Reference no: EM132551122

A local merchandiser purchases inventory that it subsequently sells to customers. During the month of May, the following costs (in dollars) were incurred:

Cost of inventory purchased and sold: $20, 000

Selling Expenses: $4000

Administrative Expensive: $5000

Question 1: What was the product cost per unit if 1,000 units of inventory were purchased and sold during May?

a. $29

b. $26

c. $24

d. $25

Question 2: During its first month of operations, a manufacturer incurs the following costs (in dollars) related to activities within its factory.

Direct Materials - $20,000

Direct Labor - $40,000

Manufacturing Overhead - $25,000

What are the manufactures total product costs for the month?

a. $85,000

b. $65,000

c. $60,000

d. $45,000

Question 3: Which overhead cost is associated with unit level activity?

a. Power to run the equipment

b. Product design costs

c. Machine setup expenses

d. Property taxes

Question 4: What would be the appropriate cost drive to allocate overhead for a company that is labor intensive?

a. Number of labor hours

b. Totals sales dollars

c. Number of units produced

d. Total material cost