56. Adolphson Corporation has provided the following summary of its quality cost report for the last two years:
Summary of Quality Cost Report
(in thousands)
This Year
Last Year
% Change
Prevention costs ……………………..
$
300
$
200
+50
Appraisal costs ………………………
315
210
+50
Internal failure costs ……………….
114
190
-40
External failure costs ………………
621
1,200
-48
………………….Totalqualitycosts
$
1,350
$
1,800
-25
On the basis of this report, which one of the following statements is most likely correct?
A) An increase in prevention and appraisal costs resulted in fewer defects, and therefore, resulted in a decrease in internal and external failure costs.
B) A decrease in internal and external failure costs resulted in less need for prevention and appraisal costs.
C) Quality costs such as scrap and rework decreased by 48%.
D) Quality costs such as returns and repairs under warranty decreased by 40%.
57. The following costs were incurred in January:
Direct materials ………………………..
$33,000
Direct labor ………………………………
$28,000
Manufacturing overhead …………….
$69,000
Selling expenses ……………………….
$16,000
Administrative expenses …………….
$21,000
Conversion costs during the month totaled:
A) $97,000
B) $167,000
C) $102,000
D) $61,000
Garrison, Managerial Accounting, 12th Edition 27
Chapter 2 Cost Terms, Concepts, and Classifications
58. The following costs were incurred in February:
Direct materials …………………….
$43,000
Direct labor ………………………….
$16,000
Manufacturing overhead ………..
$37,000
Selling expenses ……………………
$17,000
Administrative expenses ………..
$26,000
Conversion costs during the month totaled:
A) $59,000
B) $80,000
C) $53,000
D) $139,000
59. The following costs were incurred in March:
Direct materials ………………………..
$21,000
Direct labor ………………………………
$17,000
Manufacturing overhead …………….
$67,000
Selling expenses ……………………….
$16,000
Administrative expenses …………….
$15,000
Conversion costs during the month totaled:
A) $88,000
B) $38,000
C) $136,000
D) $84,000
28 Garrison, Managerial Accounting, 12th Edition
Chapter 2 Cost Terms, Concepts, and Classifications
60. The following costs were incurred in January:
Direct materials ………………………..
$39,000
Direct labor ………………………………
$26,000
Manufacturing overhead …………….
$21,000
Selling expenses ……………………….
$14,000
Administrative expenses …………….
$27,000
Prime costs during the month totaled:
A) $86,000
B) $65,000
C) $47,000
D) $127,000
61. The following costs were incurred in February:
Direct materials ………………………..
$39,000
Direct labor ………………………………
$18,000
Manufacturing overhead …………….
$14,000
Selling expenses ……………………….
$13,000
Administrative expenses …………….
$29,000
Prime costs during the month totaled:
A) $71,000
B) $32,000
C) $113,000
D) $57,000
Garrison, Managerial Accounting, 12th Edition 29
Chapter 2 Cost Terms, Concepts, and Classifications
62. The following costs were incurred in March:
Direct materials ………………………..
$39,000
Direct labor ………………………………
$24,000
Manufacturing overhead …………….
$14,000
Selling expenses ……………………….
$11,000
Administrative expenses …………….
$19,000
Prime costs during the month totaled:
A) $63,000
B) $107,000
C) $38,000
D) $77,000
63. Aable Company’s manufacturing overhead is 20% of its total conversion costs. If direct labor is $45,000 and if direct materials are $53,000, the manufacturing overhead is:
A) $11,250
B) $13,250
C) $180,000
D) $24,500
64. Abair Company’s manufacturing overhead is 20% of its total conversion costs. If direct labor is $38,000 and if direct materials are $35,000, the manufacturing overhead is:
A) $18,250
B) $9,500
C) $8,750
D) $152,000
30 Garrison, Managerial Accounting, 12th Edition
Chapter 2 Cost Terms, Concepts, and Classifications
65. Abbey Company’s manufacturing overhead is 60% of its total conversion costs. If direct labor is $35,000 and if direct materials are $55,000, the manufacturing overhead is:
A) $135,000
B) $23,333
C) $82,500
D) $52,500
