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31 indirect costs such as rent telephone and depreciation are always costs of the pe 4301203

 

31) Indirect costs such as rent, telephone, and depreciation are always costs of the period in which they are incurred and are not associated with inventories.

 

Objective 2.7

 

1) Which of the following is a manufacturing overhead cost?

A) cost of conversion of direct materials to finished goods

B) labor cost that can be traced to individual products

C) cost of materials that can be traced to individual products

D) overtime premiums paid to plant workers

2) Flyers Inc., had the following activities during 2015:

 

Direct materials:

Beginning inventory$ 22,000

Purchases61,600

Ending inventory10,800

Direct manufacturing labor18,000

Manufacturing overhead11,500

Beginning work-in-process inventory1,000

Ending work-in-process inventory3,500

Beginning finished goods inventory25,000

Ending finished goods inventory19,000

 

Required:

a.What is the cost of direct materials used during 2015?

b.What is cost of goods manufactured for 2015?

c.What is cost of goods sold for 2015?

d.What amount of prime costs was added to production during 2015?

e.What amount of conversion costs was added to production during 2015?

 

3) Product cost for reimbursement under government contracts includes ________.

A) marketing costs

B) design costs

C) production costs

D) research and development costs

4) On the assembly floor, Crystal is paid $20 an hour for straight-time assuming 8 working hours a day and five working days in a week. She is paid $30 an hour for overtime. One week she worked 52 hours.

 

Required:

a.What is Crystal's total compensation for the week?

b.What amount of compensation would be reported as direct manufacturing labor?

c.What amount of compensation would be reported as manufacturing overhead?

 

5) In the manufacturing plant, Alex is paid $40 an hour for straight-time and $60 an hour for overtime. One week she worked 54 hours, which included 8 hours of overtime, and 6 hours of idle time caused by material shortages.

 

Required:

a.What is Alex's total compensation for the week?

b.What amount of compensation would be reported as direct manufacturing labor?

c.What amount of compensation would be reported as manufacturing overhead?

6) Bosely Manufacturing Co. wants to classify costs for the product produced at its facility. The company produces only one product at the facility and operates continually.  The cost categories are:

 

Product cost

Prime cost

Conversion cost

Period cost

 

The following costs are found in the accounting records:

 

a.Quality control inspection wages

b.Raw material purchases

c.Sales commissions

d.Factory depreciation

e.Assembly wages

 

Required:

Assign each of the above costs to the most appropriate cost categories.

 

7) Which of the following is included in product cost for pricing and product-mix decisions?

A) design costs

B) sunk costs

C) opportunity costs

D) cost of capital

 

8) Under GAAP, only ________ can be assigned to inventories in the financial statements.

A) manufacturing costs

B) period costs

C) cost of goods sold

D) historical costs

9) Product costs for financial statements may refer to ________.

A) inventoriable costs for external reporting purposes

B) exchange cost incurred during transportation

C) only the costs incurred along the supply chain

D) opportunity costs incurred for the decisions forgone

 

 

 

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