AC 204 Exam 1 Review

Direct labor cost is classified as:

Conversion cost prime cost Yes Yes

Administrative expense

(Variable administrative expense per unit x # of units sold) + total fixed administrative expense

Selling Expense

(Variable selling expense per unit x # of units sold) + total fixed selling expense

Fixed cost

= Total cost - (varib cost/unit x machine hours)

Variable cost per unit

= change in cost / change in activity

Luthan Company uses a plantwide predetermined overhead rate of $22.40 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $268,800 of total manufacturing overhead cost for an estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead cost of $270,000 and 12,100 total direct labor-hours during the period. Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period.

Actual direct labor hours. 12100 POHR 22.40 Manu OH applied (a x b) = 271040

For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. The salary of the company's accountant.

Admin cost

COGS

Beginning merchandise inventory + merchandise purchase - ending merchandise inventory

Which of the following is NOT a period cost?

Depreciation of factory maintenance equipment.

For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. The wages of employees who assemble computers from components.

Direct labor costs

Variable cost per unit produced & sold

Direct materials + direct labor + total variable manufacturing overhead + variable selling expense + variable admin expense = xxxxx # of units produced & sold = yyyy Variable cost/unit = xxxxx/yyyy

Total variable manufacturing cost

Direct materials + direct labor + variable manufacturing overhead

Incremental manufacturing cost

Direct materials + direct labor + variable manufacturing overhead = total incremental cost (xxxxx) # of units produced & sold = yyyy Incremental cost per unit produced = xxxxx/yyyy

Skolnick Corporation has provided the following information: ........ a. If 8,500 units are produced, what is the total amount of direct manufacturing cost incurred?

Direct materials 5.10 direct labor 4.60 direct manufacturing cost per unit = 9.70 # of units produced 8500 Total direct manufacturing cost (9.70 x 8500) = 82450

Landmann Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: ..... For financial reporting purposes, the total amount of product costs incurred to make 9,000 units is closest to:

Direct materials 6.35 Direct labor 4.10 variable manufacturing overhead 1.35 = variable manufacturing cost per unit = 11.80 Total variable manufacturing cost (11.80 x 9000 units) = 106200 Total fixed manufacturing cost (13.50 x 9000 units) = 121500 Total product manufacturing cost = 227700

Schwiesow Corporation has provided the following information: ......... If 4,000 units are sold, the variable cost per unit sold is closest to:

Direct materials 7.05 Direct labor 3.50 Variable manufacturing OH 1.65 Sales commission 1.00 Variable administrative exp .40 Variable cost per unit sold. $13.60

For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. The cost of a hard drive installed in a computer.

Direct materials cost

Total amount of fixed cost for the company as a whole

Fixed manufacturing overhead + fixed selling expense + fixed administrative expenses

As the level of activity increases, how will a mixed cost in total and per unit behave?

In total per unit increase decrease

For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. Depreciation on equipment used to test assembled computers before release to customers.

Manu OH cost

For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. The salary of the assembly shop's supervisor.

Manu OH cost

Gross margin

Sales - COGS

For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. Sales commissions paid to the company's salespeople.

Selling cost

For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. The cost of advertising in the Puget Sound Computer User newspaper.

Selling cost

Mickley Company's plantwide predetermined overhead rate is $19.00 per direct labor-hour and its direct labor wage rate is $11.00 per hour. The following information pertains to Job A-500: 1. What is the total manufacturing cost assigned to Job A-500?

Total direct labor hours Direct labor 165 direct labor wage/hour 11 total direct labor hours (a/b) = 15 Total manu cost assigned: direct materials 220 direct labor 165 Manu overhead applied (19/dlh x 15 dlhs) = 270 Total manufacturing cost= (220+ 165+ 270) $670

Unit product cost

Total manufacturing cost = 670 # of units in job 50 Unit product cost (a/b) = 13.40

Total period cost

Total selling expenses (variable + fixed) + total admin expenses (variable + fixed)

b. If 8,500 units are produced, what is the total amount of indirect manufacturing costs incurred?

Total variable manufacturing overhead cost (1.70/unit x 8500 units) = 14450 Total fixed manufacturing overhead cost 119000 Total indirect manufacturing cost = 133450

Wages paid to production supervisors would be classified as manufacturing overhead.

True

Total conversion cost

direct labor + total manufacturing overhead

Total direct manufacturing cost

direct materials + direct labor

Total product cost

direct materials + direct labor + total manu OH (variable + fixed)

Total manufacturing cost

direct materials + direct labor + total manufacturing cost

Total prime cost

direct materials + direct labors

POHR =

est. manufacturing overhead cost / est. total base units

Selling & admin costs are...

period costs

Total non-manufacturing cost

total selling expenses + total admin expenses

Total indirect manufacturing cost

variable manufacturing overhead + fixed manufacturing overhead