Exam 2: Cost Terms,concepts,and Classifications

Which of the following best defines an opportunity cost?

During the first week of April,Gillian worked a total of 50 hours assembling products and had no idle time.Gillian is paid $15 per hour for regular time,and is paid time-and-a-half for all hours in excess of a 40-hour week.How much of Gillian's wages for the week should be charged to direct labour?

Variable costs are costs whose per unit costs vary as the activity level rises and falls.

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 43,000 units,what is the total expected cost (Do not round your intermediate calculations)?

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 the raw materials used in production (in thousands of dollars)during the year?

The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the year just ended. Sales \ 910 Raw materials inventory, beginning \ 80 Raw materials inventory, ending \ 20 Purchases of raw materials \ 100 Direct labour \ 130 Manufacturing overhead \ 200 Administrative expenses \ 160 Selling expenses \ 140 Work-in-process inventory, beginning \ 40 Work-in-process inventory, ending \ 10 Finished goods inventory, beginning \ 130 Finished goods inventory, ending \ 150 -What was the cost of goods sold for the year (in thousands of dollars)?

Williams Company's direct labour cost is 25% of its conversion cost.If the manufacturing overhead cost for the last period is $45,000 and the direct materials cost is $25,000,what is the direct labour cost?

The advertising costs incurred by Pepsi to air its commercials during the hockey season can best be described as a:

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?

What does manufacturing overhead cost consist of?

How should the cost of the fire insurance for a manufacturing plant be classified?

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)?

Mary Tappin,an assistant Vice President at Galaxy Toys,was disturbed to find on her desk a memo from her boss,Gary Resnick,to the controller of the company.The memo appears below: Galaxy Toys Internal Memo Sept 15 To: Harry Wilson,Controller Fm: Gary Resnick,Executive Vice President As you know,we won't start recording many sales until October when stores start accepting shipments from us for the Christmas season.Meanwhile,we are producing flat-out and are building up our finished goods inventories so that we will be ready to ship next month.Unfortunately,we are in a bind right now since it looks like the net income for the quarter ending on Sept 30 is going to be pretty awful.This may get us in trouble with the bank since they always review the quarterly financial reports and may call in our loan if they don't like what they see.Is there any possibility that we could change the classification of some of our period costs to product costs--such as the rent on the finished goods warehouse? Please let me know as soon as possible.The President is pushing for results. Mary didn't know what to do about the memo.It wasn't intended for her,but its contents were alarming. Required: a.Why has Gary Resnick suggested reclassifying some period costs as product costs? b.Why do you think Mary was alarmed about the memo?

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 -Which of the following is Boardman Company's total conversion cost for January?

The following selected account balances for the year ended December 31 are provided for Amita Company: Purchases of raw materials \ 260,000 Direct labour 65,000 Maintenance, factory 74,000 Selling and administrative salaries 179,000 Depreciation, factory equipment 110,000 Cleaning supplies 6,000 Sales commissions 350,000 Utilities, factory building 52,000 Rent, factory 90,000 Depreciation, sales equipment 80,000 Insurance, factory equipment 8,000 Advertising expense 300,000 In addition,you have the following information about inventories during the year: Increase in raw materials \ 10,000 Decrease in work in process \ 15,000 Decrease in finished goods \ 30,000 Cleaning supplies are in the factory. Assume the company uses FIFO. Required: (a.)Calculate the cost of goods manufactured. (b.)Calculate the cost of goods sold.

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 cost 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?

On a per unit basis,a fixed cost varies inversely with the level of activity.

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: Year 3 Year 2 Year 1 Net income \ 168,000 \ 254,000 \ 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

A manufacturing company prepays its insurance coverage for a three-year period.The premium for the three years is $2,700 and is paid at the beginning of the first year.Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities.What amounts should be considered product costs and period costs respectively for the first year of coverage? Product Costs Period Costs A) \ 2,700 \ 0 B) \ 2,160 \ 540 C) \ 1,440 \ 360 D) \ 720 \ 180

For a manufacturing company,which of the following is an example of a period cost rather than a product cost?