Exam 3: Basic Cost Management Concepts

Advanced Technical Services Ltd., has many products and services in the medical field. The Clinical Division of the company does research and testing of consumer products on human participants in controlled clinical studies. Required: Determine for each cost below whether it is best classified as a fixed, variable, or step-fixed cost. (1) Director's salary (2) Part-time help (3) Payment on purchase of medical equipment (4) Allocation of company-wide advertising (5) Patches used on participants' arms during the study (6) Stipends paid to participants

The income statement for a manufacturing company includes:

Greenbelt Hospital has the following activities in its value chain of providing service to each inpatient admission: 1. Schedule patient. 2. Verify insurance. 3. Admit patient. 4. Prepare patient's room. 5. Review doctor's report. 6. Feed patient. 7. Order tests. 8. Move to/from laboratory. 9. Administer lab tests. 10. Order pharmaceuticals. 11. Complete patient report. 12. Check patient's vital signs. 13. Prepare patient for operation. 14. Move to/from operating room. 15. Operate. 16. Collect charges. 17. Discharge patient. 18. Bill insurance. Required: Assume that the cost object is the individual patient. Determine the appropriate cost driver(s) for each activity.

Variable costs within the relevant range for a firm are assumed:

Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files: Cost of goods sold \ 80,000 Work in process inventory, January 1, 2016 18,500 Work in process inventory, December 31, 2016 14,500 Selling and Administrative Expenses 16,000 Net Income 30,000 Factory overhead 20,000 Direct materials inventory, January 1, 2016 26,000 Direct materials inventory, December 31, 2016 14,000 Cost of goods manufactured 98,000 Finished goods inventory, January 1, 2016 31,000 Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow. What should be the amount of total manufacturing cost?

Which of the following tend to be non-differential in the short term since they cannot be changed, but are more likely to be differential in the long term?

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 of direct materials purchased?

Woodcarving Co.incurred the following costs during May: Conversion costs \ 460,000 Prime costs \ 390,000 Manufacturing overhead \ 315,000 What was the amount of direct materials and direct labor used in May? Direct materials Direct labor A) \ 100,000 \ 295,000 B) \ 105,000 \ 215,000 C) \ 245,000 \ 145,000 D) \ 70,000 \ 75,000

Factory overhead costs for a given period were 3 times as much as the direct material costs.Prime costs totaled $2,000.Conversion costs totaled $3,280.What are the direct labor costs for the period?

Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files: Cost of goods sold \ 80,000 Work in process inventory, January 1, 2016 18,500 Work in process inventory, December 31, 2016 14,500 Selling and Administrative Expenses 16,000 Net Income 30,000 Factory overhead 20,000 Direct materials inventory, January 1, 2016 26,000 Direct materials inventory, December 31, 2016 14,000 Cost of goods manufactured 98,000 Finished goods inventory, January 1, 2016 31,000 Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow. What should be the amount of direct materials purchased?

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 Direct labor used is calculated to be:

The following information pertains to the Petrie Company: Prime costs \ 180,000 Conversion costs 215,000 Direct materials used 95,000 Beginning work in process 75,000 Ending work in process 65,000 Required: Determine the cost of goods manufactured.

Since indirect cost cannot be conveniently or economically traced directly to a cost pool or cost object, the management accountant will:

Lester-Sung, Inc. is a large general construction firm in the commercial building industry. The following is a list of costs incurred by this company: (1) The cost of an employee for 8 hours at $6.00 an hour. (2) The cost of insurance for the employees. (3) The cost of 1,000 board feet of 2×4 lumber. (4) The CEO's salary. Required: Classify each cost above using the following categories: (a) General, selling, and administrative cost (b) Direct material (c) Direct labor (d) Overhead cost

The following costs are incurred by the Oakland Company, a manufacturer of furniture. (1) wood and fabric used in furniture (2) depreciation on machinery (3) property taxes on the factory (4) labor costs to manufacture the furniture (5) electricity cost to operate the machinery (6) factory rent (7) production supervisor's salary (8) sandpaper and other supplies (9) fire insurance on factory (10) commissions paid to salespersons Required: Classify each cost as either variable or fixed.

A manager of a small manufacturing firm is interested in knowing what the company's product costs are.Which of the following would be considered a product cost for the manager's company?

When production levels are expected to decline within a relevant range, what effects would be anticipated with respect to each of the following? Fixed Costs Variable Costs per Unit per Unit A) increase no change B) increase increase C) no change no change D) no change increase

Certain workers are assigned the task of unpacking production materials received from suppliers.These workers place the material in a storage area pending subsequent use in the production process.The labor cost of such workers is normally classified as: