ACC Chapter 14

Which of the following is an example of direct labor cost in a factory? A) wages of assembly line personnel B) salary of vice president of production C) wages of factory security guard D) salary of production manager

A) wages of assembly line personnel

Conversion Costs

Conversion Costs= Direct labor + Factory Overhead

Compute prime costs given the following data: Direct Materials, $301,700; Direct Labor, $86,000; Factory Overhead, $252,300; and Selling Expenses, $45,290. a. $338,300 b. $175,600 c. $816,600 d. $387,700

D (Prime costs = Direct materials + Direct labor)

Williams Company reports production costs for 2017 as follows: Direct materials used $675,000 Direct labor incurred 155,000 Factory overhead incurred 400,000 Selling and administrative expenses 225,000 6. Williams Company's product costs for 2017 amount to: a. $925,000 b. $975,000 c. $605,000 d. $1,230,000

D (Product cost = DM + DL + OH)

In a manufacturing plant, indirect materials costs from lubricants and cleaning fluids are NOT product costs. TRUE/FALSE?

FALSE - They are part of overhead costs.

Prime Cost

Prime Cost= Direct Materials + Direct Labor

Product Cost

Product Cost= DL+DM+OH

What term is used to refer to the cost of changing direct materials into a finished manufactured product? a. Conversion cost b. Period cost c. Factory overhead cost d. Direct labor cost

a. Conversion cost

Which of the following is false in regards to direct materials for an automobile manufacturer? a. Steel would probably be a direct material. b. Upholstery fabric would probably be a direct material c. Oil to lubricate factory machines would not be a direct material. d. Small plastic clips to hold on door panels, that become part of the auto, must be accounted for as direct materials.

d. Small plastic clips to hold on door panels, that become part of the auto, must be accounted for as direct materials.

Compute conversion costs given the following data: Direct Materials, $301,700; Direct Labor, $86,000; Factory Overhead, $252,300; and Selling Expenses, $45,290. a. $338,300 b. $175,600 c. $816,600 d. $361,900

A (Conversion costs = Direct Labor + Factory Overhead)

Manufacturing overhead includes indirect manufacturing costs, such as insurance and depreciation on the factory building. TRUE/FALSE?

TRUE

The salary of a manufacturing plant manager will be included in manufacturing overhead. TRUE/FALSE?

TRUE

Materials must have which two qualities in order to be classified as direct materials? a. They must be classified as both prime costs and conversion costs. b. They must be introduced into the process in both work-in-process inventories and finished goods inventories. c. They must be an integral part of the finished product and be a significant portion of the total product cost. d. They must be an integral part of the finished product, but can be an insignificant portion of the total product cost.

c. They must be an integral part of the finished product and be a significant portion of the total product cost.