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Assignment 1

This document contains 7 questions regarding cost accounting concepts including classification of costs, determination of variable and fixed costs, calculation of unit costs, components of manufacturing costs, calculation of cost of goods manufactured and cost of goods sold, identification of manufacturing overhead, and determination of expected total costs for an upcoming period based on estimates of variable and fixed costs. Responses are required to calculate or identify costs, cost components, and expected profits or losses based on the information provided for each question.

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Betheemae R. Matarlo
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378 views

Assignment 1

This document contains 7 questions regarding cost accounting concepts including classification of costs, determination of variable and fixed costs, calculation of unit costs, components of manufacturing costs, calculation of cost of goods manufactured and cost of goods sold, identification of manufacturing overhead, and determination of expected total costs for an upcoming period based on estimates of variable and fixed costs. Responses are required to calculate or identify costs, cost components, and expected profits or losses based on the information provided for each question.

Uploaded by

Betheemae R. Matarlo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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WMSU CLA

Accountancy Department
Cost Accounting and Control
Assignment #1

1. Classification of Costs. Place a check mark in the appropriate column to indicate the proper classification of each of the following costs.

Other
Indirect Admini-
Indirect Indirect Factory Marketing strative
Item Materials Labor Costs Expenses Expenses
1. Factory heat, light,
and power .........................................................
2. Advertising ........................................................
3. Wages of stockroom clerk .................................
4. Freight out .........................................................
5. Oil for machines ................................................
6. Salary of vice president
of human relations .............................................
7. Legal expenses .................................................
8. Salary of the factory manager ...........................
9. Employer payroll taxes on
controller's salary ..............................................
10. Idle time due to assembly
line breakdown ..................................................

2. Fixed and Variable Costs. In year 1, the Lin Company had sales of $2,500,000, with $1,250,000 variable and $900,000 fixed costs. In
year 2, sales are expected to decrease 10% and the fixed costs are not expected to change.

Required: Determine Lin Company's expected operating income or loss for year 2.

3. Determination of per Unit Total Costs. The estimated unit costs for Hoteling Industries, when operating at a production and sales level of
10,000 units, are as follows:

Cost ItemEstimated Unit Cost


Direct materials ................................................. $15
Direct labor ....................................................... 10
Variable factory overhead ................................. 8
Fixed factory overhead ..................................... 5
Variable marketing ............................................ 4
Fixed marketing ................................................ 3

Required:

(1) Identify the estimated conversion cost per unit.


(2) Identify the estimated prime cost per unit.
(3) Determine the estimated total variable cost per unit.
(4) Compute the total cost that would be incurred during a month with a production level of 10,000 units and a sales level of 12,000 units.

4. Components of Manufacturing Cost. Myerson Inc. produces video cameras. The direct labor cost of one camera is $200, and the total
manufacturing cost is $650. The overhead cost of one camera is two-thirds as large as its conversion cost.

Required:

(1) Compute the conversion cost per unit.


(2) Determine the factory overhead cost per unit.
(3) Determine the direct materials cost per unit.

5. Panama Manufacturing had the following data for the period just ended:

Work in process, Jan. 1 $ 21,000


Work in process, Dec. 31 40,000
Finished goods, Jan. 1 70,000
Finished goods, Dec. 31 61,000
Direct materials used 126,000
Direct labor 260,000
Factory depreciation 80,000
Sales 945,000
Advertising expense 52,000
Factory utilities 27,000
Indirect materials 19,000
Indirect labor 35,000

MAS Introduction – Cost and Cost Concepts


Required:
A. Calculate Panama's cost of goods manufactured.
B. Calculate Panama's cost of goods sold.
6. The following selected information was extracted from the 20x3 accounting records of Miami Products:

Raw materials used $284,000


Direct labor 178,000
Indirect labor 35,000
Selling and administrative salaries 250,000
Building depreciation* 330,000
Other selling and administrative expenses 80,000
Other factory costs 620,000

*Seventy percent of the company's building was devoted to production activities; the remaining 30% was used for selling and
administrative functions.

Miami's beginning and ending work-in-process inventories amounted to $306,000 and $245,000, respectively. The company's beginning
and ending finished-goods inventories were $450,000 and $440,000, respectively.

Required:
A. Calculate Miami's manufacturing overhead for the year.
B. Calculate Miami's cost of goods manufactured.
C. Compute the company's cost of goods sold.

7. Global Systems began business on January 1 of the current year, producing a single product that is popular with home builders.
Demand was very strong, allowing the company to sell its entire manufacturing output of 80,000 units. The following unit costs were
incurred:

Manufacturing costs:
Direct materials $15
Direct labor 8
Variable overhead 11
Fixed overhead 6
Selling and administrative costs:
Variable 5
Fixed 2

Global anticipates an increase in productive output to 100,000 units and sales of 95,000 units in the next accounting period. The company
uses appropriate drivers to determine cost behavior and estimates.

Required:
A. Assuming that present cost behavior patterns continue, compute the total expected costs in the upcoming accounting period.
B. Determine whether the following costs are variable or fixed in terms of behavior:
1. Yearly lease payments for a state-of-the-art cutting machine.
2. A fee paid to a consultant who provided advice about quality issues. The fee was based on the number of consulting hours
provided.
3. Cost of an awards dinner for "star" salespeople.

MAS Introduction – Cost and Cost Concepts

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