MGMR ACCT F/MANAGERS-CONNECT 180-DAY COD
MGMR ACCT F/MANAGERS-CONNECT 180-DAY COD
5th Edition
ISBN: 9781265951627
Author: Noreen
Publisher: MCG
Question
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Chapter 1, Problem 1.24P

a.

To determine

Introduction:

Direct cost: When a cost is directly linked with the production of certain goods or services, it is termed as direct cost. Examples of direct cost are direct material, direct labor.

To compute: The total product cost and period cost which are required to prepare the financial statements.

a.

Expert Solution
Check Mark

Answer to Problem 1.24P

The total product is $147000 and period cost would be $59000.

Explanation of Solution

    ParticularAmountAmount
    Direct Material$69000
    Direct Labor350000
    Variable manufacturing overhead15000
    Fixed manufacturing overhead28000
    Total manufacturing overhead43000
    Variable selling expense12000
    Fixed selling expense18000
    Total selling expense30000
    Variable administrative expense4000
    Fixed administrative expense25000
    Total administrative expense29000

Let us calculate the total product cost and total period cost. These are required to prepare financial statements.

Calculation of Total product cost:

  Total product cost=Direct materials+Direct labor+Manufacturing overheads$69000+435000+$43000$147000

Therefore the total product cost is $147000.

Calculation of total period cost:

  Total period cost=Total selling expense+Total administrative expense$30000+$29000$59000

Therefore, the total period cost would be $59000.

b.

To determine

Introduction:

Direct cost: When a cost is directly linked with the production of certain goods or services, it is termed as direct cost. Examples of direct cost are direct material, direct labor.

To compute: The total direct manufacturing cost and total indirect manufacturing cost to assign costs to cost objects.

b.

Expert Solution
Check Mark

Answer to Problem 1.24P

The total direct manufacturing cost would $104000 and total indirect manufacturing cost would be $43000.

Explanation of Solution

    ParticularAmountAmount
    Direct Material$69000
    Direct Labor350000
    Variable manufacturing overhead15000
    Fixed manufacturing overhead28000
    Total manufacturing overhead43000
    Variable selling expense12000
    Fixed selling expense18000
    Total selling expense30000
    Variable administrative expense4000
    Fixed administrative expense25000
    Total administrative expense29000

Let us calculate the total direct and indirect manufacturing costs. These are required to assign cost to cost object.

Calculation of total direct manufacturing cost:

  Total direct manufacturing cost=Direct materials+Direct labor$69000+$35000=$104000

Therefore, the total direct manufacturing cost would be $104000.

Calculation of total indirect manufacturing cost:

  Total indirect manufacturing cost=Variable manufacturing overheads+fixed manufacturing overheads$15000+$28000$43000 Therefore, the total indirect manufacturing cost would be $43000.

c.

To determine

Introduction:

Direct cost: When a cost is directly linked with the production of certain goods or services, it is termed as direct cost. Examples of direct cost are direct material, direct labor.

To compute: The total manufacturing cost, total non-manufacturing cost , total conversion cost and total prime cost to update the manufacturer.

c.

Expert Solution
Check Mark

Answer to Problem 1.24P

The total manufacturing cost would be $147000 and total non-manufacturing cost would be $59000 while the total conversion cost would be $78000 and total prime cost would be $104000.

Explanation of Solution

Given information:

    ParticularAmountAmount
    Direct Material$69000
    Direct Labor350000
    Variable manufacturing overhead15000
    Fixed manufacturing overhead28000
    Total manufacturing overhead43000
    Variable selling expense12000
    Fixed selling expense18000
    Total selling expense30000
    Variable administrative expense4000
    Fixed administrative expense25000
    Total administrative expense29000

Let us calculate the total manufacturing cost, total non-manufacturing cost , total conversion cost and total prime cost to update the manufacturer.

Calculation of total manufacturing cost:

  Total manufacturing cost= Direct material+Direct labor+Total manufacturing overheads$69000+$35000+$43000$147000 Therefore, the total manufacturing cost would be $147000.

Calculation of total non-manufacturing cost:

  Total nonmanufacturing cost or overhead== Total selling expense+Total administrative expense$30000+$29000$59000 Therefore the total non-manufacturing cost would be $59000.

Calculation of total conversion cost:

  Total conversion cost=Direct labor+Total manufacturing overhead=$35000+$43000=$78000

Therefore, the total conversion cost would be $78000.

Calculation of total prime cost:

  Total prime cost=Direct materials+Direct labor=$69000+$35000=$104000

Therefore, the total prime cost would be $104000.

d.

To determine

Introduction:

Direct cost: When a cost is directly linked with the production of certain goods or services, it is termed as direct cost. Examples of direct cost are direct material, direct labor.

To compute: The total variable manufacturing cost, total fixed cost for the company as whole and total variable cost per unit to predict the cost behavior.

d.

Expert Solution
Check Mark

Answer to Problem 1.24P

The total variable manufacturing cost would be $119000 ; total fixed cost for the company as whole would be $71000 ; and total variable cost per unit would be $135.

Explanation of Solution

Let us calculate the total variable manufacturing cost, total fixed cost for the company as whole and total variable cost per unit to predict the cost behavior.

Calculation of total variable manufacturing cost:

  Total variable manufacturing cost=Direct material+Direct labor+Variable manufacturing overhead=$69000+$35000+$15000=$119000

Therefore, the total variable manufacturing cost would be $119000.

Calculation of total fixed cost:

  Total fixed cost=Fixed manufacturing overhead+Fixed selling expenses+Fixed administrative expense=$28000+$18000+$25000=$71000

Therefore, the total fixed cost would be $71000.

Calculation of variable cost per unit produced and sold:

  Total variable manufacturing cost=Total variable manufacturing overhead+Variable selling expense+Variable administrative expense=$15000+$12000+$4000=$31000

Next we need to calculate the variable cost.

  Variable cost=Direct materials+Direct labor+Total variable manufacturing overhead cost=$69000+$35000+$31000=$135000

Finally, the variable cost per unit has to be calculated.

  Variable cost per unit=Total variable costNumber of unit produced and sold$1350001000=$135

Therefore, the variable cost per unit would be $135.

e.

To determine

Introduction:

Direct cost: When a cost is directly linked with the production of certain goods or services, it is termed as direct cost. Examples of direct cost are direct material, direct labor.

To compute: The incremental cost which is helpful in decision-making.

e.

Expert Solution
Check Mark

Answer to Problem 1.24P

The incremental cost per unit additionally produced will be $119.

Explanation of Solution

    ParticularAmountAmount
    Direct Material$69000
    Direct Labor350000
    Variable manufacturing overhead15000
    Fixed manufacturing overhead28000
    Total manufacturing overhead43000
    Variable selling expense12000
    Fixed selling expense18000
    Total selling expense30000
    Variable administrative expense4000
    Fixed administrative expense25000
    Total administrative expense29000

Incremental cost is a cost incurred on production of an additional unit. Here, we are asked to compute the incremental cost if dozier produces 1001 instead of 1000 units.

The following formula will help to calculate the incremental cost.

  Incremental cost=Total incremental costNumber of unit produced and sold

We now have to calculate the total incremental cost.

  Total incremental cost=Direct materials+Direct labor+Variable manufacturing overhead$69000+$35000+$15000=$119000Incremental cost==$1190001000=$119

Therefore, the incremental cost per unit additionally produced will be $119.

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