Exercise 1
Ikerd Company is a manufacturer of personal computers. Various costs and expenses associated with its operations are as follows.
The company intends to classify these costs and expenses into the following categories: (a) direct materials, (b) direct labor, (c) manufacturing overhead, and (d) period costs.
For each item, indicate the cost category to which it belongs.
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Item
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Category
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1.
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Property taxes on the factory building.
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2.
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Production superintendents' salaries.
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3.
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Memory boards and chips used in assembling computers.
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4.
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Depreciation on the factory equipment.
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5.
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Salaries for assembly-line quality control inspectors.
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6.
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Sales commissions paid to sell personal computers.
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7.
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Electrical components used in assembling computers.
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8.
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Wages of workers assembling personal computers.
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9.
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Soldering materials used on factory assembly lines.
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10.
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Salaries for the night security guards for the factory building.
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Exercise 2
Kwik Delivery Service reports the following costs and expenses in June 2014.
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Indirect materials
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$5,857
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Drivers' salaries
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$16,652
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Depreciation on delivery equipment
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12,267
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Advertising
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4,206
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Dispatcher's salary
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5,900
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Delivery equipment repairs
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499
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Property taxes on office building
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975
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Office supplies
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701
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CEO's salary
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13,036
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Office utilities
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1,021
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Gas and oil for delivery trucks
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2,641
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Repairs on office equipment
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202
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Determine the total amount of (a) delivery service (product) costs and (b) period costs.
(a) Indicate the missing amount for each letter.
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Direct
Materials
Used
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Direct
Labor
Used
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Manufacturing
Overhead
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Total
Manufacturing
Costs
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Work in
Process
1/1
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Work in
Process
12/31
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Cost of Goods
Manufactured
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(1)
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$132,350
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$142,550
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$89,560
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$
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(a)
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$38,530
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$
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(b)
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$363,690
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(2)
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(c)
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203,280
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135,000
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454,130
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(d)
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41,500
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471,960
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(3)
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82,210
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101,080
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(e)
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259,870
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61,170
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84,810
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(f)
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(4)
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71,030
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(g)
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79,100
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292,450
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50,680
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(h)
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273,540
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(b) The parts of this question must be completed in order. This part will be available when you complete the part above.
Exercise 3 (Part Level Submission)
Cepeda Corporation has the following cost records for June 2014.
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Indirect factory labor
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$5,500
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Factory utilities
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$440
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Direct materials used
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22,280
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Depreciation, factory equipment
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1,690
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Work in process, 6/1/14
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3,560
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Direct labor
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41,160
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Work in process, 6/30/14
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4,440
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Maintenance, factory equipment
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1,970
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Finished goods, 6/1/14
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5,960
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Indirect materials
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2,390
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Finished goods, 6/30/14
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8,280
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Factory manager's salary
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3,880
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Exercise 4 (Part Level Submission)
The controller of Furgee Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.
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Month
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Total Maintenance Costs
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Total Machine Hours
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January
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$2,980
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310
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February
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3,480
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460
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March
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4,080
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610
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April
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4,980
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580
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May
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3,680
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510
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June
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5,270
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710
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(a) Determine the variable cost components using the high-low method. (Round variable cost to 3 decimal places e.g. 12.250.)
Exercise 5
Family Furniture Corporation incurred the following costs.
Identify the costs as variable, fixed, or mixed.
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1.
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Wood used in the production of furniture.
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2.
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Fuel used in delivery trucks.
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3.
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Straight-line depreciation on factory building.
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4.
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Screws used in the production of furniture.
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5.
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Sales staff salaries.
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6.
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Sales commissions.
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7.
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Property taxes.
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8.
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Insurance on buildings.
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9.
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Hourly wages of furniture craftsmen.
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10.
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Salaries of factory supervisors.
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11.
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Utilities expense.
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12.
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Telephone bill.
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Exercise 6
The Green Acres Inn is trying to determine its break-even point. The inn has 50 rooms that it rents at $50 a night. Operating costs are as follows.
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Salaries
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$5,600
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per month
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Utilities
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$1,200
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per month
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Depreciation
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$800
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per month
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Maintenance
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$400
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per month
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Maid service
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$6
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per room
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Other costs
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$24
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per room
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Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars.
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(1)
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Break-even point
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rooms
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(2)
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Break-even point
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$
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Exercise 7
Glacial Company estimates that variable costs will be 60% of sales, and fixed costs will total $756,960. The selling price of the product is $4.
Compute the break-even point in (1) units and (2) dollars.
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(1)
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Break-even sales
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units
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(2)
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Break-even sales
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$
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Compute the margin of safety in (1) dollars and (2) as a ratio, assuming actual sales are $2,336,296. (Round ratio to 0 decimal places, e.g. 20%.)
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(1)
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Margin of safety
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$
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(2)
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Margin of safety ratio
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%
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