Cost Calculations - Managerial Accounting

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Problem 1 Page 40

a- Cost of goods manufactured
= Direct cost + Indirect cost
= [Direct Cost of Material + Direct Cost of Labor] + [Indirect Cost of Material + Indirect Cost of Labor + Utilities Overhead] = Total Cost of Material + Total Cost of Labor + Utilities Overhead = 120,000 + 90,000 + 40,000

= $ 250,000

b- Total Cost of Operation
= Cost of goods manufactured + Selling, General admin. and expenses. = 250,000 + 60,000
= $ 310,000

c- Prime Cost
=Direct Material Cost + Direct Labor Cost
= 80,000 + 65,000
= $ 145,000

d- Conversion Cost
= Direct Labor + Factory Overhead
= Direct labor + [Indirect Material + Indirect Labor + Utilities Overhead] = 65,000 + 40,000 +25,000 + 40,000
= $ 170,000

e- Product Cost
= Cost of goods manufactured
= $ 250,000

f- Period Cost
= Selling, general admin. and expenses
= $ 60,000

g- Unit Cost
= Total Cost of goods manufactured/Number of unit product
= $ 250,000/10,000
= $ 25 per unit

Problem 2 Page 40

a- Cost of goods manufactured
= Total Cost of goods put into production + [Difference between Beginning & Ending work-in-process] = [Total Direct Cost + Factory Overhead Cost] + [25,000-10,000] = [Direct Material Cost + Direct Labor Cost + Factory Overhead Cost] + 15,000 = [95,000+110,000+70,000]+15,000

= $ 290,000

b- Cost of goods sold
= Cost of goods manufactured + [Difference between Beginning & Ending finished goods inventory] = 290,000 + [(30,000)]
= $ 260,000

c- Net Income or Loss
= Sales – Cost of goods manufactured - Selling , general admin. and expenses = 300,000 – 260,000 – 75,000
= ($ 35,000) ; Net Loss

Exercise # 1 Page 43

Direct Material Cost = $ 8,000
Indirect Material Cost = $ 2,000
Direct Labor Cost = $ 3,500
Indirect Labor Cost = $ 1,500
Factory Overhead = $ 5,000
Selling Expenses = $ 7,500
General admin. Expenses = $ 8,500

a- Cost of goods manufactured
= Total Direct Cost + Total Factory Overhead
= Total Direct Cost + [Total Indirect Cost + Factory Overhead for heat, light and power] = 8,000 + 3,500 + 2,000 + 1,500 + 5,000
= $ 20,000

b- Total Cost of Operation
= Cost of goods manufactured + Selling, general and admin. expenses = 20,000 + 7,500 + 8,500
= $ 36,000

Exercise # 2 Page 43

Direct Material Cost = $ 25,000
Indirect Material Cost = $ 5,000
Direct Labor Cost = $ 30,000
Indirect Labor Cost = $ 4,500
Overhead [excluding indirect material & labor Costs] = $ 15,000

a- Prime Cost
= Direct Cost
= Direct Material Cost + Direct Labor Cost
= 25,000 + 30,000
= $ 55,000

b- Conversion Cost
= Direct Labor Cost + Total Overhead Cost
= Direct Labor Cost + Indirect Material Cost + indirect Labor Cost + Overhead Cost [excluding indirect material & labor Costs] = 30,000 + 5,000 + 4,500 + 15,000
= $ 54,500

c- Product Cost
= Cost of goods manufactured
= Total Direct Cost + Total Indirect Cost + Overhead Cost[excluding indirect material & labor Costs] = 55,000 + 9,500 + 15,000
= $ 79,500

Exercise # 5 Page 44

75,000 unit/year
Beginning work –in- process = 0
Ending work –in- process = 0
Total Cost of goods manufactured = $ 300,000
Number of sold units = 59,000
Number of non sold units = 14,000
Number of loss = 2,000
Beginning finished goods inventory = 0

a- Expenses was for the year;
Cost of each unit = $ 300,000/75,000= $ 4 per unit
Expenses (Not sold units) = 14,000 * 4 = $ 56,000

b- Loss was incurred for the year;
= 2,000 * 4 = $ 8,000
c- Assets to be recorded as finished goods inventory was for the year; = 59,000 * 4 = $ 236,000

Problem # 2 Page 47

Beginning work-in-process $ 5,000
Ending work-in-process $ 6,200
Direct material cost $ 8,900
Direct Labor cost $ 10,000
Factory overhead $ 15,000
Beginning finished goods inventory $ 12,000
Ending finished goods inventory $ 22,000
Sales $ 37,500
Selling and general expenses $ 17,000

a-...
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