Reference no: EM13684849

Question 1: Calamari Manufacturing produces small electric engines. Identify the following costs as direct materials (DM), direct labor (DL), manufacturing overhead (MOH), or a period cost (PC). Also indicate whether the cost is variable (V) or fixed (F) with respect to behavior.

A. Commissions paid to salespeople
B. Straight-line depreciation on the factory building
C. Salary of the plant supervisor
D. Wages of the assembly-line workers
E. Machine lubricant used in production activities
F. Engine casings used in production activities
G. Advertising placed in trade journals
H. Lease payments for the president's automobile
I. Property taxes paid on the factory facilities

Question 2. Parrish's Manufacturing had the following data for the period just ended:

Work in process, Jan. 1	$ 21,000
Work in process, Dec. 31	40,000
Finished goods, Jan. 1	70,000
Finished goods, Dec. 31	61,000
Direct materials used	126,000
Direct labor	260,000
Factory depreciation	80,000
Sales	945,000
Advertising expense	52,000
Factory utilities	27,000
Indirect materials	19,000
Indirect labor	35,000

Required:

A. Calculate Parrish's cost of goods manufactured.

B. Calculate Parrish's cost of goods sold.

Question 3. Hamilton Company had the following inventory balances at the beginning and end of the year:

January 1	December 31
Raw material   $ 50,000          $ 35,000 Work in process          130,000           170,000 Finished goods            280,000           255,000

During the year, the company purchased $100,000 of raw material and incurred $340,000 of direct labor costs. Other data: manufacturing overhead incurred, $450,000; sales, $1,560,000; selling and administrative expenses, $90,000; income tax rate, 30%.

Required:

A. Calculate cost of goods manufactured.
B. Calculate cost of goods sold.
C. Determine Hamilton's net income. 

Question 4. Lettman Corporation has provided the following partial listing of costs incurred during November:

Marketing salaries	$45,000
Property taxes, factory	$9,000
Administrative travel	$98,000
Sales commissions	$48,000
Indirect labor	$38,000
Direct materials	$165,000
Advertising	$138,000
Depreciation of production equipment	$39,000
Direct labor	$87,000

Required:

a. What is the total amount of production/inventoriable costs listed above? Show your work.
b. What is the total amount of period costs listed above? Show your work.

Question 5. The following information summarizes the company's cost structure:

Variable cost per unit $1.30

Fixed cost per unit      4.50

Total cost per unit       $5.80

Units produced and sold  48,000

Required:

Estimate the following costs at the 40,000 unit level of activity:
a. Total variable cost.
b. Total fixed cost.
c. Variable cost per unit.
d. Fixed cost per unit.

Question 6. Slonaker Inc. has provided the following data concerning its maintenance costs:

	Machine-Hours	Maintenance Cost
April	5,799	$30,379
May	5,782	$30,289
June	5,764	$30,237
July	5,761	$30,233
August	5,717	$30,078
September	5,795	$30,360
October	5,809	$30,388
November	5,801	$30,378
December	5,785	$30,318

Management believes that maintenance cost is a mixed cost that depends on machine-hours.

Required:

Estimate the variable cost per machine-hour and the fixed cost per month using the high-low method.

Question 7. Iron Decor manufactures decorative iron railings. In preparing for next year's operations, management has developed the following estimates:

	Total Per Unit
Sales (20,000 units)	$1,000,000	$50.00
Direct materials	$200,000	$10.00
Direct labor (variable)	$50,000	$2.50
Manufacturing overhead:
Variable	$70,000	$3.50
Fixed	$80,000	$4.00
Selling & administrative:
Variable	$100,000	$5.00
Fixed	$30,000	$1.50

Required:

Compute the following items:

a. Unit contribution margin.

b. Contribution margin ratio.

c. Break-even in dollar sales.

d. Margin of safety percentage.

e. If the sales volume increases by 20% with no change in total fixed expenses, what will be the change in net operating income?

f. If the per unit variable production costs increase by 15%, and if fixed selling and administrative expenses increase by 12%, what will be the new break-even point in dollar sales?

Question 8. Butremovic Corporation's contribution format income statement for the most recent month follows: 

Sales    $121,000

Variable expenses       60„500

Contribution margin    60,500

Fixed expenses            43,700

Net operating income  $ 16,800

Required:

a. Compute the degree of operating leverage to two decimal places.

b. Using the degree of operating leverage, estimate the percentage change in net operating income that should result from an 8% increase in sales.

Question 9. Torri Inc. produces and sells two products. During the most recent month, Product C34M's sales were $25,000 and its variable expenses were $5,750. Product Y03Z's sales were $40,000 and its variable expenses were $9,850. The company's fixed expenses were $48,310.

Required:

a. Determine the overall break-even point for the company. Show your work!

b. If the sales mix shifts toward Product C34M with no change in total sales, what will happen to the break-even point for the company? Explain. 

Question 10. A number of companies in different industries are listed below:

1. Elevator production and installation company
2. Cattle feedlot that fattens cattle prior to slaughter
3. Brick manufacturer
4. Architectural firm that designs custom homes
5. Winery that produces a number of varietal wines
6. Synthetic rubber manufacturer

Required:

For each company, indicate whether the company is most likely to use job-order costing or process costing.