Exam 2: Cost Concepts and Behavior

Doran Technical Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following?

Property taxes on the manufacturing facility are an element of Conversion Cost Period Cost A. No No B. No Yes C. Yes No D. Yes Yes

Classifying a cost as either direct or indirect depends upon

Period costs are those costs assigned to units of production in the period in which they are incurred.

Total cost of goods purchased minus beginning merchandise inventory plus ending merchandise inventory equals cost of goods sold.

A partial listing of costs incurred at Marshall Corporation during August appears below: Required: (a) What is the total amount of product costs listed above? Show your work. (b) What is the total amount of period costs listed above? Show your work.

Michael Corporation has provided the following data for the month of July: Sales \ 280,000 Raw materials purchases 76,000 Direct labor cost 42,000 Manufacturing overhead 77,000 Selling expenses 20,000 Administrative expense 35,000 Inventories: Beginning Ending Raw materials \ 22,000 \ 33,000 Work-in-process 15,000 23,000 Finished good 52,000 43,000 Required: a. Prepare a Statement of Cost of Goods Manufactured in good form for July. b. Prepare an Income Statement in good form for July.

Grover Company has the following data for the production and sale of 2,000 units. Sales price per unit \ 800per unit Fixed costs: Marketing and adrinistrative \ 400,000 per period Marufacturing overhead \ 200,000 per period Variable costs: Marketing and adrinistrative \ 50 per unit Marnufacturing overhead \ 80 per unit Direct labor \ 100 perunit Direct Materials \ 200 per unit - What is the prime cost per unit?

Mountainburg Industries has developed two new products but has only enough plant capacity to introduce one product during the current year. The following data will assist management in deciding which product should be selected. Product L Product W Direct materials \ 44 \ 36 Machining labor ( \1 2hour) 18 15 Assembly labor ( \1 0/hour) 30 10 Variable overhead ( \8 /hour) 36 18 Fixed overhead (4/hour) 18 9 Total Manufacturing Cost \ 146 \ 88 Estimated selling \1 70 \1 00 Actual research and development costs \ 240,000 \ 175,000 Estimated advertising costs \ 500,000 \ 350,000 Mountainburg's fixed overhead includes rent and utilities, equipment depreciation, and supervisory salaries. Selling and administrative expenses are not allocated to individual products. - The difference between the $100 estimated selling price for Mountainburg's Product W and its total manufacturing cost of $88 represents

Given the following information for a retail company, what is the total cost of goods purchased for the period? Purcheses discounts \ 3,500 Transportation-in 6,700 Ending irventory 35,000 Gross mercharidise cost 304,000 Purcheses retirns 8,400 Begirning irventory 27,000 Sales discournts 10,300

Grover Company has the following data for the production and sale of 2,000 units. Sales price per unit \ 800per unit Fixed costs: Marketing and administrative \ 400,000 per period Manufacturing overhead \ 200,000 per period Variable costs: Marketing and administrative \ 50 per unit Manufacturing overhead \ 80 per unit Direct labor \ 100 per unit Direct materials \ 200per unit - What is the total manufacturing cost per unit?

A number of costs are listed below. Required: For each item above, indicate whether the cost is direct or indirect with respect to the cost object listed next to it.

Ramos Company has the following unit costs: Variable manufacturing overhead \1 3 Direct materials 12 Direct labor 17 Fixed manufacturing overhead 10 Fixed marketing and administrative 8 - What cost per unit would be used for product costs under variable costing?

The process of assigning indirect costs to products, services, people, business units, etc., is

Explain the difference between a direct cost and an indirect cost.

Tulsa Company, (a merchandising co.) has the following data pertaining to the year ended December 31, 2019: (CPA adapted) Purchases \ 450,000 Beginning inventory 170,000 Ending inventory 210,000 Freight-in 50,000 Freight-out 75,000 What is the cost of goods sold for the year?

Consider the following cost and production information for Barnard Steel Building Company, Inc. Additional information: ∙ Sales revenue: $20,000,000. ∙ Beginning inventory: $1,150,000. ∙ Sales of part D-1340: 80 units. ∙ Sales of all other parts are the same as the number of units produced. ∙ Sales price of part D-1340: $35,500 per unit ∙ The only spending increase was for materials cost due to increased production. All other spending as shown above was unchanged. Barnard Steel Building Company uses the variable costing method. Required: (a) Compute the (1) contribution margin, (2) operating income, and (3) ending inventory for Barnard Steel Building Company. (b) Assume that sales of part D-1340 increase by 30 units to 110 units during the given period (production remains constant). Re-compute the above amounts. (c) Jaime Porter, the controller of Barnard Steel Building Company, is considering the use of absorption costing instead of variable costing to be in line with financial reporting requirements. She knows that the use of a different costing method will give rise to different incentives. Explain to her how alternative methods of calculating product costs create different incentives.

Grover Company has the following data for the production and sale of 2,000 units. Sales price per unit \ 800per unit Fixed costs: Marketing and administrative \ 400,000 per period Manufacturing overhead \ 200,000 per period Variable costs: Marketing and administrative \ 50 per unit Manufacturing overhead \ 80 per unit Direct labor \ 100 per unit Direct materials \ 200per unit - What is the variable manufacturing cost per unit?

The following cost and inventory data were taken from the records of the Flagstaff Company for the year: Costs incurred: Depreciation, factory equipment \ 30,000 Depreciation, office equipment 7,000 Supplies, factory 1,500 Maintenance, factory equipment 20,000 Utilities, factory 8,000 Sales commissions 30,000 Indirect labor 54,500 Rent, factory building 70,000 Purchases of direct materials (net) 124,000 Direct labor 80,000 Advertising expense 90,000 Inventories: January 1 December 31 Direct materials \ 9,000 \ 11,000 Work in process 6,000 21,000 Finished goods 69,000 24,000 Required: (a) Compute the cost of goods manufactured. (b) Compute the cost of goods sold.

Calculate the conversion costs from the following information: Fixed manufacturing overhead \2 ,000 Variable manufacturing overhead 1,000 Direct materials 2,500 Direct labor 1,500