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Exam 2: Different Costs for Different Purposes

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Question 61

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Product cost for pricing and product-mix decisions may include all costs EXCEPT:

A) customer-service costs.
B) marketing costs.
C) design costs.
D) research and development costs.
E) All of the above may be included.

F) B) and C)
G) B) and D)

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Question 62

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Answer the following questions using the information below: The following information pertains to Bondi Creations: $\begin{array}{ll}\hline & \\\hline \text { Manufacturing costs } & \$ 1,500,000 \\\hline \text { Units manufactured } & 30,000 \\\hline \text { Units sold } & 29,500 \text { units sold for } \$ 85 \text { per unit } \\\hline \text { Beginning inventory } & 0 \text { units } \\\hline\\\hline\end{array}$ -What is the average manufacturing cost per unit?

A) $50.00
B) $17.65
C) $85.00
D) $50.85

E) A) and B)
F) B) and C)

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Question 63

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The collection of accounting data in some organised way is:

A cost system determines the cost of a cost object by:

Answer the following questions using the information below: The Mt Tambourine Company manufactures several different products.Unit costs associated with Product SK2040 are as follows: $\begin{array} { l r } \text { Direct materials } & \$ 60 \\\text { Direct manufacturing labour } & 10 \\\text { Variable manufacturing overhead } & 18 \\\text { Fixed manufacturing overhead } & 32 \\\text { Sales commissions (2\% of sales) } & 4 \\\text { Administrative salaries } & \underline { 16 } \\\quad \text { Total } & \$ 140\end{array}$ -What are the fixed costs per unit associated with Product SK2040?

What does classifying a cost as either direct or indirect depend upon?

Answer the following questions using the information below: $\begin{array}{|lr|}\hline \text { Beginning finished goods, } 1 / 1 / 2018 & \$ 40,000 \\\hline \text { Ending finished goods, } 12 / 31 / 2018 & 33,000 \\\hline \text { Cost of goods sold } & 250000 \\\hline \text { Sales revenue } & 600,000 \\\hline \text { Operating expenses } & 120,000 \\\hline\end{array}$ -What is gross margin for 2018?

Answer the following questions using the information below: $\begin{array}{|lr|}\hline \text { Beginning finished goods, } 1 / 1 / 2018 & \$ 40,000 \\\hline \text { Ending finished goods, } 12 / 31 / 2018 & 33,000 \\\hline \text { Cost of goods sold } & 250000 \\\hline \text { Sales revenue } & 600,000 \\\hline \text { Operating expenses } & 120,000 \\\hline\end{array}$ -What is cost of goods manufactured for 2018?

The only difference between variable and absorption costing is the expensing of:

________ sector companies purchase materials and components and convert them into various finished goods.

On the assembly floor,Vicky Wilson is paid $20 an hour for straight-time and $30 an hour for overtime.One week she worked 43 hours,which included 3 hours of overtime. Required: a.What is Vicky's total compensation for the week? b.What amount of compensation would be reported as direct manufacturing labour? c.What amount of compensation would be reported as manufacturing overhead? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Answer the following questions using the information below: The Mt Tambourine Company manufactures several different products.Unit costs associated with Product SK2040 are as follows: $\begin{array} { l r } \text { Direct materials } & \$ 60 \\\text { Direct manufacturing labour } & 10 \\\text { Variable manufacturing overhead } & 18 \\\text { Fixed manufacturing overhead } & 32 \\\text { Sales commissions (2\% of sales) } & 4 \\\text { Administrative salaries } & \underline { 16 } \\\quad \text { Total } & \$ 140\end{array}$ -What are the variable costs per unit associated with Product SK2040?

For last year,Lewisburn Manufacturing reported the following: $\begin{array}{|l|r|}\hline\text { Revenue } & \$ 420000 \\\hline \text { Beginning inventory of direct materials, January 1 } & 22000 \\\hline \text { Purchases of direct materials } & 146000 \\\hline \text { Ending inventory of direct materials, December 31 } & 16000 \\\hline \text { Direct manufacturing labour } & 40000 \\\hline \text { Indirect manufacturing costs } & 35000 \\\hline \text { Beginning inventory of finished goods, January 1 } & 104000 \\\hline \text { Cost of goods manufactured } & 36000 \\\hline \text { Ending inventory of finished goods, December 31 } & 140000\\\hline\end{array}$ What was Lewisburn's operating profit?

Overtime premium is normally considered as a component of direct labour.

Prime costs are all direct manufacturing costs.

________ sector companies provide intangible products.

Which of the following does NOT affect the direct/indirect classification of a cost?

SBW Corporation planned to be in operation for three years. ∙ During the first year,2016,it had no sales but incurred $120 000 in variable manufacturing expenses and $40 000 in fixed manufacturing expenses. ∙ In 2017,it sold half of the finished goods inventory from 2016 for $100 000 but it had no manufacturing costs. ∙ In 2018,it sold the remainder of the inventory for $120 000,had no manufacturing expenses and went out of business. ∙ Marketing and administrative expenses were fixed and totalled $20 000 each year. Required: a.Prepare an income statement for each year using absorption costing. b.Prepare an income statement for each year using variable costing. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Fixed costs vary with the level of production or sales volume.

Answer the following questions using the information below: Healesville Animates produces and sells a luxury animal pillow for $40.00 per unit.In the first month of operation,3000 units were produced and 2250 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes: $\begin{array}{ll}\text { Variable manufacturing costs } & \$ 19 \text { per unit } \\\text { Variable marketing costs } & \$ 1 \text { per unit } \\\text { Fixed manufacturing costs } & \$ 30000 \text { per month } \\\text { Administrative expenses, all fixed } & \$ 6000 \text { per month } \\\text { Ending inventories: } &\\text { Direct materials } & -0- \\\text { WIP } & -0- \\\text { Finished goods } & 750 \text { units }\end{array}$ -When comparing the operating profits between absorption costing and variable costing,and beginning finished inventory exceeds ending finished inventory,it may be assumed that: