Cost Accounting Answer Chapter 2

Cost Accounting
Chapter 2 - Costs Concepts and classification

Problem 1
1. Direct
2. Indirect
3. Direct
4. Direct
5. Direct
6. Direct
7. Direct
8. Indirect
Problem 3
1. Variable
2. Variable
3. Fixed
4. Variable
5. Fixed
6. Fixed
7. Fixed
8. Variable
9. Fixed
10.Fixed
9. Direct
10.Direct
11.Indirect
12.Direct
13.Direct
14.Direct
15.Indirect
Product
Product
Product
Product
Product
Period
Period
Period
Product
Period
Problem 4 Bug Company

1. Fixed
Period
2. Fixed
Inventoriable
3. Fixed
Inventoriable
4. Variable
Inventoriable
5. Fixed
Inventoriable
Problem 2
1. Manufacturing
2. Selling
3. Manufacturing
4. Selling
5. Administrative
6. Manufacturing
7. Administrative
8. Selling
9. Administrative
10.Selling
Direct
Direct
Indirect
Direct
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
6. Variable
7. Variable
8. Fixed
9. Fixed
10. Fixed
Problem 5 Mighty Muffler, Inc.

a. P 60,000
b. P 60,000
c. P 37,500 = P50/muffler x 500 = P 25,000
750
d. P 50 x 1,000 = P 50,000
e. P 60,000 + P 25,000 = P 85,000
f. P 60,000 + P 50,000 = P 110,000
g. P 60,000/ 500
= P 120
h. P 60,000/750
= P 80
I, P 60,000/1,000
= P 60
j. P 50
k. P 50
l. P 50
m. P 120 + P 50
= P 170
n. P 80 + P 50
= P 130
o. P 60 + P 50
= P 110
Period
Inventoriable
Inventoriable
Period
Inventoriable
Problem 6 JP Morgan
1. b, c. i
2. a, c, i
3. a, c, i
4. a, c. h
5. b. d, i
6. g
7. e, f (correction should be when one additional loan application is processed)
8. b, d, i
9. a, c, i
10. b, c,
Problem 7 Mother Goose Company
1. Prime costs
2. Conversion cost
3 Inventoriable cost
4. Total period costs
530,000
575,000
860,000
305,000
Problem 8
a. c - fixed (total amount is constant)
b. a variable (4,480/3,200 = 1.40; 6,300/4,500 = 1.40 per unit is constant)
c. d - mixed
( 3,950/3,200 = 12.34; 5,250/4,500 = 1.16) total amount and amount per unit
varies in relation to units sold)
Problem 9 - Blanche Corporation

`
1. Direct materials used
Direct labor
Variable manufacturing overhead
Variable marketing
Total variable cost per unit
X No. of units produced and sold
Total variable costs per month
2. Fixed manufacturing overhead
Fixed marketing costs
Total fixed cost per unit
X No. of units produced and sold
Total fixed costs per month
P 32.00
20.00
15.00
3.00
70.00
12,000
P 840,000
P
6.00
4.00
10.00
12,000
P 120,000
Problem 10
1. Direct materials
Direct labor
Variable manufacturing overhead
Total variable manufacturing cost per unit
`
P 60.00
30.00
9.00
P 99.00
2. Total variable manufacturing cost per unit

Variable marketing and administrative
Total variable costs per unit
P 99.00
6.00
105.00
3. Total variable manufacturing cost per unit

Fixed manufacturing overhead (30,000/1,200)
Full manufacturing cost per unit
P 99,00
25.00
124.00
4. Full manufacturing cost per unit

Variable marketing and administrative
Fixed marketing and administrative
Full cost to make and sell per unit
124.00
6.00
20.00
150.00
Problem 11 Johnson Corporation

1. Variable cost per machine hour = 35,600 20,000
4,000 - 2,000
= 7.80 per machine hour
2.
Total electricity expense
Less: Variable costs
( 4,000 x 7.80)
( 2000 x 7.80)
Fixed cost
4,000 hours
35,600
2000 hours
20,000
31,200
______
4,400
15,600
4,400
3. Fixed cost
Variable cost ( 6,000 x 7.50)
Totl manufacturing costs
5,000
45,000
50,000
Problem 12 Valdez Motors Co.

1. Variable cost per machine hour = 5,475 3,975
210 - 145
= 23.08 per machine hour
2.
Total overhead costs
Less: Variable costs
( 210 x 23.08)
( 145 x 23.08)
Fixed cost
210 hours
5,475
145 hours
3,975
4,847
_____
628
3,347
628
Problem 13
1. Direct materials
Direct labor
Factory supplies
Direct variable costs
Department A
P 800,000
600,000
20,000
P 1,420,000
Department B
P 1,200,000
660,000
60,000
P 1,920,000
2. Controllable direct fixed costs

Supervisory salaries
48,000
72,000
3. Uncontrollable direct fixed costs:

Depreciation machinery and
Equipment
140,000
220,000
48,000
140,000
188,000
72,000
220,000
292,000
4. Controllable direct fixed cost

Uncontrollable direct fixed cost
Total direct fixed cost
5. Allocated costs from headquarters

Allocated repairs & maintenance
Allocated factory rent bldg.
Allocated plant executives salaries
Total indirect costs
6. Allocated costs from headquarters

Allocated factory rent bldg.
Allocated plant executives salaries
Depreciation- mach. & equipment
Total unavoidable costs
130,000
75,000
40,000
152,000
397,000
130,000
40,000
152,000
140,000
462,000
True/False Questions
1. False
6. True
2. False
7. False
3. True
8. True
4. False
9. False
5. False
10. True
11. False
12. False
13. True
14. False
15. False
Multiple choice
1. B
2. C
3. B
4. C
5. D
6. A
7. D
8. D
9. B
10. C
21. A
22. C
23. A
24. C
25. B
26. B
27. A
28. B
29. C
30. B
11. C
12. A
13. C
14. B
15. A
16. B
17. B
18. A
19. D
20. B
190,000
175,000
160,000
228,000
753,000
190,000
160,000
228,000
220,000
798,000
16. True
17. False
18. True
19. False
20. True

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Cost Accounting

Chapter 2 - Costs Concepts and classification

Problem 4 Bug Company

Problem 5 Mighty Muffler, Inc.

Problem 9 - Blanche Corporation

2. Total variable manufacturing cost per unit

3. Total variable manufacturing cost per unit

4. Full manufacturing cost per unit

Problem 11 Johnson Corporation

Problem 12 Valdez Motors Co.

2. Controllable direct fixed costs

3. Uncontrollable direct fixed costs:

4. Controllable direct fixed cost

5. Allocated costs from headquarters

6. Allocated costs from headquarters

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