A212 Chapter 18 HW - Handout (please remember the textbook problems assigned as well!)

1. Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for an automobile manufacturer. Also, identify each costs as either a prime costs (P), conversion costs (C) or both (B). Also please list if each cost is variable, fixed or mixed cost.

a. Steel
b. Wages of employees that operate painting equipment
c. Oil used for assembly line machinery
d. Wages of the plant supervisor

2. Classify costs as materials, labor or factory overhead AND classify as a fixed or variable cost. Indicate whether the following costs of Colgate-Palmolive Company, a maker of consumer products would be classified as direct materials cost, direct labor costs, or manufacturing overhead costs. Also please list if each cost is variable, fixed or mixed cost.

a. Scents and fragrances
b. Wages paid to Packaging Department employees
c. Resiens for soap and shampoo products
d. Maintenance supplies
e. Depreciation on production machinery
f. Salary of process engineers
g. Plant manager salary for the Clarksville, Indiana soap plan
h. Packaging materials (Not Shipping Materials)
i. Depreciation on the Morristown, Tennessee, toothpaste plant
j. Wages of production line employee

3. Classifying costs as factory overhead. Which of the following items are properly classified as part of manufacturing overhead for Caterpillar, a maker of heavy machinery and equipment? Write "MOH" if the cost should be included in manufacturing overhead. Also please list if each cost is variable, fixed or mixed cost.

a. Sales incentive fees to dealers
b. Factory supplies used in the Danville, Kentucky tractor tread plant.
c. Depreciation on Peoria, Illinois, headquarters building
d. Steel plate
e. Vice Presidents of finance's salary
f. Property taxes on the Aurora, Illinois, manufacturing plant
g. Plant manager's salary at Aurora, Illinois, manufacturing plant

4. Classifying costs as product or period costs. For apparel manufacturer Ann Taylor, Inc., classify each of the following costs as either a product (P) or a period costs (PC). Also please list if each cost is variable, fixed or mixed cost.

a. advertising expenses
b. Factory janitorial supplies
c. Utility costs for office building
d. Oil used to lubricate sewing machines
e. Sales commissions
f. Fabric used during production
g. Depreciation on Sewing Machines
h. Travel costs of marketing director.

5. The information below relates to Paper Products' operations during the third quarter. Please note DM + DL + MOH = Product Cost

Direct Labor $12,000
Direct Materials $13,000
Fixed MOH $20,000 (Inspector, factory rent, security)
Variable MOH $5,000 (indirect materials, utilities for equipment)
Units Produced 50,000 units

Notes: Management at Paper Products treats direct labor as a variable cost. The relevant range is 10,000-100,000 units; within this range, the inspector, rent, and security costs are fixed.

1a. What is the variable unit product cost as this level of Production?

1b. What is total product cost per unit at this level?

2a. Suppose production increases to 100,000 units. What is total variable product cost at this level?

2b. What is fixed product cost per unit at this level?

2c. What is total product cost at this level?

3. Suppose that if production increases to 160,000 units. Paper Product will have to hire an additional inspector. How would the behavior of this cost now be categorized?

6. During the moth of January the Terrill Company had the following costs: direct materials $52,000; direct labor $48,400; indirect labor $5,600; selling expenses $15,000; general and administrative expenses $9,000; taxes on the factory building $2,000; and rent on the factory building $18,000. The beginning inventory in work in process was $18,000 and the ending inventory in work in process was $19,000. The cost of goods manufactured was:

Work in Process (WIP)

Beg____________________
DM____________________
DL_____________________
MOH___________________
COGM (_________________)
End____________________

7. Below is partial information concerning operations of Paper Products, Inc for the month of September. Information is not in any particular order:

Raw Materials Inventory, Sept 1 $ 14,000
Raw Materials Inventory, Sept 30 $ 12,000
Factory Rent, September $ 2,000
Production supervisor's salary, September $ 3,000
Work in Process, Sept 1 $ 16,000
Work in Process, Sept 30 $ 19,000
Direct Labor, Sept $ 26,000
Indirect Materials, September $ 500
Finished Goods, Sept 1 $ 5,000
Finished Goods, Sept 30 ?
Cost of Goods Manufactured (COGM) ?
Cost of Goods Sold (COGS) $ 13,000
Raw Materials Purchase, September $ 8,000

What is the ending balance in the finished goods inventory on September 30th?

Raw Materials (RM) Work in Process (WIP) Finished Goods (FG)

Beg.____________________ Beg____________________ Beg____________________
Purch___________________ DM____________________ COGM_________________
To WIP_________________ DL_____________________ COGS__________________
End____________________ MOH___________________ End____________________
COGM (_________________) End____________________