test 1 (ch. 1-5)

wheel and tire manufacturing currently produces 1,000 tires per month. per unit data: direct materials 20 direct manu labor 3 variable moh 6 fixed moh 10 total costs $39 the plant has capacity to make 3000 tires and is considering expanding production to 2000 tires. what is the total cost of producing 2,000 tires?

68,000. 29 variable per tire = 29 x 2000 = 58,000 10 fixed costs at 1000 tires = 10 x 1000 = 10,000 total = 68,000

what is included in WIP

DM, DL, and MOH

the balance sheet, income statement, and stmnt of cash flows are used for financial accounting, but not for managerial accounting. True or False

False

distinguish between a manufacturing company, merchandising company, and service-sector company.

Manufacturing-sector companies purchase materials and components and convert them into different finished goods. Merchandising-sector companies purchase and then sell tangible products without changing their basic form. Service-sector companies provide services or intangible products to their customers—for example, legal advice or audits. Only manufacturing and merchandising companies have inventories of goods for sale.

period costs

are all costs in the income statement other than cost of goods sold. These costs are treated as expenses of the period in which they are incurred because they are presumed not to benefit future periods (or because there is not sufficient evidence to conclude that such benefit exists). Expensing these costs immediately best matches expenses to revenues.

Inventoriable costs (product costs)

are all costs of a product that are regarded as an asset when they are incurred and then become cost of goods sold when the product is sold. These costs for a manufacturing company are included in work-in-process and finished goods inventory (they are "inventoried") to build up the costs of creating these assets.

direct materials used

beg DM + purchases - ending balance = direct materials used

schedule of COGM & COGS`

beg WIP + DM + DL + MOH = total manufacturing costs to account for - ending WIP = COGM + beg FG = GAFS - ending FG = COGS

margin of safety

budgeted revenue - break even revenue

which are period costs? sand paper materials handling coolants & lubricants indirect manufacturing labor direct labor direct materials administrative costs leasing costs - plant depreciation - equipment property taxes - equipment fire insurance - equipment DM purchases sales revenue sales comissions sales salaries advertising costs

sales comissions sales salaries advertising costs administrative costs

which costs are considered part of MOH? sand paper materials handling coolants & lubricants indirect manufacturing labor direct labor direct materials administrative costs leasing costs - plant depreciation - equipment property taxes - equipment fire insurance - equipment DM purchases sales revenue sales comissions sales salaries advertising costs

sand paper materials handling coolants & lubricants indirect manufacturing labor leasing costs - plant depreciation - equipment property taxes - equipment fire insurance - equipment