Exam 2: Cost Terms, Concepts, and Classifications

Gabel Inc.is a merchandising company.Last month,the company's merchandise purchases totalled $63,000.The company's beginning merchandise inventory was $13,000,and its ending merchandise inventory was $15,000.What was the company's cost of goods sold for the month?

If the ending inventory of finished goods is understated,net income will be overstated.

In a manufacturing firm,depreciation is always considered a product cost for external financial reporting purposes.

Sally Smith is employed in the production of various electronic products,and she earns $8 per hour.She is paid time-and-a-half for work in excess of 40 hours per week.During a given week,she worked 45 hours and had no idle time.How much of her week's wages would be charged to manufacturing overhead?

What would be the classification of corporate controller's salary?

Robert Smith earns $16 per hour assembling products.For each hour over 40 he works in a week,he is paid time-and-a-half.During a given week,he worked 45 hours and had no idle time.How much of his weekly wages would be charged to the manufacturing overhead account?

Which of the following would be considered a product cost for external financial reporting purposes?

During the month of May,Bennett Manufacturing Company purchases $43,000 of raw materials.The manufacturing overhead totals $27,000 and the total manufacturing costs are $106,000.Assuming a beginning inventory of raw materials of $8,000 and an ending inventory of raw materials of $6,000,what must be the total for direct labour?

The following data (in thousands of dollars) have been taken from the accounting records of Karlist Corporation for the just completed year. Sales \ 800 Raw materials inventory, beginning \ 60 Raw materials inventory, ending \ 70 Purchases of raw materials \ 180 Direct labour \ 100 Manufacturing overhead \ 190 Administrative expenses \ 110 Selling expenses \ 150 Work-in-process inventory, beginning \ 70 Work-in-process inventory, ending \ 80 Finished goods inventory, beginning \ 120 Finished goods inventory, ending \ 160 -What was the cost of goods sold (in thousands of dollars)for the year?

Which one of the following costs should NOT be considered a direct cost of serving a particular customer who orders a customized personal computer by phone directly from the manufacturer?

The following information was provided by Wilson Company for the year just ended: Beginning finished goods inventory \ 150,750 Ending finished goods inventory \ 140,475 Sales \ 475,000 Gross margin \ 150,000 What was the cost of goods manufactured for the year?

The following inventory valuation errors were discovered by Knox Corporation's new controller just after the annual financial statements were published at the end of Year 3. The Year 3 ending inventory was understated by $\$ 17,000$ . The Year 2 ending inventory was understated by $\$ 61,000$ . The Year 1 ending inventory was overstated by $\$ 23,000$ . The net income for Knox in each of these years was: $\text { Net income } \quad \frac { \text { Year } 3 } { \$ 168,000 } \quad \frac { \text { Year } 2 } { \$ 254,000 } \quad \frac { \text { Year 1 } } { \$ 138,000 }$ Assuming there were no income taxes, what was the adjusted net income in each year? Year 3 Year 2 Year 1 A.\ 212,000 \ 170,000 \ 161,000 B.\ 124,000 \ 338,000 \ 115,000 C.\ 90,000 \ 338,000 \ 161,000 D.\ 124,000 \ 170,000 \ 115,000

For the majority of manufacturing companies,the distinction between period costs and product costs is essential because of its effect on net income for a period.Failure to make the distinction can affect the cost of goods manufactured and cost of goods sold. Required: Would the need to make the distinction between product costs and period costs still be essential if a manufacturing company were to adopt the just-in-time technique in the lean thinking model? Explain.

Advertising costs are considered product costs for external financial reports since they are incurred in order to promote specific products.

Boardman Company reported the following data for the month of January: Inventories: Raw materials \ 32,000 \ 31,000 Work in process \ 18,000 \ 12,000 Finished goods \ 30,000 \ 35,000 Additional information: Sales revenue \ 210,000 Direct labour costs \ 40,000 Manufacturing overhead costs \ 70,000 Selling expenses \ 25,000 Administrative expenses \ 35,000 -If raw materials costing $35,000 were purchased during January,what were the total manufacturing costs for the month?

The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the year just ended. Sales \ 990 Raw materials inventory, beginning \ 40 Raw materials inventory, ending \ 70 Purchases of raw materials \ 120 Direct labour \ 200 Manufacturing overhead \ 230 Administrative expenses \ 150 Selling expenses \ 140 Work-in-process inventory, beginning \ 70 Work-in-process inventory, ending \ 50 Finished goods inventory, beginning \ 120 Finished goods inventory, ending \ 160 -What was the cost of goods manufactured (finished)for the year (in thousands of dollars)?

In external financial reports,factory utilities costs may be included in an asset account on the balance sheet at the end of the period.

Last month,when 10,000 units of a product were manufactured,the cost per unit was $60.At this level of activity,variable costs were 50% of total unit costs.If 10,500 units are manufactured next month and cost behaviour patterns remain unchanged,how will costs be affected?

At a sales volume of 32,000 units, CD Company's total fixed costs are $64,000 and total variable costs are $60,000. The relevant range is 30,000 to 55,000 units. -If CD Company sells 50,000 units,what is the total expected cost per unit (rounded to the nearest cent)?

Geneva Steel Corporation produces large sheets of heavy gauge steel. The company showed the following amounts relating to its production for the year just completed: Direct materials used in production \ 110,000 Direct labour costs for the year \ 55,000 Work in process, beginning \ 22,000 Finished goods, beginning \ 45,000 Cost of goods available for sale \ 288,000 Cost of goods sold \ 238,000 Work in process, ending \ 16,000 -What was the manufacturing overhead cost for the year?