Chapter 2

Cost Accounting Chapter 2 - Costs – Concepts and classification Problem 1 1. Direct 2. Indirect 3. Direct 4. Direct 5. Direct

6. Direct 7. Direct 8. Indirect 9. Direct 10.Direct

Problem 2 1. Manufacturing 2. Selling 3. Manufacturing 4. Selling 5. Administrative

Problem 3 1. Variable 2. Variable 3. Fixed 4. Variable 5. Fixed 6. Fixed 7. Fixed 8. Variable 9. Fixed 10.Fixed

Product Product Product Product Product Period Period Period Product Period

Direct Direct Indirect Direct Indirect Indirect Indirect Direct Indirect Indirect

Problem 4 – Bug Company 1. Fixed Period 2. Fixed Inventoriable 3. Variable Inventoriable 4. Variable Inventoriable 5. Fixed Inventoriable

6. Variable 7. Variable 8. Fixed 9. Fixed 10. Fixed

6. Manufacturing 7. Administrative 8. Selling 9. Administrative 10.Selling

Period Inventoriable Inventoriable Period Inventoriable

Problem 5 – Rounin Manufacturing Company 1. Direct materials Direct labor Prime cost

50,000 60,000 110,000

2.

Direct labor FO (10,000 + 9,000 +25000) Conversion costs

60,000 44,000 104,000

3.

Direct materials Direct labor Factory overhead Product costs

50,000 60,000 44,000 154,000

Problem 6 – Mother Goose Company 1. Prime costs 2. Conversion cost 3 Inventoriable cost 4. Total period costs Problem 7 – Blanche Corporation

-

430,000 525,000 710,000 305,000

`

1. Direct materials used Direct labor Variable manufacturing overhead Variable marketing Total variable cost per unit X No. of units produced and sold Total variable costs per month

P 30.00 20.00 15.00 3.00 68.00 20,000 P 1,360,000

2. Fixed manufacturing overhead Fixed marketing costs Total fixed cost per unit X No. of units produced and sold Total fixed costs per month

P 10.00 4.00 14.00 20,000 P 280,000

Page 2 – Chapter 2 Prblem 8 1. Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing cost per unit `

P 60.00 30.00 9.00 P 99.00

2. Total variable manufacturing cost per unit Variable marketing and administrative Total variable costs per unit

P 99.00 6.00 105.00

3. Total variable manufacturing cost per unit Fixed manufacturing overhead (30,000/1,200) Full manufacturing cost per unit

P 99,00 25.00 124.00

4. Full manufacturing cost per unit Variable marketing and administrative Fixed marketing and administrative Full cost to make and sell per unit

124.00 6.00 20.00 150.00

Problem 9 - Chiz Manufacturing Company 1. Materials put into production Direct labor Prime costs 2. Direct labor Factory overhead Indirect materials Indirect labor Other overhead cost Total conversion costs 3. Direct materials

P 90,000 95,000 P 185,000 95.000 60,000 25,000 60,000

145,000 240,000 90,000

Direct labor Factory overhead Total product costs

95,000 145,000 330,000

4. none Problem 10 – Johnson Corporation 1. Variable cost per machine hour = 35,600 – 20,000

4,000 - 2,000 = 7.50 per machine hour 2. Total electricity expense Less: Variable costs ( 4,000 x 7.50) ( 2000 x 7.50) Fixed cost 3.

4,000 hours 35,000

2000 hours 20,000

30,000 ______ 5,000

15,000 5,000

Fixed cost Variable cost ( 6,000 x 7.50) Totl manufacturing costs

5,000 45,000 50,000

Problem 11 – Valdez Motors Co. 1. Variable cost per machine hour = 5,475 – 3,975 210 - 145 = 23.08 per machine hour 2. Total overhead costs Less: Variable costs ( 210 x 23.08) ( 145 x 23.08) Fixed cost

210 hours 5,475

145 hours 3,975

4,847 _____ 628

3,347 628

Page 3 Problem 12 – Justine Company 1

Variable cost per hour = 4,470 – 2,820 520 - 300 = 7.50 per hour

2. Total Less: Variable cost 520 x 7.50 300 x 7.50 Fixed cost 3.

Total cost = P 570 + P7,50 X

520 hours 4,470

300 hours 2,820

3,900 _____ 570

2,250 570

4.

Fixed cost Variable ( 420 hrs. x P 7.50) Total maintenance cost

P

570 3,150 P 3,720

True/False Questions 1. False 6. True 2. False 7. False 3. True 8. True 4. False 9. False 5. False 10. True

11. False 12. False 13. True 14. False 15. False

16. True 17. False 18. True 19. False 20. True

Multiple choice – Theory 1. B 6. A 2. C 7. D 3. B 8. D 4. C 9. B 5. D 10. C

11. C 12. A 13. C 14. B 15. B

16. B 17. B 18. A 19. D 20. B

Multiple choice – Problems 1. A 6. A 2. B 7. C 3. C 8. C 4. C 9. A 5. B 10. C

11. A 12. B 13. B 14. C 15. B

16. A 17. B 18. D 19. A 20. A