SoutionstoHW1 - Homework Problems: 2.20(15 min.) Basic...

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Unformatted text preview: Homework Problems: 2.20(15 min.) Basic Concepts. Cost Item Fixed (F) Variable (V) Period (P) Product (M) a. Advertising costs................................................................ F P b. Depreciation on pollution control equipment in the plant. . F M c. Office supplies for the plant manager................................ F M d. Power to operate factory equipment.................................. V M e. Commissions paid to sales personnel............................... V P 2.27 (20 min.) Prepare Statements for a Service Company: Lead! Inc. You can solve this in the order shown below. Lead!, Inc. Income Statement For the Month Ended April 30 Revenue $200,000 a Cost of services sold 128,000 c Gross margin $72,000 d Marketing and administrative costs 32,000 e Operating profit ($200,000 x 20%) $40,000 b a. Given b. $40,000 = 20% x $200,000. c. To find the cost of services sold plus marketing and administrative costs, start with the operating profit (b). Then cost of services plus marketing and administrative costs is $160,000 (= $200,000 – $40,000). But, marketing and administrative costs equal 25% of cost of services sold, so, 1.25 x Cost of services sold = $160,000 or cost of services sold = $128,000. d. $72,000 = $200,000 – $128,000. e. $32,000 = 25% x $128,000. 2.41(30 minutes) Cost Concepts: Princeton Fabrication, Inc. a. (1) $62 Variable manufacturing cost = Manufacturing overhead + Direct labor + Direct materials = $20 + $10 + $32 = $62 (2) $94 Full unit cost = All unit fixed costs + All unit variable costs Unit fixed manufacturing = ($9,600 ÷ 800 units) = $12 Unit fixed marketing and administrative cost = ($12,800 ÷ 800 units) = $16 = $12 + $16 + $4 + $20 + $10 + $32 = $94 (3) $66 Variable cost = All variable unit costs = $4 + $20 + $10 + $32 = $66 (4) $74 Full absorption cost...
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This note was uploaded on 05/06/2008 for the course UGBA 102B taught by Professor Fan during the Spring '08 term at University of California, Berkeley.

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SoutionstoHW1 - Homework Problems: 2.20(15 min.) Basic...

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