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184.
Sobota Corporation has provided the following partial listing of costs incurred during
August:
Marketing salaries
$49,000
Property taxes, factory
$7,000
Administrative travel
$104,000
Sales commissions
$49,000
Indirect labor
$38,000
Direct materials
$138,000
Advertising
$76,000
Depreciation of production equipment
$54,000
Direct labor
$89,000
Direct materials
Direct labor
Manufacturing overhead:
Total product cost
Marketing salaries
$49,000
Required:
a. What is the total amount of product cost listed above? Show your work.
b. What is the total amount of period cost listed above? Show your work.
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185.
Stony Electronics Corporation manufactures a portable radio designed for mounting on the
wall of the bathroom. The following list represents some of the different types of costs
incurred in the manufacture of these radios:
1. The plant manager’s salary.
2. The cost of heating the plant.
3. The cost of heating executive offices.
4. The cost of printed circuit boards used in the radios.
5. Salaries and commissions of company salespersons.
6. Depreciation on office equipment used in the executive offices.
7. Depreciation on production equipment used in the plant.
8. Wages of janitorial personnel who clean the plant.
9. The cost of insurance on the plant building.
10. The cost of electricity to light the plant.
11. The cost of electricity to power plant equipment.
12. The cost of maintaining and repairing equipment in the plant.
13. The cost of printing promotional materials for trade shows.
14. The cost of solder used in assembling the radios.
15. The cost of telephone service for the executive offices.
Required:
Classify each of the items above as product (inventoriable) cost or period
(noninventoriable) cost for the purpose of preparing external financial statements.
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186.
A number of costs and measures of activity are listed below.
Cost Description
Possible Measure of
Activity
1.
Cost of renting production equipment on a monthly
basis at a surfboard manufacturer
Surfboards produced
2.
Cost of shipping bags of garden mulch to a retail
garden store
Bags shipped
3.
Building rent at a sandwich shop
Dollar sales
4.
Cost of hard disk installed in a computer
Number of computers
assembled
5.
Cost of fresh vegetables used at a sandwich shop
Dollar sales
6.
Janitorial wages at a surfboard manufacturer
Surfboards produced
7.
Cost of advertising at a surfboard company
Surfboards sold
8.
Clinical supplies at a doctor’s office
Number of patients
9.
Cost of leasing checkout equipment on a monthly
basis at an electronics store
Dollar sales
10.
Cost of heating an electronics store
Dollar sales
Required:
For each item above, indicate whether the cost is MAINLY fixed or variable with respect
to the possible measure of activity listed next to it.
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187.
A number of costs and measures of activity are listed below.
Cost Description
Possible Measure of
Activity
1.
Cost of cement used to produce cinder blocks
Cinder blocks
produced
2.
Cost of leasing checkout equipment on a monthly
basis at a hardware store
Dollar sales
3.
Cost of vaccine used at a clinic
Vaccines
administered
4.
Salary of the staff chaplain at a hospital
Number of patients
5.
Windshield wiper blades installed on autos at an
auto assembly plant
Number of autos
assembled
6.
Lease cost of equipment at a dentist’s office
Number of patients
7.
Interest expense on corporate debt
Dollar sales
8.
Cost of renting production equipment on a monthly
basis at a snowboard manufacturer
Snowboards
produced
9.
Cost of advertising at a snowboard company
Snowboards sold
10.
Cook’s wages at a taco shop
Dollar sales
Required:
For each item above, indicate whether the cost is MAINLY fixed or variable with respect
to the possible measure of activity listed next to it.
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188.
Younger Corporation reports that at an activity level of 8,700 units, its total variable cost is
$653,109 and its total fixed cost is $658,416.
Required:
For the activity level of 8,800 units, compute: (a) the total variable cost; (b) the total fixed
cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost
per unit; and (f) the average total cost per unit. Assume that this activity level is within the
relevant range.
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189.
Shaw Supply Company sells a single product and has the following average costs at a
sales level of 15,000 units:
Variable cost per unit
$2.45
Fixed cost per unit
4.75
Total cost per unit
$7.20
Required:
Determine the following amounts at a sales level of 18,000 units:
a. Total variable cost
b. Total fixed cost
c. Variable cost per unit
d. Fixed cost per unit
e. Total cost per unit
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190.
At an activity level of 8,800 units, Pember Corporation’s total variable cost is $146,520 and
its total fixed cost is $219,296.
Required:
For the activity level of 8,900 units, compute: (a) the total variable cost; (b) the total fixed
cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost
per unit; and (f) the average total cost per unit. Assume that this activity level is within the
relevant range.
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191.
Cosgrove, Inc., is a wholesaler that distributes a single product. The company’s revenues
and expenses for the last three months are given below:
Cosgrove Company
Traditional Format Income Statement
For the Three Months Ended June 30
April
May
June
Sales in units
3,000
3,750
4,500
Sales revenue
$420,000
$525,000
$630,000
Cost of goods sold
168,000
210,000
252,000
Gross margin
252,000
315,000
378,000
Selling and administrative expenses:
Shipping expense
44,000
50,000
56,000
Advertising expense
70,000
70,000
70,000
Salaries and commissions
107,000
125,000
143,000
Insurance expense
9,000
9,000
9,000
Depreciation expense
42,000
42,000
42,000
Total selling and administrative expense
272,000
296,000
320,000
Net operating income (loss)
($20,000)
$19,000
$58,000
Required:
a. Determine which expenses are mixed and, by use of the high-low method, separate
each mixed expense into variable and fixed elements. (Use unit sales as the activity
measure.) State the cost formula for each mixed expense.
b. Compute the company‘s contribution margin for May.
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