# Exercise Solutions

Topics: Variable cost, Contribution margin, Cost Pages: 8 (638 words) Published: April 9, 2015
﻿1. Haar Inc. is a merchandising company. Last month the company's cost of goods sold was \$61,000. The company's beginning merchandise inventory was \$11,000 and its ending merchandise inventory was \$21,000. What was the total amount of the company's merchandise purchases for the month?  A. \$61,000

B. \$51,000
C. \$71,000
D. \$93,000
Purchases = Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory = \$61,000 + \$21,000 - \$11,000
= \$71,000
2. Gabruk Inc. is a merchandising company. Last month the company's merchandise purchases totaled \$88,000. The company's beginning merchandise inventory was \$15,000 and its ending merchandise inventory was \$13,000. What was the company's cost of goods sold for the month?  A. \$88,000

B. \$90,000
C. \$86,000
D. \$116,000
Cost of goods sold = Beginning merchandise inventory + purchases - Ending merchandise inventory = \$15,000 + \$88,000 - \$13,000
= \$90,000
3. A partial listing of costs incurred during December at Gagnier Corporation appears below:

The total of the period costs listed above for December is:  A. \$89,000
B. \$310,000
C. \$325,000
D. \$399,000
Period costs = Administrative wages and salaries + Sales staff salaries + Corporate headquarters building rent + Marketing = \$105,000 + \$68,000 + \$34,000 + \$103,000
= \$310,000
The total of the manufacturing overhead costs listed above for December is:  A. \$325,000
B. \$635,000
C. \$89,000
D. \$40,000
Manufacturing overhead costs = Factory supplies + Factory depreciation + Indirect labor = \$8,000 + \$49,000 + \$32,000
= \$89,000
The total of the product costs listed above for December is:  A. \$310,000
B. \$89,000
C. \$635,000
D. \$325,000
Product costs = Direct materials + Direct labor + Manufacturing overhead = \$153,000 + \$83,000 + \$89,000
= \$325,000

4. Dickison Corporation reported the following data for the month of December:

The conversion cost for December was:
A. \$107,000
B. \$142,000
C. \$111,000
D. \$178,000
Conversion cost = Direct labor + Manufacturing overhead
= \$38,000 + \$69,000
= \$107,000

The prime cost for December was:
A. \$109,000
B. \$111,000
C. \$107,000
D. \$66,000

Prime cost = Direct materials + Direct labor
= \$71,000 + \$38,000
= \$109,000
5. Nikkel Corporation, a merchandising company, reported the following results for July:

The gross margin for July is:
A. \$358,500
B. \$209,000
C. \$233,700
D. \$164,700

Gross margin = Total sales - Cost of goods sold
= \$402,800 - \$169,100
= \$233,700

The contribution margin for July is:
A. \$333,800
B. \$209,000
C. \$233,700
D. \$164,700

6. Holzhauer Corporation, a merchandising company, reported the following results for March:

Cost of goods sold is a variable cost in this company.

The gross margin for March is:
A. \$922,600
B. \$1,120,000
C. \$2,202,600
D. \$1,360,000

The contribution margin for March is:
A. \$922,600
B. \$1,120,000
C. \$1,962,600
D. \$1,360,000

7. Fiene Sales, Inc., a merchandising company, reported sales of 2,200 units in June at a selling price of \$600 per unit. Cost of goods sold, which is a variable cost, was \$364 per unit. Variable selling expenses were \$23 per unit and variable administrative expenses were \$33 per unit. The total fixed selling expenses were \$30,500 and the total administrative expenses were \$55,300.  The contribution margin for June was:

A. \$1,111,000
B. \$396,000
C. \$310,200
D. \$519,200

The gross margin for June was:
A. \$310,200
B. \$1,234,200
C. \$396,000
D. \$519,200

8. Getchman Marketing, Inc., a merchandising company, reported sales of \$592,500 and cost of goods sold of \$305,000 for April. The company's total variable selling expense was \$37,500; its total fixed selling expense was \$16,000; its total variable administrative expense was \$35,000; and its total fixed administrative expense was \$38,900. The cost of goods sold in this company is a variable cost.

The...