Exam 2: Basic Cost Management Concepts

Which of the following is a period cost?

ElizabethtownMotors Ltd. manufactures all-wheel drive (AWD) automobiles. Which of the following would not be classified as direct materials by the company?

Which of the following inventories would a company ordinarily hold for sale?

Which of the following statements is true?

Prime costs are comprised of:

Chant Corporation recently computed total product costs of $647,000 and total period costs of $549,000. On the basis of this information, Chant's income statement should reveal operating expenses of:

Conversion costs are:

Which of the following is a product cost for external financial reporting purposes?

Hampton Company had the following inventory balances at the beginning and end of the year: January 1 December 31 Raw materials 50,000 35,000 Work in process 130,000 170,000 Finished goods 280,000 255,000 During the year, the company purchased $100,000 of raw material and spent $340,000 on direct labour. Other data: manufacturing overhead incurred, $450,000; sales, $1,560,000; selling and administrative expenses, $90,000; income tax rate, 30%. Required: A. Calculate cost of goods manufactured. B. Calculate cost of goods sold. C. Determine Hampton's net income.

Should direct materials be classified as a part of any or all of the following: conversion cost, manufacturing cost, and prime cost?

The selected amounts that follow were taken from Shawville Corporation's accounting records: Raw materials used \ 27,000 Cost of goods available for sale 175,000 Direct labour 35,000 Total manufacturing costs 104,000 Work in process - Jan 1 19,000 Cost of goods manufactured 100,000 Finished goods inventory - Dec 31 60,000 Sales revenue 300,000 Selling \& administrative expenses 125,000 Income tax expense 18,000 Required: Compute the following: A. Manufacturing overhead. B. Work-in-process inventory on December 31. C. Finished-goods inventory on January 1. D. Cost of goods sold. E. Gross margin. F. Net income.

The accounting records for Ferguson Manufacturing revealed that the company began the month of September with a finished-goods inventory of $150,000. The finished-goods inventory at the end of September was $70,000 and the cost of goods sold during the month was $125,000. The cost of goods manufactured during September was:

The choices below depict five costs of Benton Corporation and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver?

Which of the following is an example of a fixed cost?

The following selected costs were extracted from the accounting records of Brampton Machining: 1. Direct materials used in production 2. Wages of machine operators 3. Factory utilities 4. Sales commissions 5. Salary of Brampton's president 6. Factory depreciation 7. Wages of plant security guards 8. Uncollectible accounts expense 9. Machine lubricant used in production Required: By the use of numbers, identify the costs that would be used to calculate: A. cost of goods manufactured. B. manufacturing overhead. C. total period costs. D. total conversion costs. E. total direct costs of Brampton's credit and collections department. F. Brampton's inventory cost.

The tuition fee that will be paid next semester by a college student who pursues a degree is a(n):

Consider the following cost items: 1. Sales commissions earned by a company's sales force. 2. Raw materials purchased during the period. 3. Current year's depreciation on a firm's manufacturing facilities. 4. Year-end completed production of a carpet manufacturer. 5. The cost of products sold to customers of an apparel store. 6. Wages earned by machine operators in a manufacturing plant. 7. Income taxes incurred by an airline. 8. Marketing costs of an electronics manufacturer. 9. Indirect labour costs incurred by a manufacturer of office equipment. Required: Required: A. Evaluate the costs just cited and determine whether the associated dollar amounts would be found on the firm's balance sheet, income statement, or schedule of cost of goods manufactured. (Note: In some cases, more than one answer will apply.) B. What major asset will normally be insignificant for service enterprises and relatively substantial for retailers, wholesalers, and manufacturers? Briefly discuss. C. Briefly explain the similarity and difference between the merchandise inventory of a retailer and the finished-goods inventory of a manufacturer.

Scott Corporation engages in mass customization and direct sales, the latter by accepting customer orders over the Internet. As a result, Scott:

Tiny Totts is a nursery school for kindergarten children. When there are twenty children enrolled, total revenues and total costs are $6,000 and $3,200, respectively. When there are twenty-one children enrolled, total revenues and total costs are $6,300 and $3,255, respectively. The marginal cost when the twenty-first student enrolls in the school is:

The following selected information was extracted from the 2012 accounting records of Cooper Products. Raw materials used \ 320,000 Direct labour 120,000 Indirect labour 30,000 Selling \& administrative salaries 200,000 Building depreciation* 350,000 Other selling \& administrative expenses 90,000 Other factory costs 700,000 *Forty percent of the company's building was devoted to production activities; the remaining 60% was used for selling and administrative functions. Cooper's beginning and ending work-in-process inventories amounted to $290,000 and $315,000, respectively. The company's beginning and ending finished-goods inventories were $404,000 and $450,000, respectively. Required: A. Calculate Cooper's manufacturing overhead for the year. B. Calculate Cooper's cost of goods manufactured. C. Compute the company's cost of goods sold.