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Cost Accounting Chapter 2 - Costs – Concepts and classification Problem 1 1. Direct 2. Indirect 3. Direct 4. Direct 5. Direct 6. Direct 7. Direct 8. Indirect Problem 3 1. Variable 2. Variable 3. Fixed 4. Variable 5. Fixed 6. Fixed 7. Fixed 8. Variable 9. Fixed 10.Fixed
9. Direct 10.Direct 11.Indirect 12.Direct 13.Direct 14.Direct 15.Indirect
Product Product Product Product Product Period Period Period Product Period
Problem 4 – Bug Company 1. Fixed Period 2. Fixed Inventoriable 3. Fixed Inventoriable 4. Variable Inventoriable 5. Fixed Inventoriable
Problem 2 1. Manufacturing 2. Selling 3. Manufacturing 4. Selling 5. Administrative
6. Manufacturing 7. Administrative 8. Selling 9. Administrative 10.Selling
Direct Direct Indirect Direct Indirect Indirect Indirect Direct Indirect Indirect
6. Variable 7. Variable 8. Fixed 9. Fixed 10. Fixed
Problem 5 – Mighty Muffler, Inc. a. P 60,000 b. P 60,000 c. P 37,500 = P50/muffler x 500 = P 25,000 750 d. P 50 x 1,000 = P 50,000 e. P 60,000 + P 25,000 = P 85,000 f. P 60,000 + P 50,000 = P 110,000 g. P 60,000/ 500 = P 120 h. P 60,000/750 = P 80 I, P 60,000/1,000 = P 60 j. P 50 k. P 50 l. P 50 m. P 120 + P 50 = P 170 n. P 80 + P 50 = P 130 o. P 60 + P 50 = P 110
Period Inventoriable Inventoriable Period Inventoriable
Problem 6 – JP Morgan 1. b, c. i 2. a, c, i 3. a, c, i 4. a, c. h 5. b. d, i 6. g 7. e, f (correction – should be when one additional loan application is processed) 8. b, d, i 9. a, c, i 10. b, c, Problem 7 – Mother Goose Company 1. Prime costs 2. Conversion cost 3 Inventoriable cost 4. Total period costs
-
530,000 575,000 860,000 305,000
Problem 8 – a. c - fixed (total amount is constant) b. a – variable (4,480/3,200 = 1.40; 6,300/4,500 = 1.40 per unit is constant) c. d - mixed ( 3,950/3,200 = 12.34; 5,250/4,500 = 1.16) total amount and amount per unit varies in relation to units sold)
Problem 9 - Blanche Corporation ` 1. Direct materials used Direct labor Variable manufacturing overhead Variable marketing Total variable cost per unit X No. of units produced and sold Total variable costs per month 2. Fixed manufacturing overhead Fixed marketing costs Total fixed cost per unit X No. of units produced and sold Total fixed costs per month
P 32.00 20.00 15.00 3.00 70.00 12,000 P 840,000 P
6.00 4.00 10.00 12,000 P 120,000
Problem 10 1. Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing cost per unit `
P 60.00 30.00 9.00 P 99.00
2. Total variable manufacturing cost per unit Variable marketing and administrative Total variable costs per unit
P 99.00 6.00 105.00
3. Total variable manufacturing cost per unit Fixed manufacturing overhead (30,000/1,200) Full manufacturing cost per unit
P 99,00 25.00 124.00
4. Full manufacturing cost per unit Variable marketing and administrative Fixed marketing and administrative Full cost to make and sell per unit
124.00 6.00 20.00 150.00
Problem 11 – Johnson Corporation 1. Variable cost per machine hour = 35,600 – 20,000
4,000 - 2,000 = 7.80 per machine hour 2. Total electricity expense Less: Variable costs ( 4,000 x 7.80) ( 2000 x 7.80) Fixed cost
4,000 hours 35,600
2000 hours 20,000
31,200 ______ 4,400
15,600 4,400
3. Fixed cost Variable cost ( 6,000 x 7.50) Totl manufacturing costs
5,000 45,000 50,000
Problem 12 – Valdez Motors Co. 1. Variable cost per machine hour = 5,475 – 3,975 210 - 145 = 23.08 per machine hour 2. Total overhead costs Less: Variable costs ( 210 x 23.08) ( 145 x 23.08) Fixed cost
210 hours 5,475
145 hours 3,975
4,847 _____ 628
3,347 628
Problem 13 1. Direct materials Direct labor Factory supplies Direct variable costs
Department A P 800,000 600,000 20,000 P 1,420,000
Department B P 1,200,000 660,000 60,000 P 1,920,000
2. Controllable direct fixed costs Supervisory salaries
P
48,000
P
72,000
3. Uncontrollable direct fixed costs: Depreciation – machinery and Equipment
P
140,000
P
220,000
P
48,000 140,000 188,000
P
72,000 220,000 292,000
4. Controllable direct fixed cost Uncontrollable direct fixed cost Total direct fixed cost
P
5. Allocated costs from headquarters Allocated repairs & maintenance Allocated factory rent – bldg. Allocated plant executive’s salaries Total indirect costs
P
6. Allocated costs from headquarters Allocated factory rent – bldg. Allocated plant executive’s salaries Depreciation- mach. & equipment Total unavoidable costs
P
P
P
130,000 75,000 40,000 152,000 397,000
P
130,000 40,000 152,000 140,000 462,000
P
True/False Questions 1. False 6. True 2. False 7. False 3. True 8. True 4. False 9. False 5. False 10. True
11. False 12. False 13. True 14. False 15. False
Multiple choice 1. B 2. C 3. B 4. C 5. D 6. A 7. D 8. D 9. B 10. C
21. A 22. C 23. A 24. C 25. B 26. B 27. A 28. B 29. C 30. B
11. C 12. A 13. C 14. B 15. A 16. B 17. B 18. A 19. D 20. B
P
P
P
190,000 175,000 160,000 228,000 753,000 190,000 160,000 228,000 220,000 798,000
16. True 17. False 18. True 19. False 20. True