Exam 2: Different Costs for Different Purposes

For external reporting:

Inventoriable costs:

Answer the following questions using the information below: Jindabyne Pillows produces and sells a decorative pillow for $75.00 per unit.In the first month of operation, 2000 units were produced and 1750 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes: Variable manufacturing costs \ 20.00 per unit Variable marketing costs \ 3.00 per unit Fixed manufacturing costs \ 7.00 per unit Administrative expenses, all fixed \ 15.00 per unit Ending inventories: Direct materials -0- WIP -0- Finished goods 250 urits -What is 'cost of goods sold' per unit using variable costing?

Which of the following is the general term used to identify both the tracing and the allocation of accumulated costs to a cost object?

Indirect costs of a cost object are related to the particular cost object and can be traced to it in an economically feasible (cost-effective)way.

________ of a cost object are related to the particular cost object but cannot be traced to it in an economically feasible (cost-effective)way.

Which of the following statements is FALSE?

Answer the following questions using the information below: Alice Opals produces and sells a mantel clock for $100 per unit.In 2018,100 000 clocks were produced and 80 000 were sold.Other information for the year includes: Direct materials \ 30.00 per unit Direct manufacturing labour \ 2.00 per unit Variable manufacturing costs \ 3.00 per unit Sales commissions \ 5.00 per part Fixed manufacturing costs \ 25.00 per unit Administrative expenses, all fixed \ 15.00 per unit -What is the inventoriable cost per unit using variable costing?

Under variable costing,managers can increase operating profit by simply producing more inventory at the end of the accounting period even if that inventory never gets sold.

What term is used to refer to a band of normal activity or volume in which specific cost-volume relationships are maintained?

Period costs are all costs of a product that are considered as assets in the balance sheet when they are incurred and that become cost of goods sold only when the product is sold.

Answer the following questions using the information below: Beginning finished goods, 1/1/2018 \ 80000 Ending firished goods, 12/31/2018 67000 Cost of goods sold 270000 Sales revenue 500000 Operating expenses 145000 -What is gross margin for 2018?

Harvey Industries produces electronic storage devices,and uses the following three-part classification for its manufacturing costs: direct materials,direct manufacturing labour,and indirect manufacturing costs.Total indirect manufacturing costs for January were $300 million,and were allocated to each product on the basis of direct manufacturing labour costs of each line.Summary data (in millions)for January for the most popular electronic storage device,the Big Bertha,was: Big Bertha Direct manufacturing costs \ 10,000,000 Direct manufacturing labour costs \ 4,000,000 Indirect manufacturing costs \ 8,500,000 Units produced 50,000 Required: a.Compute the manufacturing cost per unit for each product produced in January. b.Suppose production will be reduced to 30 000 units in February.Speculate as to whether the unit costs in February will most likely be higher or lower than unit costs in January;it is not necessary to calculate the exact February unit cost.Briefly explain your reasoning. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Rail Bogies Manufacturing currently produces 1000 bogies per month.The following per unit data apply for sales to regular customers: Direct materials \ 2000 Direct manufacturing labour 300 Variable manufacturing overhead 600 Fixed manufacturing overhead Total manufacturing costs \ 3300 The plant has capacity for 2000 bogies. Required: a.What is the total cost of producing 1000 bogies? b.What is the total cost of producing 1500 bogies? c.What is the per unit cost when producing 1500 bogies? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Classifying a cost as ________ is easier if a company's facility (or some part of it)is used exclusively for a specific cost object,such as a specific product or a particular customer.

Waugh Products Company has three cost objects that it uses to accumulate costs for its manufacturing plants. They are: Cost object #1: The physical buildings and equipment Cost object #2: The use of buildings and equipment Cost object #3: The availability and use of manufacturing labour The following manufacturing overhead cost categories are found in the accounting records: a.Depreciation on buildings and equipment b.Lubricants for machines c.Property insurance d.Supervisors' salaries e.Fringe benefits f.Property taxes g.Utilities Required: Assign each of the above costs to the most appropriate cost object. _____________________________________________________________________________________________ _____________________________________________________________________________________________

A common problem reported by companies using variable costing is the difficulty of classifying costs into fixed or variable categories.

Generally,the decision maker should think in terms of total costs rather than unit costs.

One way of determining the difference between operating profits for absorption costing and variable costing is to:

Inventory of a manufacturing firm includes goods partially worked on but not yet fully completed.