Exam 2: Managerial Accounting and Cost Concepts

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 invest in the model 280 machine,the opportunity cost was:

In July,Neidich Inc. ,a merchandising company,had sales of $295,000,selling expenses of $24,000,and administrative expenses of $29,000.The cost of merchandise purchased during the month was $215,000.The beginning balance in the merchandise inventory account was $25,000 and the ending balance was $30,000. Required: Prepare an Income Statement in good form for July.

An example of a period cost is:

The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just completed year. -The cost of goods manufactured (finished) for the year (in thousands of dollars) was:

Henscheid Corporation leases its corporate headquarters building.This lease cost is fixed with respect to the company's sales volume.In a recent month in which the sales volume was 33,000 units,the lease cost was $283,800. -To the nearest whole cent,what should be the average lease cost per unit at a sales volume of 31,600 units in a month? (Assume that this sales volume is within the relevant range. )

Tator Corporation reported the following data for the month of April: -The net operating income for April was:

In August direct labor was 60% of conversion cost.If the manufacturing overhead for the month was $54,000 and the direct materials cost was $34,000,the direct labor cost was:

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

A partial listing of costs incurred during February at Urfer Corporation appears below: -The total of the manufacturing overhead costs listed above for February is:

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 data entry clerk who enters customer order information into the company's computer system?

Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice?

The following costs were incurred in August: Prime costs during the month totaled:

Green Company's costs for the month of August were as follows: direct materials,$27,000;direct labor,$34,000;selling,$14,000;administrative,$12,000;and manufacturing overhead,$44,000.The beginning work in process inventory was $16,000 and the ending work in process inventory was $9,000.What was the cost of goods manufactured for the month?

Derflinger Corporation reported the following data for the month of January: -The net operating income for January was:

Advertising is a product cost as long as it promotes specific products.

Gluth Corporation has provided the following data for the month of July.The beginning balance in the finished goods inventory account was $56,000 and the ending balance was $49,000.Sales totaled $290,000.Cost of goods manufactured was $147,000,selling expense was $17,000,and administrative expense was $68,000. -The cost of goods sold for July was:

Dinius Corporation has provided the following data for the month of December: Required: Prepare a Schedule of Cost of Goods Manufactured for December.

The inventory of finished goods on hand at the end of a period is considered an asset,but inventories of raw materials and work-in-process are not considered assets until production is completed.

A factory supervisor's salary would be classified as a direct cost of a unit of product.

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: