Accounting Chapter 2 Fidalgo Company Makes Stereos During The

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subject Authors Maryanne Mowen Don R. Hansen

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KEY: Bloom's: Application NOT: 1 min.
77. Refer to Figure 2-3. What was the gross margin percent?
a.
52%
b.
48%
c.
17%
d.
19%
78. Refer to Figure 2-3. What was the selling expense percent?
a.
17%
b.
19%
c.
16%
d.
no correct answer
79. Refer to Figure 2-3. What was the administrative expense percent?
a.
17%
b.
19%
c.
16%
d.
15%
80. Refer to Figure 2-3. What was the operating income percent?
a.
15%
b.
19%
c.
17%
d.
16%
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Figure 2-4.
Junko Company makes financial calculators. During the year Junko manufactured 97,000 financial
calculators. Finished goods inventory had the following units on hand:
January 1
1,260
December 31
1,040
81. Refer to Figure 2-4. How many financial calculators did Junko sell during the year?
a.
96,780
b.
97,220
c.
97,000
d.
98,260
82. Refer to Figure 2-4. If each financial calculator had a per-unit product cost of $112, what was the cost
of Finished goods inventory on December 31?
a.
$116,480
b.
$141,120
c.
$24,640
d.
none of these are correct
83. Refer to Figure 2-4. If each financial calculator has a per-unit product cost of $112, what was the cost
of goods sold last year?
a.
$10,864,000
b.
$10,839,360
c.
$11,005,120
d.
$10,888,640
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Figure 2-6.
Seaview Company took the following data from their income statement at the end of the current year.
Per-unit product cost:
$30
Gross margin percentage:
40%
Selling and administrative expenses
$30,000
Operating income
$10,000
84. Refer to Figure 2-6. What was gross margin for the year?
a.
$60,000
b.
$100,000
c.
$40,000
d.
none of these
85. Refer to Figure 2-6. What was cost of goods sold for the year?
a.
$60,000
b.
$40,000
c.
$100,000
d.
none of these
86. Refer to Figure 2-6. How many units were sold during the year?
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a.
3,333
b.
1,000
c.
1,500
d.
2,000
87. Refer to Figure 2-6. What was the sales price per unit?
a.
$50
b.
$30
c.
$20
d.
$10
88. If beginning work-in-process inventory is $120,000, ending work-in-process inventory is $160,000,
cost of goods manufactured is $400,000 and direct materials used are $100,000, what are the
conversion costs?
a.
$140,000
b.
$280,000
c.
$300,000
d.
$340,000
89. Information from the records of Place, Inc., for December 2011 is as follows:
Sales
$820,000
Selling and administrative expenses
140,000
Direct materials purchases
176,000
Direct labor
200,000
Factory overhead
270,000
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Direct materials, December 1
24,000
Work in process, December 1
50,000
Finished goods, December 1
46,000
Direct materials, December 31
28,000
Work in process, December 31
56,000
Finished goods, December 31
38,000
Net income for the month of December is:
a.
$644,000.
b.
$36,000.
c.
$636,000.
d.
$180,000.
90. Selected data concerning the past year's operations of the Burner Corporation are as follows:
Selling and administrative expenses
$225,000
Direct materials used
397,500
Direct labor
450,000
Dec. 1, 2011
Dec. 31, 2011
Direct materials
$36,000
$42,000
Work in process
75,000
84,000
Finished goods
69,000
57,000
The cost of direct materials purchased is:
a.
$397,500.
b.
$403,500.
c.
$367,500.
d.
$405,000.
PROBLEM
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1. Stone Company, maker of computers, incurred the following costs during the year:
Required: Classify each cost as either fixed or variable cost.
Fixed
Variable
1.
Salary of the factory supervisor
2.
Materials needed to assemble the computers
3.
Wages paid to an assembly line worker
4.
Depreciation on the factory
5.
Utility bill for the factory
6.
Grease used to lubricate the machine
7.
Rent paid for the factory
8.
Property taxes on the factory and corporate office
9.
Boxes used to package the completed computers
10.
Advertising in a newspaper monthly
ANS:
2. Ashland Company, maker of kitchen cabinets, incurred the following costs during the current year:
Required: Classify each cost as either a product or period cost.
Product
Period
1.
Depreciation on automobiles used by the sales staff.
2.
Salary of Ashland's chief executive officer
3.
Glue used in the production process
4.
Supplies for factory washroom
5.
Research and development costs
6.
Property taxes on factory building
7.
Salary of company controller
8.
Depreciation on furniture in factory lunchroom
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9.
Cost of lubricating machinery
10.
Wood used in production process
ANS:
3. Arcadia Company manufactures recreational vehicles and incurred the following costs during the
current year.
Required: Classify each cost using the table format given below:
Product Cost
Period Cost
Direct
Materials
Direct
Labor
Overhead
Selling
Expense
Administrative
Expense
1.
Wages of general office
personnel
2.
Cost of tires
3.
Factory supervisor's salary
4.
Conference for marketing
personnel
5.
Factory security guards
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6.
Research and development
7.
Assembly line workers
8.
Company receptionist
9.
Advertising cost
10.
Cost of shipping vehicles to
customers
ANS:
4. The Bayou Company makes crab pots. During the current month, direct materials costing $126,000
were put into production. Direct labor of $78,000 was incurred and overhead equaled $84,000. Selling
and administrative expenses totaled $66,000 for the month and the company manufactured 3,000 crab
pots. Assume there was no beginning inventory and that 2,800 crab pots were sold.
Required:
A.
Compute the per-unit product cost
B.
Compute the per-unit prime cost
C.
Compute the per-unit conversion cost
D.
What is cost of goods sold for the month?
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E.
What is the cost of ending finished goods for the month?
5. Ross Company makes handbags. Last month direct materials (leather, thread, zippers, decorative
accents) costing $76,000 were put into production. Ross had 30 workers, each worked 160 hours this
month and each are paid $12 per hour. Overhead equaled $80,000 for the period. Ross Company
produced 40,000 handbags as of the end of the month.
Required: Calculate the total product cost for the month and calculate the cost of one handbag that
was produced.
6. Room With A View Company manufactures curtains. Last week, direct materials costing $42,000
were put into production. Direct labor of $22,000 was incurred and overhead totaled $50,000. By
the end of the week, the company had produced 12,000 curtains.
Required:
1. Calculate the total prime cost for the week.
2. Calculate the per-unit prime cost.
3. Calculate the total conversion cost for the week.
4. Calculate the per-unit conversion cost.
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7. The Blanchett Company manufactures fishing rods. Last year, direct materials costing $516,000 were
put into production. Direct labor of $430,000 was incurred and overhead equaled $645,000. The
company had operating income for the year of $58,000 and manufactured and sold 86,000 fishing rods
at a sales price of $21 per unit. Assume that there were no beginning or ending inventory balances in
the work in process and finished goods inventory accounts.
Required:
A.
Compute the per-unit product cost
B.
Compute the per-unit prime cost
C.
Compute the per-unit conversion cost
D.
Compute the gross margin for the year
E.
Compute the selling and administrative expenses for the year
F.
Assume production amounted to 86,000 fishing rods and 80,000 were sold. Compute
cost of goods sold.
G.
Assume production amounted to 86,000 fishing rods and 80,000 were sold. Compute
the balance in ending finished goods inventory.
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8. The Butchart Company manufactures microwave ovens. Last year, the per-unit product cost was $56,
the per-unit prime cost was $34, and the per-unit conversion cost was $42. Cost of goods sold for the
year was $560,000 and the sale price per unit was $100. In addition, direct labor costs of $200,000 and
selling and administrative expenses of $240,000 were incurred.
Required:
A.
Calculate how many units were sold last year
B.
Compute the cost of direct materials used
C.
Compute the cost of overhead
D.
Compute the gross margin for the year
E.
Calculate operating income
9. Picture It Inc. manufactures customized wooden frames. The direct materials needed to construct the
frames are wood, glass and cardboard. Picture It has 22 employees who work a 40 hour work week
and are each paid $17 per hour. The company produced and sold 900 frames in the month of
September.
During the month of September the following purchases were made to produce the 900 frames:
Wood- 4000 ft. at $1.20/ft.
Glass- 400 pieces at $5.60/piece
Cardboard- 500 pieces at $.50/piece
Required:
1. Calculate the total product cost for the month. Assume that all employees worked four full weeks in
September and that the company incurred $55,000 in overhead costs.
2. Calculate the per unit cost.
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3. Calculate the gross margin for the month of September assuming that the company sells each frame
for $250.
10. Tucker Company, a manufacturing firm, has supplied the following information from its accounting
records for the month of April.
Direct labor cost
$12,000
Purchases of raw materials
17,000
Factory insurance
4,000
Research and development
7,500
Factory property taxes
3,000
Sales commissions paid
4,500
Work in process, April 1
2,000
Work in process, April 30
2,800
Materials inventory, April 1
1,475
Materials inventory, April 30
1,200
Finished goods inventory, April 1
2,250
Finished goods inventory, April 30
750
Required: Prepare a Statement of Cost of Goods Manufactured
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11. In June, Olympic Company purchased materials costing $38,000, and incurred direct labor cost of
$42,000. Overhead totaled $27,000 for the month. Information on inventories was as follows.
June 1
June 30
$3,000
$2,700
1,000
1,275
2,500
1,775
Required:
A.
Calculate the cost of direct materials used during June.
B.
Calculate the total manufacturing cost for June.
C.
Calculate the cost of goods manufactured for June.
D.
Calculate cost of goods sold for June.
12. Templar Company, a manufacturing firm, has supplied the following information from its accounting
records for the month of November:
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Factory supplies used
$18,000
Depreciation on factory building
17,000
Salary of company controller
6,000
Factory janitorial costs
5,000
Marketing and promotion
4,500
Direct labor cost
22,000
Purchases of raw materials
10,000
Finished goods inventory, Nov. 1
2,250
Finished goods inventory, Nov. 30
3,750
Work-in-process inventory, Nov. 1
4,200
Work-in-process inventory, Nov. 30
2,750
Materials inventory, Nov. 1
3,500
Materials inventory, Nov. 30
5,100
Required:
A.
Prepare a Statement of Cost of Goods Manufactured
B.
Prepare a Statement of Cost of Goods Sold
13. Fidalgo Company makes stereos. During the year, Fidalgo manufactured and sold 75,000 stereos at a
sales price of $575 per unit. Fidalgo's per-unit product cost was $540 and selling and administrative
expenses totaled $2,000,000.
Required:
A.
Compute the total sales revenue

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