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Seatwork 1
Seths Skateboard Company incurs the costs listed below. Determine whether the following is a
Direct Cost (DC) or Indirect Cost (IC).
1.
2.
3.
4.
5.
6.
7.
8.
9.
Screws
Factory rent
Wages of skateboard painter
Factory utilities
Seatwork 2
Daisy Ryan Shirt Shop manufactures T-shirts and decorated them with custom designs for retail sale
on the premises. Determine whether the following is a Manufacturing cost (MC) or Nonmanufacturing cost (NC).
1.
2.
3.
4.
5.
6.
7.
8.
9.
42,000
Presidents salary
Company advertising
18,000
75,000
25,000
22,000
30,000
1,000
Depreciation on sewing
machines
Wages paid to cutters
75,0
00
42,0
00
750
15,0
00
6,00
0
50,0
00
6. Conversion cost
7. Total period cost
Seatwork 4
Classify the following as:
Product cost
- Direct materials
- Direct labor
- Manufacturing overhead
Period cost
- Distribution costs
- Administrative expenses
- Finance costs
1.
2.
3.
4.
Wood is used in the manufacture of the tables, at a cost P100 per table.
The tables are assembled by workers, at a cost of P40 per table.
Workers assembling the tables are supervised by a factory supervisor.
Electrical costs of P20 per machine hour are incurred in the factory in the manufacture of
tables.
5. The depreciation cost of the machines used in the manufacture of tables is P40,000 per year.
6. The salary of the president of the company is P10,000 a month.
7. The company spends P250,000 per year to advertise its products.
8. Salesperson are paid a commission of P300 for each table sold.
9. Rent paid for the factory building is P20,000 a month.
10.Insurance premiums paid for the general office is P15,000 per year.
Seatwork 5
The following is a partial list of costs incurred last month by the Salem Foam Company:
Product advertising
Fire insurance premium for factory
Electricity, sales office
Lubricating oil for sewing machines
Foam materials used in production
Assembly line workers wages
Rent, factory building
Freight out
Salary, company president
Property taxes, corporate headquarters
20,000
5,000
2,000
4,000
32,000
46,000
10,000
6,000
25,000
3,000
Case
A
B
C
D
E
Prime
Cost
9,400
(3)
55,300
(8)
(10)
Conversi
on Cost
16,100
(4)
107,500
47,350
(11)
Direct
Material
s
4,300
12,000
43,200
21,400
(12)
Direct
Labor
(1)
7,300
(5)
13,250
15,100
Manufacturi
ng
Overhead
11,000
24,500
(6)
(9)
22,900
Total
Manufacturi
ng Cost
(2)
43,800
(7)
68,750
55,700
Seatwork 7
Donna is a cost accountant for Northwind Corp. She is very efficient and hardworking, however, she
occasionally transposes numbers when recording transactions. While working late recently, Dona
accidentally recorded P19,000 of advertising cost instead of P91,000. The transaction was correctly
recorded in all other respects.
Required: Explain how Donnas error will affect the following:
1. Manufacturing costs
2. Inventory
3. Cost of Goods Sold
4. Period expenses
5. Net income
Seatwork 8
For each of the following costs incurred in a manufacturing operation, indicate whether the costs
would be fixed (F) or variable (V) and whether it would be direct materials (DM), direct labor (DL),
manufacturing overhead (MO), distribution costs (D) or administrative expenses (A).
1. Depreciation, executive jet
2. Wood used in manufacturing furniture
3. Sales managers salary
4. Secretary to the company president
5. Sand used in manufacturing concrete
6. Supervisors salary, factory
7. Executive life insurance
8. Salary, assembly-line workers
9. Advertising costs
10.Lubricants for production equipment
Seatwork 9
Mighty Muffler, Inc. operated an automobile service facility, which specializes in replacing mufflers
on cars. The following table shows the costs incurred during the month when 750 mufflers were
replaced.
Number of Muffler Replacements
500
750
1,000
Total costs
Fixed costs
Variable costs
Total costs
Cost
per
muffler
replacement
Fixed costs
Variable costs
Total costs per
replacement
a.
b.
c.
60,000
37,500
97,500
j.
k.
l.
d.
e.
g.
h.
m.
n.
f.
i.
o.
Seatwork 10
Marvin Santos prepared the following cost equation for four of the costs of Marvin Company:
Utilities
Insurance
Shipping
Maintenanc
e
Y
Y
Y
Y
=
=
=
=
P3.60 + P4.50X
P29,300 + P0.30X
P24,600
P6.75X
Maintenance
Semi-variable
Variable
Variable
Semi-variable
Seatwork 11
The following items appeared in the records of Nona Company for the current year. Each question is
based on the production and sales of 2,000 units.
Sales price per unit
Fixed costs:
P400,000 per
period
200,000 per
period
P50
P80
P100
P200
per
per
per
per
unit
unit
unit
unit
c. 300
d. 480
c. 300
d. 480
Seatwork 12
Square has made the following cost estimates for his three largest expenses:
For 12
For 16
Customer Customer
s
s
Payroll
300
400
Answering service
74
82
Office rent
270
290
What terms would best describe the cost behavior of the above costs?
Payroll
Answering service
Office rent
a.
Mixed
Variable
Variable
b.
Variable
Mixed
Fixed
c.
Variable
Mixed
Mixed
d.
Mixed
Mixed
Mixed
e.
Fixed
Mixed
Mixed
For 20
Customer
s
500
90
310