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Exercise 1

Ikerd Company is a manufacturer of personal computers. Various costs and expenses associated with its operations are as follows.

The company intends to classify these costs and expenses into the following categories: (a) direct materials, (b) direct labor, (c) manufacturing overhead, and (d) period costs.

For each item, indicate the cost category to which it belongs.

 

Item

Category

1.

Property taxes on the factory building.

2.

Production superintendents' salaries.

3.

Memory boards and chips used in assembling computers.

4.

Depreciation on the factory equipment.

5.

Salaries for assembly-line quality control inspectors.

6.

Sales commissions paid to sell personal computers.

7.

Electrical components used in assembling computers.

8.

Wages of workers assembling personal computers.

9.

Soldering materials used on factory assembly lines.

10.

Salaries for the night security guards for the factory building.

Exercise 2

Kwik Delivery Service reports the following costs and expenses in June 2014.

Indirect materials

$5,857

Drivers' salaries

$16,652

Depreciation on delivery equipment

12,267

Advertising

4,206

Dispatcher's salary

5,900

Delivery equipment repairs

499

Property taxes on office building

975

Office supplies

701

CEO's salary

13,036

Office utilities

1,021

Gas and oil for delivery trucks

2,641

Repairs on office equipment

202

Determine the total amount of (a) delivery service (product) costs and (b) period costs.

Delivery service (product) costs

$

Period costs

$

(a) Indicate the missing amount for each letter.

 

Direct
Materials
Used

Direct
Labor
Used


Manufacturing
Overhead

Total
Manufacturing
Costs

Work in
Process
1/1

Work in
Process
12/31


Cost of Goods
Manufactured

(1)

$132,350

 

$142,550

 

$89,560

 

$

(a)

$38,530

 

$

(b)

$363,690

 

(2)

(c)

203,280

 

135,000

 

454,130

 

(d)

41,500

 

471,960

 

(3)

82,210

 

101,080

 

(e)

259,870

 

61,170

 

84,810

 

(f)

(4)

71,030

 

(g)

79,100

 

292,450

 

50,680

 

(h)

273,540

 

 

(b) The parts of this question must be completed in order. This part will be available when you complete the part above.

Exercise 3 (Part Level Submission)

Cepeda Corporation has the following cost records for June 2014.

Indirect factory labor

$5,500

Factory utilities

$440

Direct materials used

22,280

Depreciation, factory equipment

1,690

Work in process, 6/1/14

3,560

Direct labor

41,160

Work in process, 6/30/14

4,440

Maintenance, factory equipment

1,970

Finished goods, 6/1/14

5,960

Indirect materials

2,390

Finished goods, 6/30/14

8,280

Factory manager's salary

3,880

Exercise 4 (Part Level Submission)

The controller of Furgee Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.

Month

Total Maintenance Costs

Total Machine Hours

January

$2,980

310

February

3,480

460

March

4,080

610

April

4,980

580

May

3,680

510

June

5,270

710

(a) Determine the variable cost components using the high-low method. (Round variable cost to 3 decimal places e.g. 12.250.)

Variable cost per machine hour

$

Exercise 5

Family Furniture Corporation incurred the following costs.

Identify the costs as variable, fixed, or mixed.

1.

Wood used in the production of furniture.

2.

Fuel used in delivery trucks.

3.

Straight-line depreciation on factory building.

4.

Screws used in the production of furniture.

5.

Sales staff salaries.

6.

Sales commissions.

7.

Property taxes.

8.

Insurance on buildings.

9.

Hourly wages of furniture craftsmen.

10.

Salaries of factory supervisors.

11.

Utilities expense.

12.

Telephone bill.

Exercise 6

The Green Acres Inn is trying to determine its break-even point. The inn has 50 rooms that it rents at $50 a night. Operating costs are as follows.

Salaries

$5,600

per month

Utilities

$1,200

per month

Depreciation

$800

per month

Maintenance

$400

per month

Maid service

$6

per room

Other costs

$24

per room

Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars.

(1)

Break-even point

 rooms

(2)

Break-even point

$

 

Exercise 7

Glacial Company estimates that variable costs will be 60% of sales, and fixed costs will total $756,960. The selling price of the product is $4.

Compute the break-even point in (1) units and (2) dollars.

(1)

Break-even sales

 units

(2)

Break-even sales

$

 

Compute the margin of safety in (1) dollars and (2) as a ratio, assuming actual sales are $2,336,296. (Round ratio to 0 decimal places, e.g. 20%.)

(1)

Margin of safety

$

 

(2)

Margin of safety ratio

 %

Cost Accounting, Accounting

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