Chapter 2 Homework.pdf

9/22/13

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Score: 70

out of 70 points (100%)

Exercise 2-34 Computing Costs; Government Agency (LO 1, 9, 10) [The [The following information applie s to the the questions displa yed b elow.]  elow.] 

Exercise 2-34

The state Department of Education owns a computer system, which its employees use for word processing and keeping track of education education s tatistics tatistics . The The governor's office office recently began us ing this com puter also . As As a res ult of  the increased us age, the demands on the compu ter soon exceeded its capacity. capacity. The The director of the the Departmen t of Education Education was s oon forced forced to lease several several personal computers to meet the computing computing needs of her  employees. The The annual cos t of leasing the equipm ent is $14,000. Exercise 2-34 Compu ting Costs; Costs; Government Agency (LO 1, 9, 10)

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10 out of  10.00 points

Exercise 2-34 Requirement 1 Requirement 1: What ty type of cos t is this $14,000?

Differential Differential Cos t Selling Cost Sunk Cost  Adm  Adm inis trative trative Cos t Opportunity Opportunity Cos t

Multiple Choice

Learning Object Objectiv ive: e: 02-01 Ex Explain plain what is m eant by the word cost.

Exercise 2-34 Requireme nt 1

Learning Object Objectiv ive: e: 02-09 Distinguish among direct, indirect, controllable, and uncontrollable costs.

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Learning Object Objectiv ive: e: 02-10 Define and give exam exam ples of an opportunity cost, an o ut-of ut-of-pocket -pocket cost, a su nk cost, a differential differential cost, a marginal cos t, and an average av erage cos t.

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10 out of  10.00 points

Exercise 2-34 Requirement 2  Requirement 2: Should this cos t be ass ociated with the governor's office or the Department of Education?

Department of Education Governor's Office

Multiple Choice

Learning Objective: 02-01 Explain what is m eant by the word cost.

Exercise 2-34 Requireme nt 2 

Learning Objective: 02-09 Distinguish among direct, indirect, controllable, and uncontrollable costs.

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Learning Objective: 02-10 Define and give exam ples of an opportunity cost, an o ut-of-pocket cost, a su nk cost, a differential cost, a marginal cos t, and an average cos t.

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Problem 2-42 Cost Terminology (LO 2, 5, 10) [The following information applie s to the questions displa yed b elow.] 

Problem 2 -42

The following cos t data for the year just end ed pertain to Sentim ents, Inc., a greeting card m anufacturer:

Direct material

$2,200,000

 Advertising expense

98,000

Depreciation on factory building

115,000

Direct labor: wages

485,000

Cost of finished goods inventory at year-end

115,000

Indirect labor: wages

140,000

Production supervisor’s salary

46,000

Service department costs *

100,000

Direct labor: fringe benefits

95,000

Indirect labor: fringe benefits

31,000

Fringe benefits for production supervisor

10,000

Total overtime premiums paid

55,000

Cost of idle time: production employees §

40,000

 Administrative costs

150,000

Rental of office space for sales personnel †

15,000

Sales commissions Product promotion costs

4,000 $

10,000

*

 All s ervices are provided to manufacturin g depa rtmen ts. Cos t of idle time is an overhead item; it is n ot included in the direct-labor wages given above. † The rental of sales space was made neces sary when the s ales offices were converted to storage space for raw material. §

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Problem 2-42 Cost Terminology  (LO 2, 5, 10)

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10 out of  10.00 points

Problem 2-42 Requirement 1 Requirement 1: Compute each of the following cos ts for the year just ended: (a) total prime costs, (b ) total m anufacturing overhead costs, (c) total conversi on costs , (d) total product costs , and (e) total period costs. (Omit the "$" sign in your response.)

2,780,000

a. Total prime costs

$

b. Total manufacturing overhead

$ 537,000

c. Total conversion costs

$

d. Total product costs

$

e. Total period costs

$ 277,000

1,117,000 3,317,000

Worksheet

Learning Objective: 02-10 Define and give exam ples of an Learning Objective: 02-02 opportunity cost, an o ut-of-pocket Distinguish am ong product costs, cost, a su nk cost, a differential period costs, and expenses . cost, a marginal cos t, and an average cos t.

Problem 2-42 Requirement 1

Learning Objective: 02-05 Give examp les of three types of  manufacturing costs.

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Problem 2-42 Requirement 2  Requirement 2: One of the cos ts lis ted below is an oppo rtunity cost. Identify this cos t.

Product promotion costs Cost of finis hed-goods inventory at year-end  Adminis trative cos ts Direct labor: fringe bene fits Sales commis sions Rental of office space for sales personnel

Multiple Choice

Learning Objective: 02-10 Define and give exam ples of an Learning Objective: 02-02 opportunity cost, an o ut-of-pocket Distinguish am ong product costs, cost, a su nk cost, a differential period costs, and expenses . cost, a marginal cos t, and an average cos t.

Problem 2-42 Requirement 2 

Learning Objective: 02-05 Give examp les of three types of  manufacturing costs.

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Problem 2-43 Schedules of Cost of Goods Manufactured and Sold; Income Statement (LO 1, 3, 5, 6) [The following information applie s to the questions displa yed b elow.] 

Problem 2-43 The following data refer to San Fernando Fashions Company for the year 20x2:

Sales revenue

$1,050,000

Work-in-process inventory, December 31

30,000

Work-in-process inventory, January 1

36,000

Selling and administrative expenses

150,000

Income tax expense

80,000

Purchases of raw material

170,000

Raw-material inventory, December 31

25,000

Raw-material inventory, January 1

40,000

Direct labor

190,000

Utilities: plant

40,000

Depreciation: plant and equipment

50,000

Finished-goods inventory, December 31

50,000

Finished-goods inventory, January 1

15,000

Indirect material

6,000

Indirect labor

15,000

Other manufacturing overhead

60,000

Probl em 2-43 Schedu les of Cost of  Goods Manufactured and Sold; Incom e Statement (LO 1, 3, 5, 6)

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Problem 2-43 Requirement 1 Requirement 1: Prepare San Fernando Fashions ’ schedu le of cost of goods man ufactured for the year. (Omit the "$" sign in your response. Input all amounts a s positive values.)

SAN FERNANDO FASHIONS COMPANY Schedule of Cost Goods Manufactured For the Year Ended December 31, 20X2 Direct material: ezto.mhecloud.mcgraw-hill.com/hm_accounting.tpx?todo=printview

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Raw-material inventory, January 1 Add

$ 40,000 170,000

: Purchases of raw material $

Raw ma terial availa ble for use

: Raw-material inventory, December 31

Deduct

210,000 25,000

$

Raw ma terial used

185,000 190,000

Direct labor  Manufacturing overhead: $ 6,000

Indirect material Indirect labor 

15,000

Utilitie s: pla nt

40,000

Depreciation: plant and equipment

50,000

Other manufacturing overhea d

60,000 171,000

Total manufacturing overhead Total manufacturing costs Add

$

36,000

: Work-in-process inventory, January 1

Subtotal Deduct

546,000

$

582,000 30,000

: Work-in-process inventory, December 31

Cost of goods manufactured

Worksheet

Problem 2-43 Requirement 1

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$

552,000

Learning Objective: 02-01 Explain what is m eant by the word cost.

Learning Objective: 02-05 Give examp les of three types of  manufacturing costs.

Learning Objective: 02-03 Des cribe the role of costs in published financial s tatements.

Learning Objective: 02-06 Prepare a sched ule of cost of goods manufactured, a schedule of cost of goods sold, and an income statemen t for a m anufacturer.

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Problem 2-43 Requirement 2  Requirement 2: Prepare San Fernando Fashions ’ schedu le of cost of goods so ld for the year. (Omit the "$" sign in your  response. Input all amounts as positive values.)

SAN FERNANDO FASHIONS COMPANY Schedule of Cost Goods Manufactured For the Year Ended December 31, 20X2 Finished goods inventory, January 1 Add

: Cost of goods manufactured

: Finished-goods inventory, December 31

Cost of goods sold

Worksheet

Problem 2-43 Requirement 2 

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15,000 552,000

$ 567,000

Cost of goods available for sale Deduct

$

50,000

$ 517,000

Learning Objective: 02-01 Explain what is m eant by the word cost.

Learning Objective: 02-05 Give examp les of three types of  manufacturing costs.

Learning Objective: 02-03 Des cribe the role of costs in published financial s tatements.

Learning Objective: 02-06 Prepare a sched ule of cost of goods manufactured, a schedule of cost of goods sold, and an income statemen t for a m anufacturer.

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Problem 2-43 Requirement 3 Requirement 3: Prepare San Fernando Fashions ’ income s tateme nt for the year. (Omit the " $" sign in your response. Input all amounts as positive values.)

SAN FERNANDO FASHIONS COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20x2 1,050,000 $

Sales revenue Deduct

517,000

: Cost of goods sold

Gross margin Deduct

$

Deduct

150,000

: Selling and administrative expenses $

Income before taxes

: Income tax expense

Problem 2-43 Requirement 3

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383,000 80,000

$

Net income

Worksheet

533,000

303,000

Learning Objective: 02-01 Explain what is m eant by the word cost.

Learning Objective: 02-05 Give examp les of three types of  manufacturing costs.

Learning Objective: 02-03 Des cribe the role of costs in published financial s tatements.

Learning Objective: 02-06 Prepare a sched ule of cost of goods manufactured, a schedule of cost of goods sold, and an income statemen t for a m anufacturer.

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