Solutions to. Homework Problems for Basic Cost Concepts & Terminology by David Albrecht. Solution to Problem #1

Transcription

1 Solutions to Homework roblems for Basic Cost Concepts & Terminology by David Albrecht Solution to roblem #1 Classifying Manufacturing Costs. The Sale Away Company assembles custom sailboats from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a boathouse. 1. The wages of employees who build the sailboats. roduct/direct labor 2. The cost of advertising in the local newspapers. eriod/selling 3. The cost of an aluminum mast installed in a sailboat. roduct/direct material 4. The wages of the assembly shop s supervisor. roduct/manufacturing overhead 5. Rent on the boathouse. Allocated between manufacturing overhead and selling 6. The wages of the company s bookkeeper. eriod/administrative, but some might be allocated to manufacturing overhead. 7. Sales commissions paid to the company s salespeople. eriod/selling 8. Depreciation on power tools. roduct/manufacturing overhead Solution to roblem #2 Classification of Costs as eriod or roduct Costs. Fairwings Avionics is a company that manufactures sophisticated radar sets for commercial aircraft. 1. The cost of the memory chips used in a radar set. roduct/direct materials 2. Factory heating costs. roduct/manufacturing overhead 3. Factory equipment maintenance costs. roduct/manufacturing overhead 4. Training costs for new administrative employees. eriod/administrative 5. The cost of the solder that is used in assembling the radar sets. roduct/direct material, but some might assign it to manufacturing overhead because it such a little cost and not worth tracking. 6. The travel costs of the company s salespersons. eriod/selling 7. Wages and salaries of factory security personnel. roduct/manufacturing overhead 8. The cost of air-conditioning executive offices. eriod/administrative 9. Wages and salaries in the department that handles billing customers. eriod/administrative 10. Depreciation on the equipment in the fitness room used by factory workers. roduct/manufacturing overhead 11. Telephone expenses incurred by factory management. roduct/manufacturing overhead 12. The costs of shipping completed radar sets to customers. eriod/selling 13. The wages of the workers who assemble the radar sets. roduct/direct labor 14. The president s salary. eriod/administrative 15. Health insurance premiums for factory personnel. roduct/direct labor 230

2 Solution to roblem #3 Cost Classification. Listed below are costs found in various organizations. 1. Depreciation, executive jet. Fixed eriod/administrative 2. Costs of shipping finished goods to customers. Variable eriod/selling 3. Wood used in manufacturing furniture. Variable roduct/direct material 4. Sales manager s salary. Fixed eriod/selling 5. Electricity used in manufacturing furniture. Variable (mixed) roduct/moh 6. Secretary to the company president. Fixed eriod/administrative 7. Aerosol attachment placed on a spray can produced by the company. Variable roduct/direct material 8. Billing costs. Fixed eriod/administrative 9. acking supplies for shipping products overseas. Variable eriod/selling 10. Sand used in manufacturing concrete. Variable roduct/direct material 11. Supervisor s salary, factory. Fixed roduct/moh 12. Executive life insurance. Fixed eriod/administrtive 13. Sales commissions. Variable eriod/selling 14. Fringe benefits, assembly-line workers. Variable roduct/direct labor 15. Advertising costs. Fixed eriod/selling 16. roperty taxes on finished goods warehouses. Fixed eriod/selling 17. Lubricants for production equipment. Variable roduct/moh Solution to roblem #4 Exercise room attached to assembly plant D I Depreciation on sewing machines I Cost of fabric D Human effort involved in maintaining sewing machines I Cost of electricity for the manufacturing plant I Cost of water/sewer for a distribution plant Cost of handles. D Human effort need to sew fabric into octagons D Depreciation on headquarters building Advertisements mailed to department stores Human effort at distribution plant 231

3 Solutions to Homework roblems for Income Statement Equations by David Albrecht Solution to roblem #5 Income statement equations! short For 2014, the following data are given: Direct materials used $70 Direct labor Overhead Sales revenue Selling & administrative Work in process, January 1, Work in process, December 31, Finished goods, January 1, Finished goods, December 31, Required: 1. Compute the cost of goods manufactured 2. Compute the cost of goods sold 3. Compute the amount of profit or loss Sales rev 500 BFG 40 BWI 50! CGS!220 + CGM DM used 70 GM 280 CGAS DL 60!SG&A!340! FG! 20 + MOH 90 Income!60 CGS 220! EWI!70 CGM 200 Solution to roblem #6 Income statement equations! short For the month of October, the following data are given: Cost of direct materials used $7 Cost of beginning finished goods Cost of beginning work in process Cost of selling and administrative Cost of overhead Cost of goods sold Cost of ending finished goods Cost of ending work in process Required: Compute amounts for: 1. Cost of goods manufactured or completed 2. Cost of direct labor 3. Total manufacturing costs (DM + DL + MOH) Sales rev BFG 15 BWI 8! CGS!33 + CGM? = 35 + DM used 7 GM + DL? = 9!SG&A!6! FG! 17 + MOH 15 Income CGS 33! EWI!4 CGM? =

4 Solution to roblem #7 Income statement equations! short For 2014, the following data are given: Cost of selling and administrative $30 Cost of beginning finished goods Cost of ending work in process Cost of ending finished goods Sales revenue Gross margin Current manufacturing costs Required: Compute these amounts for 2014: 1. rofit or loss 2. Cost of goods sold 3. Cost of goods manufactured 4. Cost of beginning work in process Sales rev 150 BFG 21 BWI? = 3! CGS? =!80 + CGM? = 74 GM 70 CGAS? = 95 + CM + DL + MOH 80!SG&A!30! FG! 15 Income? = 40 CGS 80! EWI!9 CGM

5 Solution to roblem #8 Income statement equations! medium For 2014, the following data are given: urchases of direct materials Direct labor Indirect labor Rent, factory building Rent, finished goods warehouse Sales commissions General administrative salaries Depreciation, factory equipment Utilities, factory Utilities, administrative Sales revenue ,500 Direct materials inventory, 1/1/ Finished goods inventory, 1/1/ Work in process inventory, 1/1/ Work in process inventory, 12/31/ Direct materials inventory, 12/31/ Finished goods inventory, 12/31/ Required: 1. Compute the cost of goods manufactured 2. Compute the cost of goods sold 3. Compute the amount of profit or loss Sales rev 2,500 BFG 120 BWI 125 Bmat 85! CGS!1,314 + CGM 1,534 + DM used 695 +Maturch 650 GM 1,186 CGAS 1,654 + DL 420!Emat!40!Selling!425! FG! MOH 354 Dmat used 695!Admin.!320 CGS 1,314! EWI!60 Income!441 CGM 1,534 MOH = = 354 Selling = = 425 SG&A = =

6 Solution to roblem #9 Income statement equations! long Sales rev 4,160 Beg FG 90 Beg WI 83 Beg Mat 110! CGS!1,520 + CGM 1,545 + DM used Mat urchases 921 GM 2,640! End FG!115 + DL 378! End Mat! 77! Selling!1,221 CGS 1,520 + MOH 270 DM used 954! Admin!289! End WI!140 π 1,130 CGM 1,545 Advertising 360 Rent HQ 109 Utilities, factory 51 Labor, FG warehouse 581 rez s salary 180 Rent, factory bldg 74 Customer delivery sal 280 Dep, fact equip 120 Indirect mfg labor 25 Total 1,221 Total 289 Total

7 Solution to roblem #10 Income statement equations! long Sales rev 5,221 Beg FG 210 Beg WI 143 Beg Mat 73! CGS!1,693 + CGM 1,678 + DM used Mat urchases 624 GM 3,528! End FG!195 + DL 410! End Mat! 84! S&A!1,479 CGS 1,693 + MOH 622 DM used 613 Income 2,049! End WI!110 CGM 1,678 Sales Commissions 410 Rent HQ 37 Utilities, factory 28 Labor, FG warehouse 171 rez s salary 489 Rent, factory bldg 46 Customer service 280 Dep, rez off furn 92 Dep, fact equip 510 Indirect mfg labor 38 Total 861 Total 618 Total