Managerial accounting slide note

Chapter 2
Cost Terms, Concepts, and Classifications
Solutions to Questions

2-15
Direct labour cost
(46 hours  $18 per hour)
$828
Manufacturing overhead cost
(6 hours  $9 per hour)

54
Total wages earned
$882

2-16
Direct labour cost
(35 hours  $26 per hour)
$910
Manufacturing overhead cost
(5 hours  $26 per hour)

130
Total wages earned
$1,040

Problem 2-15 (30 minutes)
Name of the Cost
Variable Cost
Fixed Cost
Product Cost
Period
(Selling and Admin.) Cost
Opportunity Cost
Sunk Cost

Direct Materials
Direct Labour
Mfg. Overhead

Rental revenue forgone, $35,000 per year

X

Direct materials cost, $50 per unit
X

X

Supervisor’s salary, $3,000 per month

X

X

Direct labour cost, $22 per unit
X

X

Rental cost of warehouse, $1,500 per month

X

X

Rental cost of equipment, $2,200 per month

X

X

Depreciation of the building, $7,000 per year

X

X

X
Advertising cost, $28,000 per year

X

X

Shipping cost, $7 per unit
X

X

Electrical costs, $4 per unit
X

X

Return earned on investments, $5,000 per year

X

Problem 2-16 (20 minutes)

Cost Behaviour

To Units of Product

Cost Item
Variable
Fixed

Direct
Indirect
1.
Plastic washers used to assemble autos*
X

X
2.
Production superintendent’s salary

X

X
3.
Wages of workers who assemble a product
X

X

4.
Electricity to run production equipment
X

X
5.
Janitorial salaries

X

X
6.
Clay used to make bricks
X

X

7.
Rent on a factory building

X

X
8.
Wood used to make skis
X

X

9.
Screws used to make furniture*
X

X
10.
A supervisor’s salary

X

X
11.
Cloth used to make shirts
X

X

12.
Depreciation of cafeteria equipment

X

X
13.
Glue used to make