Exam 2: Basic Managerial Accounting Concepts

In June,Olympic Company purchased materials costing $38,000,and incurred direct labour costs of $42,000.Overhead totalled $27,000 for the month.Information on inventories was as follows. June 1 June 30 Materials \ 3,000 \ 2,700 Work in process 1,000 1,275 Finished goods 2,500 1,775 Required: A. $\quad$ Calculate the cost of direct materials used during June. B. $\quad$ Calculate the total manufacturing cost for June. C. $\quad$ Calculate the cost of goods manufactured for June. D. $\quad$ Calculate cost of goods sold for June.

When do materials in the raw materials account become direct materials?

How is conversion cost calculated?

Which of the following is an example of a direct materials cost?

During the month of March,Cara,Inc.had total manufacturing costs of $130,000 and incurred $40,000 in direct labour costs and $30,000 in overhead costs.The materials inventory on January 1 was $3,000 less than the materials inventory on March 31.What was the cost of materials purchased during the month?

As costs are used up in the production of revenues,they are said to expire.Expired costs are called expenses.

The cost of maintenance personnel in a factory building would be classified as direct labour.

Fairchild Group's accountant prepared the following Income Statement for the month of August. Fairchild Group Income Statement For the month of August Sales revenue \ 912,200 Cost of goods sold 601,920 Gross margin 310,080 Less: Selling expense 164,160 Administrative expense 63,840 Operating income \ 82,080 Required: A. $\quad$ Calculate the sales revenue percent. B. $\quad$ Calculate the cost of goods sold percent. C. $\quad$ Calculate the gross margin percent. D. $\quad$ Calculate the selling expense percent. E. $\quad$ Calculate the administrative expense percent. F. $\quad$ Calculate the operating income percent.

Costs can be assigned to cost objects in a number of ways.

Which of the following expenses is included in manufacturing overhead?

Per-unit product cost: \ 30 Gross margin percentage: 40\% Selling and admini strative expenses \ 30,000 Operating income \ 10,000 -Refer to the Figure.What was the sales price per unit?

A fixed cost is a cost that does NOT increase in total as output increases and does NOT decrease in total as output decreases.

Which of the following are production costs?

What is the formula to calculate gross margin percent?

January 1 1,260 December 31 1,040 -Refer to the Figure.How many sets of portable speakers did Ballard sell during the year?

Selected data concerning the past year's operations of the Intelligent Creatures Corporation are as follows: Selling and administrative expenses \ 225,000 Direct materials used 397,500 Direct labour 450,000 Inventories Dec. 1 Dec. 31 Direct materials \ 36,000 \ 42,000 Work in process 75,000 84,000 Finished goods 69,000 57,000 What is the cost of direct materials purchased?

What three categories separate the expenses on a manufacturer's income statement?

Prairie Plant Company supplied the following data at the end of the current year: Sales commissions \ 15,000 Sales revenue 150,000 Research and development 17,000 Finished goods inventory, Jan. 1 7,500 Work-in-process inventory, Jan 1 9,000 Finished goods inventory, Dec. 31 6,000 Work-in-process inventory, Dec. 31 11,000 Cost of goods manufactured 50,000 Required: Prepare an income statement for Prairie Plant Company.

Research and development costs would be classified as nonproduction costs.

Arche produces a product with the following per unit costs. Direct materials \ 17 Direct labour 11 Overhead 12 Last year,Arche produced and sold 3,000 units at a sales price of $80 each.Total selling and administrative expenses were $25,000. Required: Solve for the following: A. $\quad$ total cost of goods sold for last year B. $\quad$ operating income for last year C. $\quad$ total gross margin for last year D. $\quad$ prime cost per unit