ANSWERS_Acct 611 Ch 2-4 Spring 2011

ANSWERS_Acct 611 Ch 2-4 Spring 2011 - PROBLEM 2-37 1. a....

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PROBLEM 2-37 1. a. Total prime costs: Direct material. .................................................. $ 1,050,00 0 Direct labor: Wages. ........................................................... 242,500 Fringe benefits. .............................................. 47,500 Total prime costs. .............................................. $ 1,340,00 0 b. Total manufacturing overhead: Depreciation on factory building. ........................ $ 57,500 Indirect labor: wages. ........................................ 70,000 Production supervisor's salary. ........................... 22,500 Service department costs. .................................. 50,000 Indirect labor: fringe benefits. ............................ 15,000 Fringe benefits for production supervisor. .......... 4,500 Total overtime premiums paid. ........................... 27,500 Cost of idle time: production employees. ............ 20,000 Total manufacturing overhead. ........................... $ 267,000 c. Total conversion costs: Direct labor ($242,500 + $47,500). ..................... $ 290,000 Manufacturing overhead. ................................... 267,000 Total conversion costs. ....................................... $ 557,000 d. Total product costs: Direct material. .................................................. $1,050,0
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00 Direct labor. ....................................................... 290,000 Manufacturing overhead. ................................... 267,000 Total product costs. ........................................... $1,607,0 00
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PROBLEM 2-37 e. Total period costs: Advertising expense. .......................................... $ 49,500 Administrative costs. ......................................... 75,000 Rental of office space for sales personnel. .......... 7,500 Sales commissions. ............................................ 2,500 Product promotion costs. ................................... 5,000 Total period costs. ............................................. $ 139,500 2. The $7,500 in rental cost for sales office space is an opportunity cost. It measures the opportunity cost of using the former sales office space for raw-material storage. PROBLEM 2-43 1. L AREDO L UGGAGE C OMPANY S CHEDULE OF C OST OF G OODS M ANUFACTURED F OR THE Y EAR E NDED D ECEMBER 31, 20 X 2 Direct material: Raw-material inventory, January 1. ................. $ 20,000 Add: Purchases of raw material. ..................... 90,000 Raw material available for use. ...................... $110,0 00 Deduct: Raw-material inventory, December 31 12,500 Raw material used. ........................................ $97,50 0 Direct labor. ..................................................... 100,00 0 Manufacturing overhead: Indirect material. ........................................... $ 5,000 Indirect labor. ................................................ 7,500 Utilities: plant. ............................................... 20,000
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Depreciation: plant and equipment. ............... 30,000 Other. ............................................................ 40,000
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ANSWERS_Acct 611 Ch 2-4 Spring 2011 - PROBLEM 2-37 1. a....

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