final 3306

Assume the cost object is the manufacturing department and the total output for units of production is 35,000. How much total manufacturing cost is directly traceable to the manufacturing department?

When the cost object is the manufacturing department, all manufacturing costs are directly traceable to the manufacturing department. DM + DL + VMOH + FMOH = $21.00 x 35,000 units = $735,000

Continuing from Question 8, what is the incremental selling and administrative cost per unit incurred to sell these units to the customer?

All manufacturing costs are already considered to be sunk, so DM, DL, FMOH, and VMOH should be ignored. In addition, since we're talking about incremental costs per unit we need to disregard any other fixed costs, such as Fixed Selling, Advertising, and Administrative expenses. This leaves only Sales Commissions and Variable Administrative Expenses. Incremental Selling & Admin Costs = $1.00 + $0.50 = $1.50 per unit. (Total of $1,500 for 1,000 units)

Which of the following is true if the production volume increases?

Average cost per unit decreases.

Assume Tech Manufacturing produced 35,000 units and sold 34,000 units. If a customer unexpectedly expresses interest in buying the 1,000 extra units produced (that would otherwise remain unsold), what is the incremental manufacturing cost per unit incurred to sell these units to the customer?

Zero—these 1,000 additional units have already been produced and, therefore, are considered a sunk manufacturing cost.

True or False: A company's fixed and variable administrative expenses, such as the CFO's salary, should always be treated as an indirect expense

False, because direct or indirect designations depend on identification of the cost object.

Which of the following is a true statement about product costs (often called "inventoriable costs")?

Product costs are considered to be assets until the products are sold.

For financial accounting purposes, what is the total amount of product costs incurred to make 33,000 units?

The product costs are those associated with production of the 33,000 units (DM, DL, VMOH, & FMOH). For this question, we first need to know our total Fixed Manufacturing Overhead for the period (which needs to be calculated at 35,000 units because fixed costs do not change with fluctuations in activity). Total FMOH = $5.00 x 35,000 units = $175,000 Total Product Costs = [($10.00 + $4.50 + $1.50) x 33,000 units] + $175,000 FMOH = $703,000

When talking about mixed costs, we typically use the equation 𝑦 = 𝑚𝑥 + 𝑏. With regard to this equation and the link between fixed and variable costs, which of the following statements is false?

The total mixed cost (𝒚) is a direct product of total fixed costs and the level of activity.

When the company sells 37,000 units, what is the total indirect selling expense that cannot be readily traced to the individual sales representatives (assuming the sales reps are the cost object)? Assume the entire portion of Fixed Selling Expense is compensation for the sales representatives.

When the cost object is the sales representatives, the direct selling expenses will be Sales Commissions and Fixed Selling Expenses (compensation). That leaves only Fixed Advertising Expense left as the indirect selling expenses (which must be calculated at 35,000 units because fixed costs do not change with fluctuations in activity). Indirect Selling Expenses = $1.00 x 35,000 units = $35,000