a.
Introduction:
Direct cost: When a cost is directly linked with the production of certain goods or services, it is termed as direct cost. Examples of direct cost are direct material, direct labor.
To compute: The total product cost and period cost which are required to prepare the financial statements.
a.
Answer to Problem 1.24P
The total product is $147000 and period cost would be $59000.
Explanation of Solution
| Particular | Amount | Amount |
| Direct Material | $69000 | |
| Direct Labor | 350000 | |
| Variable manufacturing | 15000 | |
| Fixed manufacturing overhead | 28000 | |
| Total manufacturing overhead | 43000 | |
| Variable selling expense | 12000 | |
| Fixed selling expense | 18000 | |
| Total selling expense | 30000 | |
| Variable administrative expense | 4000 | |
| Fixed administrative expense | 25000 | |
| Total administrative expense | 29000 |
Let us calculate the total product cost and total period cost. These are required to prepare financial statements.
Calculation of Total product cost:
Therefore the total product cost is $147000.
Calculation of total period cost:
Therefore, the total period cost would be $59000.
b.
Introduction:
Direct cost: When a cost is directly linked with the production of certain goods or services, it is termed as direct cost. Examples of direct cost are direct material, direct labor.
To compute: The total direct
b.
Answer to Problem 1.24P
The total direct manufacturing cost would $104000 and total indirect manufacturing cost would be $43000.
Explanation of Solution
| Particular | Amount | Amount |
| Direct Material | $69000 | |
| Direct Labor | 350000 | |
| Variable manufacturing overhead | 15000 | |
| Fixed manufacturing overhead | 28000 | |
| Total manufacturing overhead | 43000 | |
| Variable selling expense | 12000 | |
| Fixed selling expense | 18000 | |
| Total selling expense | 30000 | |
| Variable administrative expense | 4000 | |
| Fixed administrative expense | 25000 | |
| Total administrative expense | 29000 |
Let us calculate the total direct and indirect manufacturing costs. These are required to assign cost to cost object.
Calculation of total direct manufacturing cost:
Therefore, the total direct manufacturing cost would be $104000.
Calculation of total indirect manufacturing cost:
c.
Introduction:
Direct cost: When a cost is directly linked with the production of certain goods or services, it is termed as direct cost. Examples of direct cost are direct material, direct labor.
To compute: The total manufacturing cost, total non-manufacturing cost , total conversion cost and total prime cost to update the manufacturer.
c.
Answer to Problem 1.24P
The total manufacturing cost would be $147000 and total non-manufacturing cost would be $59000 while the total conversion cost would be $78000 and total prime cost would be $104000.
Explanation of Solution
Given information:
| Particular | Amount | Amount |
| Direct Material | $69000 | |
| Direct Labor | 350000 | |
| Variable manufacturing overhead | 15000 | |
| Fixed manufacturing overhead | 28000 | |
| Total manufacturing overhead | 43000 | |
| Variable selling expense | 12000 | |
| Fixed selling expense | 18000 | |
| Total selling expense | 30000 | |
| Variable administrative expense | 4000 | |
| Fixed administrative expense | 25000 | |
| Total administrative expense | 29000 |
Let us calculate the total manufacturing cost, total non-manufacturing cost , total conversion cost and total prime cost to update the manufacturer.
Calculation of total manufacturing cost:
Calculation of total non-manufacturing cost:
Calculation of total conversion cost:
Therefore, the total conversion cost would be $78000.
Calculation of total prime cost:
Therefore, the total prime cost would be $104000.
d.
Introduction:
Direct cost: When a cost is directly linked with the production of certain goods or services, it is termed as direct cost. Examples of direct cost are direct material, direct labor.
To compute: The total variable manufacturing cost, total fixed cost for the company as whole and total variable cost per unit to predict the cost behavior.
d.
Answer to Problem 1.24P
The total variable manufacturing cost would be $119000 ; total fixed cost for the company as whole would be $71000 ; and total variable cost per unit would be $135.
Explanation of Solution
Let us calculate the total variable manufacturing cost, total fixed cost for the company as whole and total variable cost per unit to predict the cost behavior.
Calculation of total variable manufacturing cost:
Therefore, the total variable manufacturing cost would be $119000.
Calculation of total fixed cost:
Therefore, the total fixed cost would be $71000.
Calculation of variable cost per unit produced and sold:
Next we need to calculate the variable cost.
Finally, the variable cost per unit has to be calculated.
Therefore, the variable cost per unit would be $135.
e.
Introduction:
Direct cost: When a cost is directly linked with the production of certain goods or services, it is termed as direct cost. Examples of direct cost are direct material, direct labor.
To compute: The incremental cost which is helpful in decision-making.
e.
Answer to Problem 1.24P
The incremental cost per unit additionally produced will be $119.
Explanation of Solution
| Particular | Amount | Amount |
| Direct Material | $69000 | |
| Direct Labor | 350000 | |
| Variable manufacturing overhead | 15000 | |
| Fixed manufacturing overhead | 28000 | |
| Total manufacturing overhead | 43000 | |
| Variable selling expense | 12000 | |
| Fixed selling expense | 18000 | |
| Total selling expense | 30000 | |
| Variable administrative expense | 4000 | |
| Fixed administrative expense | 25000 | |
| Total administrative expense | 29000 |
Incremental cost is a cost incurred on production of an additional unit. Here, we are asked to compute the incremental cost if dozier produces 1001 instead of 1000 units.
The following formula will help to calculate the incremental cost.
We now have to calculate the total incremental cost.
Therefore, the incremental cost per unit additionally produced will be $119.
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Chapter 1 Solutions
MANAG ACCT F/..(LL)+CONNECT W/PROCTORIO+
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