Question 1- Gala Company is a manufacturer of laptop computers. Various casts and expenses associated with its operations are as follows.
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 laptop computers.
7. Electrical components used in assembling computers.
8. Wages of workers assembling laptop computers.
9. Soldering materials used on factory assembly lines.
10. Salaries for the night security guards for the factory building.
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 casts.
Instructions- List the items (1) through (10). For each item, indicate the cost category to which it belongs.
Question 2- An incomplete cost of goods manufactured is presented below.
HOBBIT COMPANY - Cost of Goods Manufactured Schedule For the Year Ended December 31,2017
|
Work in process (1/1) Direct materials
|
|
|
$210,000
|
|
Raw materials inventory (111)
|
$ ?
|
|
|
|
Add: Raw materials purchases
|
158,000
|
|
|
|
Total raw materials available for use lass: Raw materials inventory (12731)
|
22,500
|
|
|
|
Direct materials used
|
|
$180,000
|
|
|
Direct labor
|
|
|
|
|
Manufacturing over
|
|
|
|
|
Indirect labor
|
18,000
|
|
|
|
Factory depreciation
|
36,000
|
|
|
|
Factory utilities
|
68,000
|
|
|
|
Total overhead
|
|
122,000
|
|
|
Total manufacturing costs
|
|
|
|
|
Total cast of work in process
|
|
|
|
|
Less: Work in process (12/31)
|
|
|
81,000
|
|
Cost of goods manufactured
|
|
|
$540,000
|
Instruction- Complete the cost of goods manufactured schedule for Hobbit Company.
Question 3- Manufacturing cost data for Copa Company presented below.
|
|
Case A
|
Case B
|
Case C
|
|
Direct materials used
|
$ (a)
|
$68,400
|
$130,000
|
|
Dircct labor
|
57,000
|
86,000
|
(g)
|
|
Manufacturing overhead
|
46,500
|
81,600
|
102,000
|
|
Total manufacturing costs
|
195,650
|
(d)
|
253,700
|
|
Work in process 1/1/17
|
(b)
|
16,500
|
(11)
|
|
Total cost of work in process
|
221,500
|
(c)
|
337,000
|
|
Work in process 12/31/17
|
(c)
|
11,000
|
70,000
|
|
Cost of goods manufactured
|
185,275
|
(0
|
(i)
|
Instruction- Indicate the missing amount for each letter (a) through (i).
Question 4- Bell Company, a manufacturer of audio systems, started its production in October 2017. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory.
Raw materials ant for an audio system will total $74 per unit. Workers on the production lines are on avenge paid $12 per hour. An audio system usually takes 5 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $4,900 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,000.
Factory janitorial costs are $1,300 monthly. Advertising costs for the audio system will be $9,500 per month. The factory building depreciation expense is $7,800 per year. Property taxes on the factory building will be $9,000 per year.
Instructions-
(a) Prepare an answer sheet with the following column headings.
| Product Costs |
| Cost |
Direct |
Direct |
Manufacturing |
Period |
| Item |
Material |
Labor |
Overhead |
Costs |
Assuming that Bell manufactures, on avenge, 1,500 audio systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns.
(b) Compute the ant to produce one audio system.