Chapter 1, Problem 24P

1.

(a)

To determine

To identify: The total product cost.

Product Cost: Product Cost is the total cost incurred to produce a product which includes cost of material used, labor cost and overhead.

(b)

To determine

To identify: The total period cost.

Period Costs: Period Costs is the cost incurred by the business except the cost of goods sold. Period costs are the expense of the same period in which it is incurred.

2.

(a)

To determine

To identify: The total direct manufacturing cost.

Direct manufacturing: Direct manufacturing cost is the total cost incurred to manufacture a product which includes cost of material used, labor cost and direct expenses.

(b)

To determine

To identify: The total indirect manufacturing cost.

Indirect manufacturing: Indirect manufacturing cost is the total cost incurred to manufacture a product which includes cost of material used, labor cost and indirect expenses.

3.

(a)

To determine

To identify: The total manufacturing cost.

Manufacturing Cost: Manufacturing cost is the total cost incurred to manufacture a product which includes cost of material used, labor cost and manufacturing overheads.

(b)

To determine

To identify: The total nonmanufacturing cost.

Nonmanufacturing: Nonmanufacturing cost is the cost which is not directly linked with the manufacturing of a product but it includes selling and administration expense.

(c)

To determine

To identify: The total conversion cost and prime cost.

Prime Costs: Prime cost is the primary cost incurred to produce product, it is a sum total of direct material costs and direct manufacturing labor costs.

Conversion Costs: Conversion cost is the cost of transferring the raw material into finished product, it is sum total of direct manufacturing labor costs and manufacturing overhead costs.

4.

(a)

To determine

To identify: The total variable manufacturing cost.

Variable manufacturing cost: Variable manufacturing cost is the total cost incurred to manufacture a product which includes cost of material used, labor cost and variable overheads.

(b)

To determine

To identify: The total fixed cost.

Fixed Cost: Fixed cost refers the cost which remains constant for particular time duration and there is no effect of the level of production on it.

(c)

To determine

To identify: The variable cost per unit.

Variable Cost: Variable cost refers the cost which varies due to the change in the level of production. Higher the production level, higher is the variable cost, and lowers the production level, lower is the variable cost.

5.

To determine

To identify: The incremental manufacturing cost.

Incremental Manufacturing cost: Incremental manufacturing cost is the increase in the total cost incurred to manufacture a product which includes the cost of material used, labor cost and manufacturing overheads.