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Solutions Manual, Chapter 1 21
Exercise 1-8 (continued)
3. Direct materials ………………………………….. $ 7.00
Direct labor ……………………………………….. 4.00
V
ariable manufacturin
g
overhead ……………. 1.50
V
ariable manufacturin
g
cost per unit ……….. $12.50
T
T
4. Sales commissions ………………………………. $1.00
V
ariable administrative expense ……………… 0.50
V
ariable sellin
g
and administrative per unit .. $1.50
V
g
T
T
T
V
g
T
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22 Managerial Accounting, 16th edition
Exercise 1-9 (20 minutes)
1. Direct materials ……………………………….. $ 7.00
Direct labor …………………………………….. 4.00
V
ariable manufacturin
g
overhead …………. 1.50
V
2. Direct materials ………………………………..
$ 7.00
Direct labor …………………………………….. 4.00
V
ariable manufacturin
g
overhead …………. 1.50
V
V
3.
V
ariable cost per unit sold (a) ………………
$14.00
T
4.
V
ariable cost per unit sold (a) ………………
$14.00
T
Note: The key to answering questions 5 through 8 is to calculate the total
fixed manufacturing overhead costs as follows:
A
vera
g
e fixed manufacturin
g
overhead
T
Note: The average fixed manufacturing overhead cost per unit of $5.00 is
V
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Solutions Manual, Chapter 1 23
Exercise 1-9 (continued)
5. The average fixed manufacturing overhead per unit is:
T
otal fixed manufacturin
g
overhead (a)….. $100,000
A
6. The average fixed manufacturing overhead per unit is:
T
otal fixed manufacturin
g
overhead (a)….. $100,000
A
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24 Managerial Accounting, 16th edition
Exercise 1-10 (10 minutes)
1. Direct materials ……………………………….. $ 7.00
Direct labor …………………………………….. 4.00
2. Direct materials ……………………………….. $ 7.00
Direct labor …………………………………….. 4.00
V
ariable manufacturin
g
overhead …………. 1.50
V
V
3. Because the 200 units to be sold to the new customer have already
been produced, the incremental manufacturing cost per unit is zero.
4. Sales commission ………………………………
$1.00
V
V
V
g
T
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Solutions Manual, Chapter 1 25
Exercise 1-11 (20 minutes)
1. The company’s variable cost per unit is:
$180,000 =$6 per unit.
30,000 units
The completed schedule is as follows:
Units produced and sold
30,000 40,000 50,000
T
otal costs:
T
T
2. The company’s contribution format income statement is:
Sales (45,000 units × $16 per unit)…………………… $720,000
V
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26 Managerial Accounting, 16th edition
Exercise 1-12 (10 minutes)
1. The computations for parts 1a through 1e are as follows:
a. The cost of batteries in Raw Materials:
Be
g
innin
g
raw materials inventory…………. 0
Plus: Battery purchases ………………………. 8,000
Batteries available ……………………………… 8,000
b. The cost of batteries in Work in Process:
Be
g
innin
g
work in process inventory ……… 0
Plus: Batteries withdrawn for production…. 7,500
c. The cost of batteries in Finished Goods:
Be
g
innin
g
finished
g
oods inventory ……….. 0
Plus: Batteries transferred in from work in
process (see requirement b) ………….….. 6,750
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Solutions Manual, Chapter 1 27
Exercise 1-12 (continued)
d. The cost of batteries in Cost of Goods Sold:
Number of batteries (see requirement c)
e. The cost of batteries included in selling expense:
2. Raw Materials, Work in Process and Finished Goods would appear on
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28 Managerial Accounting, 16th edition
Exercise 1-13 (30 minutes)
1. True. The variable manufacturing cost per unit will remain the same
2. False. The total fixed manufacturing cost will remain the same within
3. True. The total variable manufacturing cost will increase, so the total
4. True. The average fixed manufacturing cost per unit will decrease as
5. False. The total variable manufacturing cost will increase (rather than
6. False. The variable manufacturing cost per unit will remain the same,
7. True. The variable manufacturing cost per unit of $28 will stay
constant within the relevant range. The $28 figure is computed as
follows:
T
g
V
V
8. False. The total fixed manufacturing cost of $420,000 does not change
within the relevant range. The $420,000 figure is computed as follows:
T
otal manufacturin
g
cost per unit (a) …….. $70.00
V
A
T
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Solutions Manual, Chapter 1 29
Exercise 1-13 (continued)
9. True. The underlying computations are as follows:
V
ariable manufacturin
g
cost per unit (see
requirement 7) (a) …………………………...
$28.00
Number of units produced (b) …….………… 10,050
T
T
g
T
10. True. The underlying computations are as follows:
T
otal fixed manufacturin
g
cost (see requirement 8)
A
11. False. The total variable manufacturing cost will equal $281,400,
computed as follows:
V
ariable manufacturin
g
cost per unit (see
T
12. True. The underlying computations are as follows:
V
ariable manufacturin
g
cost per unit (see
A
T
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30 Managerial Accounting, 16th edition
Exercise 1-14 (30 minutes)
Cost Classifications for:
Name of the Cost
(1)
Predictin
g
Cost
behavior
(2)
Manufacturers
(3)
Preparing
Financial
Statements
(4)
Decision
Making
Rental revenue for
g
one, $30,000
per year ………………………………. None None None Opportunity cost
Direct materials cost, $80 per unit .. Variable Direct materials Product
Rental cost of warehouse, $500
per month ……………………………. Fixed None Period
Rental cost of equipment, $4,000
per month ……………………………. Fixed
Manufacturin
g
overhead Product
g
g
g