Quiz4 Chapter 8

Quiz4 Chapter 8 - Print Quiz 4 Name: Raj Brar Date:...

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Unformatted text preview: Print Quiz 4 Name: Raj Brar Date: 2010-02-14 12:59 Question 1 [4 points] The question was: Stiller Co. is a family-owned company that produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The sounding bars are cast from brass and hand filed to attain just the right sound. The bars are then mounted on an intricately hand-carved wooden base. The gamelans are sold for $1,000. Selected data for the company's operations last year follow: Please make sure your final answer(s) are accurate to the nearest whole number. Your solution was: (a) Assume that the company uses absorption costing. Compute the unit product cost for one gamelan. Marking: Your answer was: $120 The correct answer was: $858 Under absorption costing, the unit product cost is the sum of direct materials, direct labour and both variable and fixed overhead. The fixed overhead amount used is per unit. Therefore, we get: Unit product cost = Direct materials + Direct labour + Variable overhead + Fixed overhead = $170 + $250 + $38 + ($120,000 300) = $858 You will lose 2 marks for this part. (b) Assume that the company uses variable costing. Compute the unit product cost for one gamelan. Marking: Your answer was: $5,456 The correct answer was: $458 Under variable costing, the unit product cost is the sum of direct materials, direct labour, and variable overhead. Therefore, we get: Unit product cost = Direct materials + Direct labour + Variable overhead = $170 + $250 + $38 = $458 You will lose 2 marks for this part. Total marks for this question: 0 Question 2 [35 points] The question was: NorthCo manufactures and sells a single product. The following costs were incurred during the company's first year of operations: During the year, the company produced 15,000 units and sold 10,000 units. The selling price of the company's product is $70 per unit. Your solution was: (a) Assume that the company uses absorption costing. Compute the unit product cost. Marking: Your answer was: $7 The correct answer was: $32 Under absorption costing, the unit product cost is the sum of direct materials, direct labour and both variable and fixed overhead. The fixed overhead amount used is per unit. Therefore, we get: Unit product cost = Direct materials + Direct labour + Variable overhead + Fixed overhead = $6 + $10 + $9 + ($105,000 15,000) = $32 You will lose 2 marks for this part. (b) Assume that the company uses absorption costing. Prepare an income statement for the year. Marking: Sales (Line 1) Line 1: 'Sales' should be $700,000, but you have not entered this. This will cost you 1 mark. Cost of goods sold (Line 2) Line 2: 'Cost of goods sold' should be $320,000, but you have left this blank. This will cost you 1 mark....
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This note was uploaded on 04/13/2010 for the course CA 1001 taught by Professor James during the Spring '06 term at Buffalo State.

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Quiz4 Chapter 8 - Print Quiz 4 Name: Raj Brar Date:...

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