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