Exam 2: Different Costs for Different Purposes

Answer the following questions using the information below: Wangaratta Corporation incurred fixed manufacturing costs of $6000 during 2018.Other information for 2018 includes: The budgeted denominator level is 1000 units. Units produced total 750 units. Units sold total 600 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold. -Operating profit using absorption costing will be ________ than operating profit if using variable costing.

Absorption costing is required by GAAP (Generally Accepted Accounting Principles)for external reporting.

The MOST likely cost driver of direct material costs is the:

Manufacturing sector companies purchase raw materials and components to convert them via a process known as the manufacturing process into saleable,finished products.

The following information pertains to Ball Company: Manufacturing costs \ 2400000 Units manufactured 40000 Beginuning inventory 0 units 39 800 units are sold during the year for $100 per unit. Required: a.What is the average manufacturing cost per unit? b.What is the cost of ending finished goods inventory? c.What is the gross margin? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Answer the following questions using the information below: Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes: The budgeted denominator level is 800 units. Units produced total 1000 units. Units sold total 950 units. Beginning inventory was zero. The fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold. -Under absorption costing,fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total:

When should the overtime premium of direct manufacturing labour be considered an indirect manufacturing cost? A direct manufacturing cost? _____________________________________________________________________________________________ _____________________________________________________________________________________________

'Cost of goods sold' refers to the cost of goods brought to completion,whether they were started before or during the current accounting period.

Tamworth Company prepared the following absorption-costing income statement for the year ended 31 May 2018. Sales (16 000 units) \ 320000 Cost of goods sold 216000 Gross margin \ 104000 Selling and administrative expenses \ 6000 Operating profit \ 58000 Additional information follows: Selling and administrative expenses include $1.50 of variable cost per unit sold.There was no beginning inventory,and 17 500 units were produced.Variable manufacturing costs were $11 per unit.Actual fixed costs were equal to budgeted fixed costs. Required: Prepare a variable-costing income statement for the same period. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Which of the following reflects product costs?

Which method is NOT a way to discourage producing for inventory?

The following information has come from Bill Lawrie Inc.accounting records for 2018: Direct materials: Beginning inventory \ 40000 Purchases 123200 Ending inventory 20800 Direct manufacturing labour 32000 Manufacturing overhead 24000 Beginuing work-in-process inventory 1600 Ending work-in-process inventory 8000 Beginuing finished goods inventory 48000 Ending finished goods inventory 32000 Required: a.What is the cost of direct materials used during 2018? b.What is cost of goods manufactured for 2018? c.What is cost of goods sold for 2018? d.What amount of prime costs was added to production during 2018? e.What amount of conversion costs was added to production during 2018? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Direct manufacturing labour costs are a part of both prime costs and conversion costs.

Period costs:

Answer the following questions using the information below: The SouthAus Company manufactures several different products.Unit costs associated with Product ADE108 are as follows: Direct materials \ 40 Direct manufacturing labour 8 Variable manufacturing overhead 12 Fixed manufacturing overhead 23 Sales commissions (2\% of sales) 6 Administrative salaries 9 Total \ 98 -What are the fixed costs per unit associated with Product ADE108?

A product cost is the sum of the costs assigned to a product for a specific purpose.

To discourage producing for inventory,management can:

________ include the compensation of all manufacturing labour that can be traced to the cost object.

Answer the following questions using the information below: Hewitt Corporation incurred fixed manufacturing costs of $6000 during 2018.Other information for 2018 includes: The budgeted denominator level is 1000 units. Units produced total 750 units. Units sold total 600 units. Beginning inventory was zero. The company uses VARIABLE COSTING and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold. -Fixed manufacturing costs included in ending inventory total:

A manager can increase operating profit by deferring maintenance beyond the current accounting period when absorption costing is used.