Pair of single-vision lenses

Assignment Help Accounting Basics

Reference no: EM13987505

Following is a list of cost items described in the chapter and a list of brief descriptive settings. Match the items with the settings. More than one cost classification may be associated with each setting; however, select the setting that best seems to fit the item.

Cost terms

a. Opportunity cost

b. Period cost

c. Product cost

d. Direct labor cost

e. Selling cost

f. Conversion cost

g. Prime cost

h. Direct materials cost

i. Manufacturing overhead cost

j. Administrative cost

Settings

1. Marcus Armstrong, manager of Timmins Optical, estimated that the cost of plas- tic, wages of the technician producing the lenses, and overhead totaled $30 per pair of single-vision lenses.

2. Linda was having a hard time deciding whether to return to school. She was concerned about the salary she would have to give up for the next four years.

3. Randy Harris is the finished goods warehouse manager for a medium-size manu- facturing firm. He is paid a salary of $90,000 per year. As he studied the finan- cial statements prepared by the local CPA firm, he wondered how his salary was treated.

4. Jamie Young is in charge of the legal department at company headquarters. Her salary is $95,000 per year. She reports to the chief executive officer.

5. All factory costs that are not classified as direct materials or direct labor.

6. The new product required machining, assembly, and painting. The design engi- neer requested the accounting department to estimate the labor cost of each of the three operations. The engineer supplied the estimated labor hours for each operation.

7. After obtaining the estimate of direct labor cost, the design engineer estimated the cost of the materials that would be used for the new product.

8. The design engineer totaled the costs of direct materials and direct labor for the new product.

9. The design engineer also estimated the cost of converting the raw materials into their final form.

10. The auditor pointed out that the depreciation on the corporate jet had been incorrectly assigned to finished goods inventory (the jet was primarily used to fly the CEO and other staff to various company sites). Accordingly, the deprecia- tion charge was reallocated to the income statement.

Reference no: EM13987505

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