ACC 202 Principles of Accounting 2 Ball State University
15th Edition
ISBN: 9781308193977
Author: Noreen, Brewer Garrison
Publisher: MCG/CREATE
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Textbook Question
Chapter 2, Problem 3E
EXERCISE 1-3 Classifying Costs as Product or Period Costs LO1−3
Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financial statements before approving the loan.
Required:
Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank.
Depreciation on salespersons’ cars.- Rent on equipment used in the factory.
- Lubricants used for machine maintenance.
- Salaries of personnel who work in the finished goods warehouse.
- Soap and paper towels used by factory workers at the end of a shift.
- Factory supervisors’ salaries.
- Heat, water, and power consumed in the factory.
- Materials used for boxing products for shipment overseas. (Units are not normally boxed.)
- Advertising costs.
- Workers’ compensation insurance for factory employees.
- Depreciation on chairs and tables in the factory lunchroom.
- The wages of the receptionist in the administrative offices.
- Cost of leasing the corporate jet used by the company’s executives.
- The cost of renting rooms at a Florida resort for the annual sales conference.
- The cost of packaging the company’s product.
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Download and fill out the Section 5 Comprehensive Problem Template attached below to complete the problems (ignore question 5-2 as this applies to the "combined accounting and finance" course).
Problem 5-1
Redlands Inc. sells one product for $5. The variable cost per item is $3, and the fixed costs for the firm are $40.
Required:
a. Compute the breakeven point in units.
b. Compute the number of units and sales revenue needed to achieve a $20 profit. (Ignore income taxes.)
c. Assume that the income tax rate for Redlands is 40%. Compute the number of units and sales revenue needed to achieve an $18 net profit.
d. Compute the number of units and sales revenue needed to achieve an 8% profit margin. (Ignore income taxes.)
e. Compute the number of units and sales revenue needed to achieve a 12% net profit margin. (Assume a 40% income tax rate.)
f. Assume that Redlands currently sells 40 units. Redlands estimates that if it increased sales price to $6 per unit demand would decrease by…
Question 3
Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn set from an outside vendor for $30 per set. Modern Furniture’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the firm money. Additional information shows that if Modern furniture’s were to manufacture the cushions, the materials cost would be $16 and the labor cost would be $10 per set and that it would have to purchase cutting and sewing equipment, which would add $25,000 to annual fixed costs.
NOTE: No need to enter comma between numbers
Required
Computation for 10,000 units
What amount should have been inccrued if company produce 10,000 units
What amount should have been inccrued if company purhcase 10,000 units from outside
What amount company save if company make 10,000 cushions
Question 3
Study the information given below and answer:
3.1 Calculate the total Marginal Income and Net Profit/Loss if
all the tables are sold.
INFORMATION
Samcor Limited manufactures tables. The following
information was extracted from the budget for the year ended
30 June 2022:
1. Total production and sales
2. Selling price per table
3.
4.
5.
Variable manufacturing costs per table:
Direct material
Direct labour
Overheads
Fixed manufacturing overheads
Other costs:
Fixed marketing and administrative costs
Sales commission
2 400 units
R1 200
R288
R192
R96
R216 960
R144 000
5%
Chapter 2 Solutions
ACC 202 Principles of Accounting 2 Ball State University
Ch. 2.A - Prob. 1ECh. 2.A - Prob. 2ECh. 2.A - Prob. 3PCh. 2.A - Prob. 4PCh. 2.A - Prob. 5CCh. 2.B - Prob. 1ECh. 2.B - Prob. 2ECh. 2.B - Prob. 3PCh. 2.B - Prob. 4PCh. 2 - Prob. 1Q
Ch. 2 - Define the following: (a) direct materials, (b)...Ch. 2 - Explain the difference between a product cost and...Ch. 2 - Distinguish between (a) a variable cost, (b) a...Ch. 2 - Prob. 5QCh. 2 - Define the following terms: (a) cost behavior and...Ch. 2 - What is meant by an activity base when dealing...Ch. 2 - Managers often assume a strictly linear...Ch. 2 - Distinguish between discretionary fixed costs and...Ch. 2 - Does the concept of the relevant range apply to...Ch. 2 - What is the major disadvantage of the high-low...Ch. 2 - Prob. 12QCh. 2 - Prob. 13QCh. 2 - What is the difference between a traditional...Ch. 2 - Prob. 15QCh. 2 - Prob. 16QCh. 2 - Prob. 17QCh. 2 - Prob. 1AECh. 2 - Prob. 2AECh. 2 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - Prob. 1F15Ch. 2 - L012, L013, L014, L015, L016 Martinez Company’s...Ch. 2 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 2 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 2 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 2 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - EXERCISE 1—1 Identifying Direct and Indirect Costs...Ch. 2 - EXERCISE 1-2 Classifying Manufacturing Costs LO1-2...Ch. 2 - EXERCISE 1-3 Classifying Costs as Product or...Ch. 2 - EXERCISE 14 Fixed and Variable Cost Behavior LO14...Ch. 2 - Prob. 5ECh. 2 - EXERCISE 1—6 Traditional and Contribution Format...Ch. 2 - Prob. 7ECh. 2 - Prob. 8ECh. 2 - Prob. 9ECh. 2 - Prob. 10ECh. 2 - Prob. 11ECh. 2 - EXERCISE 1-12 Product and Period Cost Flows LO1–3...Ch. 2 - Prob. 13ECh. 2 - EXERCISE 2-14 High-Low Method: Predicting Cost...Ch. 2 - Prob. 15ECh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - PROBLEM 1-18 Direct and Indirect Costs; variable...Ch. 2 - Prob. 19PCh. 2 - PROBLEM 2-20 High-Low Method; Predicting Cost...Ch. 2 - PROBLEM 2-21 Cost Classification [L02-1, L02-3,...Ch. 2 - Prob. 22PCh. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26CCh. 2 - Prob. 27C
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