Your friend, Suzie Chang, has designed a new type of outdoor toy that helps children learn basic concepts such as colors, numbers,and shapes. Suzie's product will target two groups: day care centers in warm climates and home school programs. Her company isJiffy Jet and costs for last month follow.Factory rentCompany advertisingWages paid to assembly workersDepreciation for salespersons' vehiclesScrewsUtilities for factoryAssembly supervisor's salarySandpaperPresident's salary$ 3,0201, 01030, 3002,0705108403,5501055,1904,080Plastic tubingPaintSales commissionsFactory insuranceDepreciation on cutting machinesWages paid to paintersAssume that Suzie Chang has decided to begin production of her outdoor children's toy.2801, 3901,0702,1807,800Required:1 & 2. Identify each of the preceding costs as either a product or a period cost. If the cost is a product cost, decide whether it is fordirect materials (DM), direct labor (DL), or manufacturing overhead (MOH) and also identify each of the preceding costs as variable orfixed cost. Assumes that screws, sandpaper, and paint are not worth the effort to trace to specific units.3. Determine the total cost for each of the following:

Variable cost is the cost that changes with change in the activity of cost driver used. The variable…

Answered: Required: 1 & 2. Identify each of the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Under either weighted average or FIFO, when materials are added at the beginning of a process, rather than being added uniformly throughout the process, a unit cost should be calculated for the a.materials category only b.labor category only c.materials and conversion categories d.conversion category only
Which of the following is not a step involved in activity-based costing? Select one O a Compute a cost rate per cost driver unit or transaction. O bidentify the activities that consume resources and assign costs to those activities -O CAssign costs to products by multiplying the cost driver rate by the volume of cost driver units consumed by the product o d Determine how to reduce the costs of making products by cutting activities
Required:Identify each cost as either a product cost or a period cost. If a product cost, classify it as direct materials, direct labor, or factory overhead. If a period cost, classify it as a selling expense or a general and administrative expense. (Leave no cell blank. Enter "NA - Not a product cost" or "NA - Not a period cost" for expenses that are not product cost or period cost.) The options for the drop down in section 1 are: direct labor, direct materials, factory overhead, NA- not a product cost the options for the drop down in section 2 are: general and administrative expenses, NA- not a period cost, selling expenses
Precision Manufacturing Inc. (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually produces 69,000 units of EX300 and 13,400 units of TX500. The company's conventional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: EX300 $375,325 $129,000 Total $546,875 $176,000 TX500 Direct materials Direct labor $171,550 $ 47,000 The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below: Activity Manufacturing Overhead $182,600 249,900 187,070 84,460 $704,000 Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-level (number of products) General factory (direct labor dollars) EX300 99,000 120 1 TX500 67,000 390 1 Total 166,000 510 2 $129,000 $47,000…
Atlanta Systems produces two different products, Product A, which sells for $450 per unit, and Product B, which sells for $800 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Usage by Product A Usage by Product B Cost Design (Engineering Hours) Machining (Machine Hours) Inspection (Batches) $ 190,000 $1,800,000 $ 108 142 2,160 2,840 160,000 42 38 8 Atlanta manufactures 12,500 units of Product A and 10,200 units of Product B per month. Each unit of Product A uses $100 of direct materials and $45 of direct labor, while each unit of Product B uşes $140 of direct materials and $75 of direct labor.
Which cost accounting method assumes that the cost of production is driven by the number of units produced? A. Activity-Based Costing (ABC)B. Standard CostingC. Absorption CostingD. Variable Costing
Indicate whether the following statement is true or false, then support your view. By using a single cost pool and a single cost driver to allocate overhead, the more traditional methods of overhead assignment fully considers the influence on cost of the different activities that occur to make a product.
Activity Based Costing (ABC) is an alternative method for allocating costs to products by estimnating the amout of each activity a product uses. True False
Following is a list of cost terms described in the chapter as well as a list of brief descriptive settings for each item.Cost terms:a. Opportunity costb. Period costc. Product costd. Direct labor coste. Selling costf. Conversion costg. Prime costh. Direct materials costi. Manufacturing overhead costj. Administrative costSettings:1. Marcus Armstrong, manager of Timmins Optical, estimated that the cost of plastic, wagesof the technician producing the lenses, and overhead totaled $30 per pair of single-visionlenses.2. Linda was having a hard time deciding whether to return to school. She was concernedabout the salary she would have to give up for the next 4 years.3. Randy Harris is the finished goods warehouse manager for a medium-sized manufacturingfirm. He is paid a salary of $90,000 per year. As he studied the financial statementsprepared by the local certified public accounting firm, he wondered how his salary wastreated.4. Jamie Young is in charge of the legal department at company…
MULTIPLE CHOICE (Choose one answer): A volume-based rate is an appropriate overhead application base when: a. Direct material costs are large relative to direct labor costs incurred b. Several well-differentiated products are manufactured c. Direct labor costs are large d. Multiple products are manufactured e. Only one product is manufactured
Please indicate which are product costs and which are period costs. Under Absorption Costing: Direct Materials are considered a Direct Labor is considered a Variable overhead is considered a Fixed overhead is considered a Under Variable Costing: Direct Materials are considered a Direct Labor is considered a Variable overhead is considered a Fixed overhead is considered a
! Required information [The following information applies to the questions displayed below.] For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called LEC 90 that has become increasingly popular. The LEC 90 is a more complex product, requiring 0.60 hours of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The LEC 40 requires only 0.20 hours of direct labor time per unit and only a small amount of machining. Manufacturing overhead costs are currently assigned to products on the basis of direct labor-hours. Despite the growing popularity of the company's new LEC 90, profits have been declining steadily. Management is beginning to believe that there may be a problem with the company's costing system. Direct material and direct labor costs per unit are as follows: Direct materials Direct labor…

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