HW Ch 14 solutions

HW Ch 14 solutions - Exercise 14-6 (20 minutes) Product...

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Exercise 14-6 (20 minutes) Product Cost Period Cost Direct Cost Indirect Cost Prime Conversion 1. Amortization of patents on factory machine ..................... X X 2. Payroll taxes for production supervisor ............................. X X 3. Accident insurance on factory workers * .................... X X X X 4. Depreciation—Factory bldg ... X X 5. State and federal income tax . X 6. Wages to assembly workers ** X X X 7. Direct materials used ............ X X 8. Office supplies used .............. X 9. Bad debts expense ................ X 10. Small tools used ................... X X 11. Factory utilities ..................... X X 12. Advertising ........................... X * There are certain costs that can be classified as direct for one company and indirect for another. The specific classification depends on the materiality and cost benefit of tracking. For example, some companies track employee benefits for direct and indirect workers. Yet, some manufacturing companies will simply classify all employee benefits as indirect and overhead. ** Direct labor is a prime and conversion cost because this labor force is in direct contact with the product in the conversion process. Exercise 14-7 (15 minutes) 1. Five cost classifications are (a) Behavior (c) Controllability (e) Function (b ) Traceability (d) Relevance 2. Two purposes of identifying these separate cost classifications (a) Cost classifications provide a standardized framework for using cost
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This note was uploaded on 02/01/2011 for the course ACCT 203 taught by Professor Hylton during the Summer '08 term at George Mason.

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HW Ch 14 solutions - Exercise 14-6 (20 minutes) Product...

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