The cost of depreciating Applewhite's plant machinery is considered a variable cost because Applewhite uses an accelerated depreciation method for both book and income tax purposes. The cost of electricity for Applewhite's manufacturing facility is considered a fixed cost, even though the cost of the electricity has both variable and fixed components. 34;All of the above" is an available option. Statement I states that the cost of the direct materials in Applewhite's products is considered a variable cost.
While total fixed costs will remain unchanged regardless of changes in the cost driver, fixed unit costs will not. If the cost driver level increases, total fixed costs will remain the same, but the total number of units will increase, and unit fixed costs will decrease, not increase. If the cost object is the Jacket and Packaging Department, then anything directly associated with this Department will be a direct cost.
Cost of store manager’s salary
Draw a graph of the total monthly costs of the three plans for different levels of monthly long- distance calling
Which plan should Ashton choose if she expects to make 100 minutes of long-distance calls?
What is the variable manufacturing cost per vehicle? What is the fixed manufacturing cost per month?
Rent for the factory site and. inventory and other fixed manufacturing costs total $1,300 per month. Assuming Dotball purchases a second machine identical to the first machine, it will increase capacity from 4,400 jaw breakers per month to 8,800. The company will sell the phones at wholesale prices to mobile phone companies, who will in turn sell them in retail stores to the end customer.
TTC has undertaken the following activities in its value chain to bring its product to market:. Conduct market research on competing brands B. Design a TTC smartphone prototype C. Show the new design to mobile phone companies. Provide online help to mobile phone users for using the smartphone TTC H. Make design changes to the smartphone based on customer feedback.
Throughout the process of product development, manufacturing, marketing, distribution and customer service, TTC has tracked the following cost factors: Number of deliveries to mobile phone companies Technical hours spent on initial product design Hours spent researching competing market brands Hours of customer service. Identify each value chain activity listed at the beginning of the exercise with one of the following value chain categories:
Use the list of upstream cost drivers to find one or more reasonable cost drivers for each of the activities in the TTC value chain. Conduct market research on competing brands—Product and process design TTC smartphone prototype design—Product and process design Marketing new design to mobile phone companies—Marketing. Provide online assistance to mobile phone users to use TTC smartphone - Customer Service.
Change TTC smartphone design based on customer feedback—Product and process planning.
Inspection of materials E. Number of purchase orders
Draw a graph that plots fixed costs, variable costs, and total costs for each event against the number of guests. As the number of guests increases, TBE can offer price discounts because its fixed costs will be spread over a larger number of guests. The catering costs will then vary less with the number of guests because only $4,000 of fixed costs will be spread over the number of guests.
Materials cost $1 per flange, and the glassblowers are paid $28 an hour. How would your answer to requirement 2 be different if Gayle's Glassworks made and sold 10,000 flanges during this period. The variable costs are $1 per flange for materials and $2.80 per flange ($28 per hour divided by 10 flanges per hour) for direct production labor for a total of $3.80 per flange.
However, to make a profit, Gayle's Glassworks must also cover the period (non-manufacturing costs) of $10,000, or. Gayle's Glassworks cannot sell below Flora's price of $10 and still make a profit on the flanges. Average (unit) inventory (manufacturing) cost would be units = $6.60 per flange. Total unit costs including both inventory and period costs will be
The reason that the cost per unit decreases significantly is that fixed inventory (manufacturing) costs and fixed period (non-manufacturing) costs remain the same regardless of the number of units produced. So, as Gayle's Glassworks produces more units, fixed costs are spread over more units and the cost per unit decreases. This means that if you use unit costs to make decisions about price and which product to produce, you must be aware that unit cost only applies to a certain level of production.
Wages for personnel responsible for testing the quality of KitchenAid products during the assembly process.
Distinguish between manufacturing-, merchandising-, and service-sector companies
Distinguish between inventoriable costs and period costs
Each of the following cost items belongs to one of these companies: Best Buy (a company in the merchandising sector), KitchenAid (a company in the manufacturing sector), and HughesNet (a company in the service sector):. Perrier mineral water purchased by HughesNet for consumption by its software engineers h. HughesNet Area Sales Manager Salaries. Inventory costs are all costs of a product that are considered an asset when they are incurred and then become cost of goods sold when the product is sold.
These costs for a manufacturing company are included in the inventory of work in progress and finished goods (they are 'inventoried') to build up the costs of creating these assets. Period costs are all costs in the income statement except cost of goods sold. These costs are treated as expenses of the period in which they are incurred because they are not believed to benefit future periods (or because there is not sufficient evidence to conclude that such a benefit exists).
Expenditure of these costs is best matched immediately with expenditure with income. a) Telephones and computers purchased for resale by Best Buy—inventory cost of a trading company. It becomes part of cost of goods sold when phones and computers are sold. It is part of the manufacturing overhead that is included in the cost of producing a finished good.
It is a cost that benefits the current period and is not traceable to goods purchased for resale. e) Salaries for personnel responsible for testing the quality of KitchenAid products during the assembly process - the inventoriable cost of a manufacturing company. It is usually part of the manufacturing overhead that is included in the cost of producing a finished good (if quality testing is done for some products), but it can be a direct cost if quality testing is done by personnel working in a KitchenAid special. product line such as KitchenAid dishwashers. f) Salaries of Best Buy's marketing staff—the period cost of a trading company. It is assumed that it will not benefit future periods (or at least there is no sufficiently reliable evidence to estimate such future benefits). g) Perrier mineral water consumed by HughesNet software engineers-period cost of a service company.
HughesNet has no inventory of goods for sale and therefore no inventoryable costs. h) HughesNet Marketing Staff Salaries - Service Company Period Costs.
Compute (a) the cost of goods purchased and (b) the cost of goods sold
Prepare the income statement for 2017
Direct materials inventory 10/31/2017
Fixed manufacturing overhead costs for October 2017
Direct manufacturing labor costs for October 2017 4. Cost of finished goods available for sale in October min.). How would the answer to Problem 2-39 change if you were asked for a price schedule for goods manufactured and sold instead of a price schedule for goods manufactured.
Would the sales manager’s salary (included in marketing, distribution, and customer-service costs) be accounted for any differently if the Howell Corporation were a merchandising-
Using the flow of manufacturing costs outlined in Exhibit 2-9 (page 64), describe how the wages of an assembler in the plant would be accounted for in this manufacturing company
Plant supervisory salaries are usually regarded as manufacturing overhead costs. When might some of these costs be regarded as direct manufacturing costs? Give an example
Suppose that both the direct materials used and the plant and equipment depreciation are related to the manufacture of 1 million units of product. What is the unit cost for the direct
As a management accountant, explain concisely to the president why the unit costs differed in requirements 5 and 6
The direct materials unit cost of $320 is valid for predicting total costs because direct materials are a variable cost; the total direct material costs change as the level of production changes. Assume that both the direct materials used and the depreciation on plant and equipment are related to the production of 2 million units of product. Determine the unit cost of the direct materials assigned to these units and the unit cost of depreciation on plant and equipment.
Design costs and R&D costs may be considered product costs in the case of a contract with a government agency. For example, if the Air Force negotiated a contract with Lockheed to build a new type of supersonic fighter jet, design costs and R&D costs could be included in the contract as product costs. Is free time and overtime premium a direct or indirect cost for the products that Akua worked on in December.
Downtime caused by regular machine maintenance, slow order periods, or unexpected mechanical problems is an indirect cost to the product because it is not related to a specific product. If, on the other hand, the overtime is the result of a demanding "urgent job", the overtime premium is a direct cost of the job in question. The selling price per unit and the purchase price per pounds of direct materials were stable throughout the year.
New Times Manufacturing classifies all costs directly related to the manufacture of its product as product costs. Müller had suggested that the storage costs be included as product costs because they are “certainly related to our product”. The company produced 210,000 units and sold 190,000 units during that period. Show numerically how operating income would improve by $340,000 just by classifying the previous costs as product costs instead of period costs.
Although these costs are in fact related to the product, they are not direct costs of manufacturing the product. The controller should not reclassify costs as product costs just so the plant can reap short-term benefits, including the increase in Müller's personal year-end bonus. The idea of classifying costs as product costs versus period costs is to properly reflect the costs directly related to manufacturing (costs incurred to convert one asset, materials into another asset, finished goods) on the income statement and to properly reflect on the balance sheet those costs that will provide a future benefit (inventory).
The following table shows the total cost of petrol and insurance and the cost per miles if the truck has been driven (a) 20,000 miles and (b) 30,000 miles. We first calculate the cost of direct materials used and then the total cost of production in 2017. Total cost of production refers to all direct manufacturing costs and production costs incurred during 2017 for all items worked on during the year.
