Acct 3030 Exam 1 review Ch 2

Puritan Apparels is a clothing retailer. Unit costs associated with one of its​ products, Product AHF​ 130, are as​ follows: Direct materials $120 Direct manufacturing labor 60 Variable manufacturing overhead 55 Fixed manufacturing overhead 33 Sales commissions​ (2% of​ sales) 5 Administrative salaries 21 Total $294 What are the variable manufacturing costs per unit associated with Product AHF​ 130? A.$ 180 B.$ 235 C.$ 273 D.$ 240

B. $235

Rapid Cabinet Makers Inc. provided the following information for last​ month: Sales $28,000 Variable costs 8,000 Fixed costs 7,000 Operating income $13,000 If sales reduce to half the amount in the next​ month, what is the projected operating​ income? A. $20,500 B. $6,500 C. $3,000 D. $2,500

C. $3,000

Cost assignment​ ________. A. includes future and arbitrary costs B. is the same as cost accumulation C. associates accumulated costs with certain cost objects D. is the difference between budgeted and actual costs

C. associates accumulated costs with certain cost objects

What is Direct material costs

Costs of all materials that can be traced to the cost object.

When 30,000 units are​ produced, variable costs are $9.00 per unit.​ Therefore, when 20,000 units are produced _________________. A. variable unit costs will decrease to $6.00 per unit B. variable costs will total $270,000 C. variable unit costs will increase to $13.50 per unit D. variable costs will remain at $9.00 per unit

D. variable costs will remain at $9.00 per unit

Example of Cost that is fixed and direct

Depreciation for a machine that is only used for one product

How to calculate ending direct materials total cost

Direct materials cost per pound × Ending direct materials in pounds = Ending direct materials total cost

calculate ending direct materials total cost

Direct materials cost per pound × Ending direct materials in pounds = Ending direct materials total cost

A cost object is anything for which a cost measurement is desired. True False

True

How to calculate the total cost per unit (ch2)

(Total fixed costs + Total variable costs) ÷ Units produced and sold = Total cost per unit

The East Company manufactures several different products. Unit costs associated with Product ORD105 are as​ follows: Direct materials $90 Direct manufacturing labor 24 Variable manufacturing overhead 20 Fixed manufacturing overhead 10 Sales commissions​ (2% of​ sales) 18 Administrative salaries 38 Total $200 What is the percentage of the total fixed costs per unit associated with Product ORD105 with respect to total​ cost?

24%

What is Prime costs

All direct manufacturing costs.

All Rite Manufacturing reported the​ following: Revenue $460,000 Beg inventory of direct​ materials, Jan 1, 2015 23,000 Purchases of direct materials 158,000 End inventory of direct​ materials, Dec 31, 2015 12,000 Direct manufacturing labor 20,000 Indirect manufacturing costs 41,000 Beg inventory of finished​ goods, Jan​ 1, 2015 43,000 Cost of goods manufactured 230,000 End inventory of finished​ goods, Dec​ 31, 2015 42,000 Operating costs 154,000 What is All​ Rite's gross margin​ (or gross​ profit)? A. $76,000 B. $229,000 C. $230,000 D. $ 75,000

B. $229,000

Pederson Company reported the​ following: Manufacturing costs $480,000 Units manufactured 8,000 Units sold 7,500 units sold for​ $90 per unit Beginning inventory 2,000 units What is the average manufacturing cost per​ unit? (Round the answer to the nearest​ dollar.) A. $80.00 B. $60.00 C. $48.00 D. $64.00

B. $60.00

For merchandising​ companies, inventoriable costs include​ ________. A. outgoing freight and handling costs B. shipping​ (incoming) costs to acquire merchandise C. selling expenses D. distribution costs

B. Shipping (incoming) costs to acquire merchandise

The American West Company manufactures several different products. Unit costs associated with Product ORD210 are as​ follows: Direct materials $86 Direct manufacturing labor 30 Variable manufacturing overhead 26 Fixed manufacturing overhead 12 Sales commissions​ (2% of​ sales) 22 Administrative salaries 24 Total $200 What are the inventoriable costs per unit associated with Product​ ORD210? A.$ 128 B.$ 142 C.$ 154 D.$ 116

C. $154

A common classification of costs is by business function. Which of the following classifications is not by business​ function? A. research and development B. distribution C. cost object D. production

C. Cost object

The most likely cost driver of distribution costs is the​ ________. A. number of products manufactured B. number of parts within the product C. number of miles driven D. number of production hours

C. number of miles driven

Cost allocation is​ ________. A. made based on material acquisition document B. the process of tracking both direct and indirect costs associated with a cost object C. the assignment of indirect costs to the chosen cost object D. the process of determining the opportunity cost of a cost object chosen

C. the assignment of indirect costs to the chosen cost object

What is Direct manufacturing-labor costs

Compensation of all manufacturing labor that can be traced to the cost object.

Example of Cost that is variable and indirect

Electricity used in the plant where multiple products are manufactured

How to calculate ending finished goods

End finished goods in $ ÷ Manufacturing cost per unit = Ending finished goods inventory in units

How to calculate Ending finished goods inventory in units

End finished goods in $ ÷ Manufacturing cost per unit = Ending finished goods inventory in units

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Night security for the factory

Indirect Fixed

How to calculate selling price

Total revenues ÷ Total units sold = Selling price

Expert Manufacturing reported the​ following: Revenue $450,000 Beg inventory of direct​ materials, Jan 1, 2015 28,000 Purchases of direct materials 152,000 End inventory of direct​ materials, Dec​ 31, 2015 16,000 Direct manufacturing labor 23,000 Indirect manufacturing costs 48,000 Beg inventory of finished​ goods, Jan 1, 2015 45,000 Cost of goods manufactured 235,000 End inventory of finished​ goods, Dec 31, 2015 46,000 Operating costs 159,000 How much of the above would be considered period costs for Expert​ Manufacturing? A.$159,000 B.$282,000 C.$283,000 D.$234,000

$159,000

Define cost object and give three examples.

A cost object is anything for which a separate measurement of costs is desired. Examples include a​ product, a​ service, and a customer.

Define product cost. Describe three different purposes for computing product costs.

A product cost is the sum of the costs assigned to a product for a specific purpose. Purposes for computing a product cost include​ (1) pricing and product mix​ decisions, (2) contracting with government​ agencies, and​ (3) preparing financial statements for external reporting under GAAP.

For a manufacturing​ company, direct material costs may be included in​ ________. A. direct materials​ inventory, work−in−process ​inventory, and finished goods inventory accounts B. only the direct materials inventory account C. only in the merchandise inventory account reflecting the inventory on hand D. only in both work−in−process inventory and finished goods inventory

A. direct materials​ inventory, work−in−process ​inventory, and finished goods inventory accounts

What is Conversion costs

All manufacturing costs other than direct material costs.

What is Manufacturing overhead costs

All manufacturing costs related to the cost object but cannot be traced to the cost object.

What are three features of cost accounting and cost management that can be used for a wide range of​ applications? ​(Select the three correct​ choices.) -Analyzing the relevant information for making decisions. -Obtaining information for planning and control and performance evaluation. -Calculating the cost of​ products, services, and other cost objects -Period costs are considered assets in the balance sheet when they are incurred and become cost of goods sold only when the product is sold. -Direct material costs are also referred to as overhead costs or factory overhead costs.

Analyzing the relevant information for making decisions. -Obtaining information for planning and control and performance evaluation. -Calculating the cost of​ products, services, and other cost objects

For a manufacturing−sector ​company, the cost of factory depreciation is classified as a​ ________. A. period cost B. manufacturing overhead cost C. direct manufacturing labor cost D. direct material cost

B. manufacturing overhead cost

Within the certain expected range of production during the next​ year, which of the following would be​ true? A. fixed costs per unit decreases as production decreases B. total fixed costs remain the same when production increases or decreases C. total variable costs decrease as production increases D. total variable costs remain the same when production increases or decreases

B. total fixed costs remain the same when production

Product costs for financial statements​ are: A. exchange costs incurred during transportation B. only the costs incurred along the supply chain C. inventoriable costs for external reporting purposes D. opportunity costs incurred for the decisions forgone

C. Inventoriable costs for external reporting purposes

Manufacturing overhead costs are also referred to as​ ________. A. prime costs B. direct material C. direct manufacturing costs D. indirect manufacturing costs

D. Indirect manufacturing costs

Indirect manufacturing costs​ ________. A. can be traced to the product that created the costs B. can be easily identified with the cost object C. generally include the cost of material and the cost of labor D. may include both variable and fixed costs

D. May include both variable and fixed costs

When costs can be traced to a particular cost object in an economically feasible​ way, the cost is​ a: A. budgeted cost B. allocated cost C. indirect cost D. direct cost

D. direct cost

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Cartons for the juice

Direct Variable

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Cost of the oranges and grapefruit

Direct Variable

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Sugars and flavorings of the juices

Direct Variable

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Cost of pest control of the factory

Indirect Fixed

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Depreciation of the factory building

Indirect Fixed

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Depreciation on packaging machines (Assume the factory is cleaned regardless of how much juice is​ produced.)

Indirect Fixed

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Hurricane insurance on factory building

Indirect Fixed

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Property taxes on the factory building

Indirect Fixed

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Salary of the production supervisor

Indirect Fixed

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Wages of the factory cleaning crew

Indirect Fixed

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Cost of disinfectants to clean the factory

Indirect Variable

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Cost of the cleaners used to clean the fruit in step one

Indirect Variable

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Oil, grease, etc. for factory machines

Indirect Variable

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Wages of the fruit cleaners in the first step

Indirect Variable

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Wages of the machinist running the squeezing machine

Indirect Variable

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Wages of the operator of the packaging machine

Indirect Variable

For each​ cost, indicate whether it is a direct​ variable, direct​ fixed, indirect​ variable, or indirect fixed cost with respect to the cost object​ "one gallon of grapefruit​ juice". Water and electricity costs of the factory

Indirect Variable

Example of Cost that is fixed and indirect

Salary for the company's CEO

Example of Cost that is variable and direct

Tires used to manufacture a particular kind of car

How to calculate Total manufacturing cost per unit

Total manufacturing costs ÷ Units produced

How to calculate selling price

Total revenues ÷ Total units sold = Selling price

If the cost object were the​ "squeezing department" rather than a gallon of grapefruit​ juice, which of the preceding costs would now be considered direct rather than​ indirect?

Wages of the machinist running the squeezing machine

compute formula of how the controller was able to improve operating​ income

Warehousing costs as period costs -Warehousing costs as product costs = Increase in operating income