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Exam 2: Cost Concepts and Behavior

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Question 81

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The three basic elements of manufacturing cost are direct materials, direct labor, and:

A) cost of goods manufactured.
B) cost of goods sold.
C) work in process.
D) manufacturing overhead.

E) C) and D)
F) None of the above

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Question 82

Multiple Choice

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The following information is available for Barnes Company for the fiscal year ended December 31: $\begin{array}{llr} \text { Beginning finished goods inventory in units } &0\\ \text {Units produced } &4,800\\ \text { Units sold } &4,000\\ \text { Sales } &\$400,000\\ \text { Materials cost } &\$96,000\\ \text { Variable conversion cost used } &\$48,000\\ \text { Fixed manufacturing cost} &\$72,000\\ \text { Indirect operating costs (fixed) } &\$80,000\\\end{array}$ - The variable costing operating income is:

A) $120,000
B) $140,000
C) $104,000
D) $128,000

E) B) and C)
F) A) and D)

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Question 83

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Which of the following costs is both a prime cost and a conversion cost?

Grover Company has the following data for the production and sale of 2,000 units. $\begin{array}{llr}\text { Sales price per unit } & \text {\$ 800per unit } \\\text { Fixed costs: } & & \\\text { Marketing and administrative } &\$ 400,000 \text { per period } \\\text { Manufacturing overhead } & \$ 200,000 \text { per period }\\\text { Variable costs: }\\\text { Marketing and administrative } & \$ 50 \text { per unit } \\\text { Manufacturing overhead } & \$ 80 \text { per unit } \\\text { Direct labor } & \$ 100 \text { per unit } \\\text { Direct materials } & \$ \text { 200per unit }\end{array}$ - What is the contribution margin per unit?

A number of costs and measures of activity are listed below. Required: For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the possible measure of activity listed next to it.

Which of the following best distinguishes an opportunity cost from an outlay cost?

Grankowski Corporation has provided the following partial listing of costs incurred during November: Required: (a) What is the total amount of product costs listed above? Show your work. (b) What is the total amount of period costs listed above? Show your work.

The beginning Work-in-Process Inventory plus the total of the manufacturing costs equals

Cost of goods sold plus the ending finished goods inventory minus the beginning finished goods inventory equals the cost of goods manufactured.

Mountainburg Industries has developed two new products but has only enough plant capacity to introduce one product during the current year. The following data will assist management in deciding which product should be selected. $\begin{array}{lrrrr}&\text { Product L } &\text { Product W}\\\text { Direct materials } & \$ 44 & \$ 36 \\\text { Machining labor (\$12hour) } &18 & 15 \\\text { Assembly labor (\$10/hour) } & 30 & 10 \\\text { Variable overhead (\$8/hour) } & 36 & 18 \\\text { Fixed overhead (4/hour) } & 18 & 9\\ \text { Total Manufacturing Cost } &\$ 146 &\$ 88 \\ \text { Estimated selling } \mathrm{p} & \$170 &\$100 \\\text { Actual research and development costs } & \$ 240,000 & \$ 175,000 \\ \text { Estimated advertising costs } & \$ 500,000 & \$ 350,000 \\\end{array}$ Mountainburg's fixed overhead includes rent and utilities, equipment depreciation, and supervisory salaries. Selling and administrative expenses are not allocated to individual products. - Direct material costs for Mountainburg's two new products are

The following information is available for Barnes Company for the fiscal year ended December 31: $\begin{array}{llr} \text { Beginning finished goods inventory in units } &0\\ \text {Units produced } &4,800\\ \text { Units sold } &4,000\\ \text { Sales } &\$400,000\\ \text { Materials cost } &\$96,000\\ \text { Variable conversion cost used } &\$48,000\\ \text { Fixed manufacturing cost} &\$72,000\\ \text { Indirect operating costs (fixed) } &\$80,000\\\end{array}$ - Cost of goods sold using absorption costing is:

The term "gross margin" for a manufacturing firm refers to the excess of sales over:

Each column below is independent and for a different company. Use the data given, which refers to one year for each example, to find the unknown account balances.