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Midterm - 1 Short Answer Direct Materials Beginning raw...

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1. Short Answer Direct Materials: Beginning raw materials inventory: 70,000 +Purchases of raw materials: 170,000 Raw Materials available for use: 240,000 - Ending raw materials inventory: 80,000 Raw materials used in production: 160,000 Direct Labor: 210,000 Manufacturing Overhead: 200,000 Total Manufacturing Costs: 570,000 +Beginning work in progress inventory: 30,000 -Ending work in progress inventory: 20,000 Cost of Goods Manufactured: $580,000 2. Essay Units Complete: 280,000 Units in ending inventory: 55,000 Equivalent Units: 335,000 Transferred = 280,000 Units Equivalent = Materials: 55,000 x .75 = 41,250 Conversion: 55,000 x .65 = 35,750 Equivalent Units: Materials: 280,000+41,250 = 69,250 Conversion: 280,000+35,750 = 63,750 3. a. Contribution Margin per Unit = Unit Price - Variable Costs Unit Price = 650,000/26,000 = 25 Variable Costs = 442,000/26,000 = 17 Contribution Margin Per Unit = $8 b. a. Contribution Margin per Unit = Unit Price - Variable Costs Unit Price = 650,000/26,000 = 25 Variable Costs = 442,000/26,000 = 17 Contribution Margin Per Unit = $8 b. Break-even Point in dollars = (total fixed costs + target profit) / contribution margin ratio contribution margin ratio = contribution margin/revenue total fixed costs = 234,000 target profit = 0
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contribution margin ration = 208,000/650,000 = 3.2 break-even point = (234,000+0) / 3.2 = $73,125 c. Desired Net Income: 20,000 (total fixed costs + target income) / contribution margin per unit (234,000 + 20,000) / 8 = 31,750 units 4. a. Unit Product Cost Variable = direct materials + direct labor + variable manufacturing overhead Absorption = DM + DL + var. man. ov. + fixed manufactuing overhead Variable Unit Product Cost = 190 + 40 + 25 = 255 Absorption Unit Product Cost= 190+40+25+ (250,000/20,000) = 267.50 b. Absorption Income Statement: Sales (350 x 19000) = 6,650,000 -Varibale Expenses Beginning Inventory = 0 COGM = 5,350,000 -End Balance = 267,500 GM = 1,567,500 -Selling and Admin Costs [(20x19000) +225000] = 605,000 Net Income 962,500 Notes: COGM = variable cost x units produces + fixed costs variable costs = 190+40+25 = 255 COGM = (255x19000) +250000 = 5,350,000 Ending Balance = units left x variable cost + fixed cost 1000 x 255 + [(250000 / 20000) x 1000] = 267500 c. Variable Income Statement Sales = 6,650,000 -Variable Expenses Beginning Inventory = 0 Variable COGS = 255x19000 = 4,845,000 Variable Selling and Admin 380,000 CM = 1,425,000 -Fixed expenses Fixed Manufacturing Overhead =250,000 Fixed selling and admin cost = 225,000 Net Income 950,000 1. Question: (TCO A) Wages paid to a timekeeper in a factory are a:
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Your Answer: Prime Cost YES ..... Conversion Cost NO Prime Cost YES ..... Conversion Cost YES Prime Cost NO .... Conversion Cost NO Prime Cost NO ..... Conversion Cost YES CORRECT Instructor Explanation: Chapter 2 Points Received: 6 of 6 2. Question: (TCO A) A cost incurred in the past that is not relevant to any current decision is classified as a(n): Your Answer: period cost. opportunity cost. sunk cost. CORRECT differential cost. Instructor Explanation: Chapter 2 Points Received: 6 of 6 3. Question: (TCO A) The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n): Your Answer: period cost direct material cost indirect manufacturing cost CORRECT direct labor cost none of the above Instructor Explanation: Chapter 2 Points Received: 6 of 6 4. Question: (TCO A) When the activity level is expected to decline within the relevant range, what effects would be anticipated with respect to each of the following?
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