butis idle for " hours due to material shorta$es. The company treats all frin$e benefits relatin$ todirect labor as added direct labor cost and the remainder as part of manufacturin$ overhead.

The allocation of Chuc!0s a$es and frin$e benefits for the ee! beteen direct labor costand manufacturin$ overhead ould be(

A"6ption AB.6ption BC.6ption C).6ption )




#evel: Me"ium

Essay Questions

3B-""


23/27


12. Broo!e Foster is employed by 5on$ Laboratories& %nc.& and is directly involved inpreparin$ and pac!a$in$ the company0s leadin$ sleep aid& ;est5ell. Broo!e0s basic a$e rateis ,1+ per hour& and she is paid time and a half for any or! in excess of * hours per ee!.Additionally& 5on$ Laboratories provides a frin$e benefit pac!a$e that costs the company ,+

for each hour of employee time 9re$ular or overtime:. )urin$ a recent ee!& Broo!e or!ed*7 hours but as idle for 3 hours due to materials shorta$es.;e8uired(a. Assume that 5on$ Laboratories treats all frin$e benefits as part of manufacturin$overhead. Compute Broo!e0s total a$es and frin$e benefits for the ee! and indicate homuch of her a$es and frin$e benefits for the ee! ould be allocated to direct labor andho much ould be allocated to manufacturin$ overhead.b. Assume that 5on$ Laboratories treats the part of frin$e benefits related to direct labor as acomponent of direct labor cost. Compute Broo!e0s total a$es and frin$e benefits for theee! and indicate ho much of her a$es and frin$e benefits ould be allocated to directlabor and ho much ould be allocated to manufacturin$ overhead.

a.

b. Total a$es and frin$e benefits ould be ,1&*4.+ as shon above.

3B-"3


24/27


AACSB: Anal/tic




#evel: 1ar"

14. A direct labor or!er at


25/27


1. A direct labor or!er at )amann Corporation is paid ,"* per hour for re$ular time andtime and a half for all or! in excess of * hours per ee!. This employee or!s * hours ina $iven ee! but is idle for 3 hours durin$ the ee! due to e8uipment brea!dons.;e8uired(

)etermine ho much of the or!er0s a$es for the ee! ould be classified as direct laborcost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

AACSB: Anal/tic



#evel: 0as/

3B-"+


26/27


17. A direct labor or!er at Co$sell Corporation is paid ,"" per hour for re$ular time andtime and a half for all or! in excess of * hours per ee!. The company0s frin$e benefitscost ,4 for each hour of employee time 9both re$ular and overtime:. Last ee! this employeeor!ed *3 hours but as idle for 3 hours due to material shorta$es. The company treats all

frin$e benefits relatin$ to direct labor as added direct labor cost and the remainder as part ofmanufacturin$ overhead.;e8uired()etermine ho much of the or!er0s a$es for the ee! ould be classified as direct laborcost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

AACSB: Anal/tic




#evel: Me"ium

3B-"2


27/27


". A direct labor or!er at Bla$$ Corporation is paid ,1* per hour for re$ular time and timeand a half for all or! in excess of * hours per ee!. The company0s frin$e benefits cost ,*for each hour of employee time 9both re$ular and overtime:. Last ee! this employee or!ed*+ hours but as idle for " hours due to material shorta$es. The company treats all frin$e

benefits as part of manufacturin$ overhead.;e8uired()etermine ho much of the or!er0s a$es for the ee! ould be classified as direct laborcost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

AACSB: Anal/tic





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Chapter 3B - Test Bank.doc