2013 AICPA Newly Released Questions Business1Following are multiple choice questions and simulations recently released by theAICPA. These questions were released by the AICPA with letter answers only. Oureditorial board has provided the accompanying explanation.Please note that the AICPA generally releases questions that it does NOT intend to useagain. These questions and content may or may not be representative of questions youmay see on any upcoming exams.2013 AICPA Newly Released Questions Business2AICPA QUESTIONS RATED MODERATE DIFFICULTY1. CPA-08280On January 1 Maples had two jobs in process: #506 with assigned costs of $10,500 and #507 withassigned costs of $14,250. During January three new jobs, #508 through #510, were started and threejobs, #506, #507, and #508, were completed. Materials and labor costs added during January were asfollows:Job number Materials Labor506 $0 $2,000507 0 1,500508 4,000 3,600509 3,800 2,000510 2,6003,100Manufacturing overhead is assigned at the rate of 200 percent of labor. What is the January cost ofgoods manufactured and transferred from work-in-process?a. $25,300b. $35,850c. $42,950d. $50,050Solution:Choice "d" is correct. The cost of goods manufactured is $50,050 and can be computed based onbeginning and ending inventory balances and manufacturing costs incurred.The CGM includes the cost of all jobs finished in January. Jobs 506 and 507 were finished in January,and Job 508 was started and finished in January. The total costs for each of these jobs are as follows:Job 506: $10,500 (beg. WIP) + $2,000 (labor) + $4,000 (O'h) = $16,500Job 507: $14,250 (beg. WIP) + $1,500 (labor) + $3,000 (O'h) = $18,750Job 508: $4,000 (materials) + $3,600 (labor) + $7,200 (O'h) = $14,800($50,050)Choices "a", "b", and "c" are incorrect based on the above analysis.2013 AICPA Newly Released Questions Business32. CPA-08281Which of the following choices shows the proper treatment of sales commissions and abnormal spoilagecharges when calculating a manufactured good's inventoriable cost?Sales Abnormalcommissions spoilagea. Include Includeb. Include Excludec. Exclude Included. Exclude ExcludeSolution:Choice "d" is correct. Product (inventoriable) costs include direct labor, direct material, and appliedoverhead. Direct material costs anticipate a provision for normal spoilage. Sales commissions are sellingand administrative expenses that are period (not product) costs, and abnormal spoilage is chargedagainst income of the period as a separate component of cost of goods sold.Choices "a", "b", and "c" are incorrect based on the above explanation.2013 AICPA Newly Released Questions Business43. CPA-08282An entity has the following sales orders in a batch:Invoice# Product Quantity Unit Price101 K 10 50 $ 5.00102 M 15 100 $10.00103 P 20 150 $25.00104 Q 25 200 $30.00105 T 30 250 $35.00Which of the following numbers represents the record count?a. 5b. 100c. 105d. 750Solution:Choice "a" is correct. The fact pattern presents a collection of five records. Records are a collection offields (e.g., invoice, product, quantity, and unit price). Five records are listed, representing invoices 101through 105.Choice "b" is incorrect. This proposed solution suggests that the sum of the product numbers is a recordcount. Records are a collection of fields (e.g., invoice, product, quantity, and unit price). Five records arelisted, representing invoices 101 through 105.Choice "c" is incorrect. This proposed solution sums the unit prices to obtain $105. This is not a recordcount. Records are a collection of fields (e.g., invoice, product, quantity, and unit price). Five recordsare listed, representing invoices 101 through 105.Choice "d" is incorrect. This proposed solution suggests that the sum of the quantities is a record count.Records are a collection of fields (e.g., invoice, product, quantity, and unit price). Five records are listed,representing invoices 101 through 105.2013 AICPA Newly Released Questions Business54. CPA-08283A manufacturing company that produces trivets has established the following standards for the currentyear:Standard price per pound $3.00Standard material usage per trivet 2.00During April, the company purchased 10,000 pounds of material for $33,000 and used 9,400 pounds toproduce 4,500 trivets. Four thousand trivets were sold during April. What amount should be reported asthe materials' quantity (usage) variance?a. $1,200 unfavorable.b. $1,320 unfavorable.c. $3,000 unfavorable.d. $4,200 unfavorable.Solution:Choice "a" is correct. The quantity usage variance applies the standard rate per unit to the differencebetween actual raw materials used and standard materials allowed to measure the efficient use ofproduct in a manufacturing process. Standard materials allowed is computed by multiplying the actualoutput times the standard material allowed per unit. The manufacturing company produced 4,500 trivetsand allows 2 units of materials per trivet. The standard quantity allowed is 9,000 units (4,500 x 2). Usingthe tabular format, the quantity usage variance is computed as follows:Actual quantity used (given) 9,400Standard price x $3 $28,200Standard quantity allowed (computed above) 9,000Standard price x$3 $27,000Variance $(1,200)Because the amount used was greater than the amount allowed, the variance is unfavorable.Choice "b" is incorrect. The quantity usage variance uses standard rather than the actual rates asproposed by this choice.Choice "c" is incorrect. This proposed solution correctly computes the price variance, but not the usagevariance. [$33,000 / 10,000 units = $3.30 per unit actual price. Standard price per unit = $3.00. ($3.30 -$3.00) x 10,000 units purchased = $3,000 price variance.]Choice "d" is incorrect. The proposed solution appears to compare units of materials purchased withunits required for sales at standard usage at standard rate. [9,400 x $3 = $28,200. 4,000 x $3 x 2 =$24,000. $28,200 - $24,000 = $4,200.] The correct computation of the quantity variance is describedabove.

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