Exam 2: Managerial Accounting and Cost Concepts

Management of Berndt Corporation has asked your help as an intern in preparing some key reports for August. The beginning balance in the raw materials inventory account was $33,000. During the month, the company made raw materials purchases amounting to $62,000. At the end of the month, the balance in the raw materials inventory account was $30,000. Direct labor cost was $46,000 and manufacturing overhead was $74,000. The beginning balance in the work in process account was $13,000 and the ending balance was $19,000. The beginning balance in the finished goods account was $54,000 and the ending balance was $50,000. Sales totaled $270,000. Selling expense was $18,000 and administrative expense was $49,000. -The cost of goods sold for August was:

Which one of the following costs should NOT be considered an indirect cost of serving a particular customer at a Dairy Queen fast food outlet?

Direct labor is a part of both prime cost and conversion cost.

Dodridge Corporation has provided the following data for February. The beginning balance in the raw materials inventory account was $23,000. During the month, the company made raw materials purchases amounting to $59,000. At the end of the month, the balance in the raw materials inventory account was $33,000. Direct labor cost was $28,000 and manufacturing overhead was $74,000. The beginning balance in the work in process account was $12,000 and the ending balance was $17,000. The beginning balance in the finished goods account was $48,000 and the ending balance was $54,000. -The total manufacturing cost for February was:

An example of a period cost is:

Twichell Inc., a local retailer, has provided the following data for the month of December: -The net operating income for December was:

Corcetti Company manufactures and sells prewashed denim jeans. Large rolls of denim cloth are purchased and are first washed in a giant washing machine. After the cloth is dried, it is cut up into jean pattern shapes and then sewn together. The completed jeans are sold to various retail chains. -Which of the following terms could be used to correctly describe the wages paid to the workers that cut up the cloth into the jean pattern shapes?

Management of Parrent Corporation has asked your help as an intern in preparing some key reports for April. The company started the month with raw materials inventories of $32,000. During the month, the company made raw materials purchases amounting to $68,000. At the end of the month, raw materials inventories totaled $35,000. Direct labor cost was $43,000 and manufacturing overhead was $62,000. The beginning balance in the work in process account was $19,000 and the ending balance was $12,000. The beginning balance in the finished goods account was $35,000 and the ending balance was $58,000. Sales totaled $240,000. Selling expense was $18,000 and administrative expense was $42,000. -The net operating income for April was:

Direct material cost combined with manufacturing overhead cost is known as conversion cost.

The three basic elements of manufacturing cost are direct materials, direct labor, and:

A partial listing of costs incurred at Rust Corporation during August appears below: Required: a. What is the total amount of product cost listed above? Show your work. b. What is the total amount of period cost listed above? Show your work.

During August, the cost of goods manufactured was $73,000. The beginning finished goods inventory was $15,000 and the ending finished goods inventory was $21,000. What was the cost of goods sold for the month?

Management of Sourwine Corporation is considering whether to purchase a new model 320 machine costing $389,000 or a new model 280 machine costing $318,000 to replace a machine that was purchased 6 years ago for $376,000. The old machine was used to make product C78P until it broke down last week. Unfortunately, the old machine cannot be repaired. Management has decided to buy the new model 280 machine. It has less capacity than the new model 320 machine, but its capacity is sufficient to continue making product C78P. Management also considered, but rejected, the alternative of simply dropping product C78P. If that were done, instead of investing $318,000 in the new machine, the money could be invested in a project that would return a total of $405,000. -In making the decision to buy the model 280 machine rather than the model 320 machine, the sunk cost was:

Management of Sourwine Corporation is considering whether to purchase a new model 320 machine costing $389,000 or a new model 280 machine costing $318,000 to replace a machine that was purchased 6 years ago for $376,000. The old machine was used to make product C78P until it broke down last week. Unfortunately, the old machine cannot be repaired. Management has decided to buy the new model 280 machine. It has less capacity than the new model 320 machine, but its capacity is sufficient to continue making product C78P. Management also considered, but rejected, the alternative of simply dropping product C78P. If that were done, instead of investing $318,000 in the new machine, the money could be invested in a project that would return a total of $405,000. -In making the decision to buy the model 280 machine rather than the model 320 machine, the differential cost was:

The following inventory balances relate to Bharath Manufacturing Corporation at the beginning and end of the year: Bharath's cost of goods sold was $653,000. What was Bharath's cost of goods manufactured?

Differential costs can be either fixed or variable.

Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following?

Although depreciation is always a period cost in a merchandising firm, it can be a product cost in a manufacturing firm.

The costs of direct materials are classified as:

Weygandt Corporation reported the following data for the month of February: -The net operating income for February was: