Exam 2: Cost Concepts

Reference: The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just completed year. Sales \ 910 Raw materials inventory, beginning \ 80 Raw materials inventory, ending \ 20 Purchases of raw materials \ 100 Direct labour \ 130 Manufacturing overhead \ 200 Administrative expenses \ 160 Selling expenses \ 140 Work in process inventory, beginning \ 40 Work in process inventory, ending \ 10 Finished goods inventory, beginning \ 130 Finished goods inventory, ending \ 150 -The cost of goods manufactured for the year (in thousands of dollars)was:

The following costs should be considered by a law firm to be indirect costs of defending a particular client in court: rent on the law firm's offices, the law firm's receptionist's wages, the costs of heating the law firm's offices, and the depreciation on the personal computer in the office of the attorney who has been assigned the client.

A cost that differs from one month to another is known as a differential cost.

Which of the following would be considered a product cost for external financial reporting purposes?

Sunk costs are irrelevant in making decisions.

Reference: Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses: -Units of production depreciation on the factory equipment.

Variable costs are costs whose per unit costs vary as the activity level rises and falls.

Reference: Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses: -The delivery charges incurred when shipping the computers to distributors and retailers.

The salary of the president of a manufacturing company would be classified as which of the following?

Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?

Reference: Frosting Corp. has provided the following relating to the most recent month (August 31, 2016) of operations, for their main product, cupcakes Baker's salaries 20,000 Finished goods inventory, beginning 18,000 Finished goods inventory, ending 20,000 General \& administrative expenses 20,000 Indirect materials 17,500 Production Supervisor, Salary 21,000 Purchases of raw materials 28,000 Raw materials inventory, ending 19,000 Raw materials inventory, beginning 18,000 Rent on production factory 19,000 Rent, retail store 18,000 Sales 243,000 Utilities on production factory 17,500 Utilities, retail store 17,000 Wages, retail staff 20,000 WIP inventory, beginning 19,500 WIP inventory, ending 21,500 -What was the total manufacturing overhead incurred during the period?

Which of the following would NOT be treated as a product cost for external financial reporting purposes?

Reference: Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses: -Wages of factory supervisor.

During the month of May, Bennett Manufacturing Company purchased $43,000 of raw materials. Total manufacturing overhead was$27,000 and the total manufacturing costs were $106,000. Assuming a beginning inventory of raw materials of $8,000 and an ending inventory of raw materials of $6,000, direct labour was:

Reference: Boardman Company reported the following data for the month of January: Inventories: 1/1 1/31 Raw materials \ 32,000 \ 31,000 Work in process \ 18,000 \ 12,000 Finished goods \ 30,000 \ 35,000 Additional information: Sales revenue \ 210,000 Direct labour costs 40,000 Manufacturing overhead costs 70,000 Selling expenses 25,000 Administrative expenses 35,000 -Assume that cost of goods sold for Boardman Company for January was $140,000. What was the cost of goods manufactured for the month?

Using the following data for January, calculate the cost of goods manufactured: Direct materials \ 38,000 Direct labour \ 24,000 Manufacturing overhead \ 17,000 Beginning work in process inventory \ 10,000 Ending work in process inventory \ 11,000 The cost of goods manufactured was:

The beginning balance of the Raw Materials inventory account for May was $27,500. The ending balance for May was $28,750 and $128,900 of raw materials were used during the month. The materials purchased during the month cost:

During the month of June, Reardon Company incurred $17,000 of direct labour, $8,500 of manufacturing overhead and purchased $15,000 of raw materials. Between the beginning and the end of the month, the raw materials inventory increased by $2,000, the finished goods inventory increased by $1,500, and the work in process inventory decreased by $3,000. The cost of goods manufactured would be: