Exam 3: Basic Cost Management Concepts

Assume the following information pertaining to Cub Company: Prime costs \ 195,000 Conversion costs 221,000 Direct materials used 85,000 Beginning work in process 98,000 Ending work in process 81,000 Cost of goods manufactured is calculated to be:

Factory overhead costs for a given period were 1.5 times as much as the direct material costs.Prime costs totaled $15,500.Conversion costs totaled $22,725.What are the direct labor costs for the period?

Roadmaster Equipment is an up-scale, higher-priced, specialty road construction equipment maker based in Irvine, California. The management accountant for Roadmaster compiled information for various levels of output in units:Required: Rounding all calculations to the nearest dollar, fill in the blanks with the correct figures.

The range of the cost driver in which the actual value of the cost driver is expected to fall is called the:

Choco Chocolata is a cookie company in Juarez, Mexico that produces and sells American-style chocolate chip cookies with extremely high quality and service. The owner would like to identify the various costs incurred during each year in order to plan and control the costs in the business. Chocolata's costs are the following (in thousands of pesos): Utilities for the bakery \ 2,100 Paper used in packaging product 180 Salaries and wages in the bakery 23,500 Cookie ingredients 43,500 Bakery labor fringe benefits 1,300 Administrative costs 2,300 Bakery equipment maintenance 800 Depreciation of bakery plant and equipment 2,200 Uniforms for bakers 750 Insurance for the bakery 900 Rent for administration offices 18,500 Advertising 3,500 Boxes, bags, and cups used in the bakery 1,100 Office Manager's salary 13,000 Overtime premiums 2,600 Idle Time 500 Required: (1) What is the total amount of product costs? (2) What is the total amount of period costs?

Assume the following information pertaining to Cub Company: Prime costs \ 195,000 Conversion costs 221,000 Direct materials used 85,000 Beginning work in process 98,000 Ending work in process 81,000 Factory overhead is calculated to be:

Barnes Co.incurred the following costs during July: Conversion costs \ 133,000 Prime costs \ 125,000 Manufacturing overhead \ 75,000 What was the amount of direct materials used and direct labor for July? Direct materials Direct labor A) \ 43,000 \ 47,000 B) \ 47,000 \ 43,000 C) \ 58,000 \ 45,000 D) \ 67,000 \ 58,000

Which one of the following is not a type of cost driver?

Conrad, Inc. recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records. Cost of Goods Sold \ 65,000 Work-in-Process Inventory, Beginning 10,500 Work-in-Process Inventory, Ending 9,000 Selling and Administrative Expense 15,000 Finished Goods Inventory, Ending 15,000 Finished Goods Inventory, Beginning ? Direct Materials Used ? Factory Overhead Applied 12,000 Operating Income 14,000 Direct Materials Inventory, Beginning 11,000 Direct Materials Inventory, Ending 6,000 Cost of Goods Manufactured 60,000 Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The CFO of Conrad, Inc. has asked you to recalculate the following accounts and to report to him by the end of the day. What is the amount in the finished goods inventory at the beginning of the year?

The emphasis on effective _________ has ________ significantly in recent years in response to SEC requirements imposed by the Sarbanes-Oxley Act of 2002.

The following information was taken from the accounting records of Elliott Manufacturing Corp. Unfortunately, some of the data were destroyed by a computer malfunction. Sales Revenue \ 58,000 Finished Goods Inventory, Beginning 9,000 Finished Goods Inventory, Ending 6,000 Cost of Goods Sold ? Gross Margin 25,000 Direct Materials Used 10,000 Selling and Administrative Expense ? Operating Income 14,000 Work-in-Process Inventory, Beginning ? Work-in-Process Inventory, Ending 5,000 Direct Labor Used 9,000 Factory Overhead 12,000 Total Manufacturing Cost ? Cost of Goods Manufactured ? Cost of goods manufactured is calculated to be:

Furniture Co.incurred the following costs during 2016: Conversion costs \ 240,000 Prime costs \ 210,000 Manufacturing overhead \ 115,000 What was the amount of direct materials and direct labor used for the year? Direct materials Direct labor A) \ 95,000 \ 100,000 B) \ 105,000 \ 80,000 C) \ 125,000 \ 90,000 D) \ 85,000 \ 125,000

The following information was taken from the accounting records of Tomek Manufacturing Company.Unfortunately, some of the data were destroyed by a computer malfunction. Case A Case B Sales \ 150,000 ? Finished goods inventory, Jan. 1, 2013 35,000 28,000 Finished goods inventory, Dec. 31,2013 40,000 ? Cost of goods sold ? 61,000 Gross margin 25,000 23,000 Selling and administrative expenses ? 1,000 Operating income 10,000 22,000 Work in process, Jan. 1, 2013 ? 14,000 Direct material used 18,000 8,000 Direct labor 35,000 9,000 Factory overhead 50,000 ? Total manufacturing costs ? 35,000 Work in process, Dec. 31, 2013 22,000 ? Cost of goods manufactured ? 45,000 Required: Calculate the unknowns indicated by question marks.

The cost of goods that were finished and transferred out of work-in-process during the current period is:

A portion of the costs incurred by business organizations is designated as direct labor cost. As used in practice, the term direct labor cost has a wide variety of meanings. Unless the meaning intended in a given context is clear, misunderstanding and confusion are likely to ensue. If a user does not understand the elements included in direct labor cost, erroneous interpretations of the numbers might occur and could result in poor management decisions. Measurement of direct labor costs has two aspects: (1) the quantity of labor effort that is to be included, that is, the types of hours or other units of time that are to be counted; and (2) the unit price by which each of these quantities is multiplied to arrive at a monetary cost. Required: 1) Distinguish between direct labor and indirect labor. 2) Presented below are labor cost elements that a company has been classified as direct labor, factory overhead, or either direct labor or factory overhead depending upon the situation. Direct labor-Included in the company's direct labor are cost production efficiency bonuses and certain benefits for direct labor workers such as FICA (employer's portion), group life insurance, vacation pay, and workers' compensation insurance. Factory overhead-The company's calculation of manufacturing overhead includes the cost of the following: wage continuation plans, the company sponsored cafeteria, the personnel department, and recreational facilities. Direct labor or factory overhead-The costs that the company includes in this category are maintenance expense, overtime premiums, and shift premiums. Explain the reasoning used by the company in classifying the cost elements in each of the three categories.

Stephenson Company's computer system recently crashed, erasing much of the company's financial data. The following accounting information was discovered soon afterwards on the CFO's back-up computer data. Cost of Goods Sold \ 380,000 Work-in-Process Inventory, Beginning 30,000 Work-in-Process Inventory, Ending 40,000 Selling and Administrative Expense 50,000 Finished Goods Inventory, Ending 15,000 Finished Goods Inventory, Beginning ? Direct Materials Purchased 171,000 Factory Overhead Applied 112,000 Operating Income 22,000 Direct Materials Inventory, Beginning 18,000 Direct Materials Inventory, Ending 6,000 Cost of Goods Manufactured 340,000 Direct Labor 55,000 The CFO of Stephenson Company has asked you to recalculate the following accounts and report to him by week's end. What should be the amount in the finished goods inventory at the beginning of the year?

Which of the following is not a product cost?

Stephenson Company's computer system recently crashed, erasing much of the company's financial data. The following accounting information was discovered soon afterwards on the CFO's back-up computer data. Cost of Goods Sold \ 380,000 Work-in-Process Inventory, Beginning 30,000 Work-in-Process Inventory, Ending 40,000 Selling and Administrative Expense 50,000 Finished Goods Inventory, Ending 15,000 Finished Goods Inventory, Beginning ? Direct Materials Purchased 171,000 Factory Overhead Applied 112,000 Operating Income 22,000 Direct Materials Inventory, Beginning 18,000 Direct Materials Inventory, Ending 6,000 Cost of Goods Manufactured 340,000 Direct Labor 55,000 The CFO of Stephenson Company has asked you to recalculate the following accounts and report to him by week's end. What should be the amount of direct materials available for use?

Which of the following is not an example of a product cost?

A computer virus destroyed some of the accounting records for Hampton Furniture Company for the periods of 2017-2019. The following information was salvaged from the computer system.Required: Determine the correct amounts for items A through P.