Cost Terms and Behaviors
What are period costs and provide an example?
Period costs are not related to product produced. Examples: Marketing expense, selling, general and administrative expense
How do you calculate contribution margin per unit?
Selling price per unit − Variable cost per unit
Calculate the Direct manufacturing cost for SB corp. which produces 5,000 units: DM 7.00 per unit, DL 3.50, Variable manufacturing overhead (MO) 2.00, Fixed MO 30,000, Variable Administrative Expense 1.00, and Sales commissions 2.00
What is 7.00+3.50 X 5,000 units = $52,500
Jack Corp uses job order costing with the following data determine the entry to report direct and indirect labor during the year.
Direct Labor Cost 750,000
Indirect Labor 230,000
Other MO costs 169,000
Debit WIP for 750,000 and Debit MO 230,000 and Credit Wages Payable
Define a fixed cost
What is a cost that remains constant in total but decreases per unit as activity increases
Compute Cost of Goods Sold for Flint Co Job 123-- consists of 9,000 units and 2,000 units sold in May
Beginning Balance 50,000
DM 300,000
DL 80,00
MO applied 163,000
What is 131,780 (BB 50,000+DM 300,000+DL 80,000+ MO applied 163,000 - 593,000/9,000 = 65.89
65.89 X 2,000 =131,780
What is incremental manufacturing cost that Sharon Company incur when production increased from 5,000 to 5,001 units given that DM 8.00, DL 6.50, VMO 2.30, sales commissions 3.00 and Variable administrative expense .80
What is $16.80 (8.00+6.50+2.30).
What is the journal entry to record depreciation on manufacturing equipment?
a. Manufacturing Overhead (MO) Debit and Accumulated Depreciation(AD) Credit
b. AD Debit and MO Credit
c. MO Debit and Depreciation Expense Credit
d. Depreciation Expense Debit and MO Credit
What is A?
Define variable cost
A cost that remains constant per unit and increases in total as activity increases
What is the amount of fixed costs.
$40,000 = $17,000 + $23 X1,000
$17,000 (Total Costs= Fixed costs +variable cost per unit X number of units)
Macy's Corp activity range is 6,000 to 9,000 units and sales 6,000 units at 28.00 per unit. DM 6.50, DL 4.00, VMO 3.00, FMO 5.00, Fixed Selling Expense 2.00 Sales Commissions 2.50 and Variable administrative expense .75, determine the unit contribution margin.
What is 11.25 (28.00 - DM 6.50, DL 4.00, VMO 3.00, Sales Commission 2.50, Variable Administrative Expense .75)
If the actual MO overhead cost was 50,000 and the applied MO overhead was 40,000, overhead would be underapplied or overapplied
What is underapplied?
Define a mixed cost.
How does mixed cost behave if the activity increases.
Contains both a variable and fixed component
Mixed cost increases in total but decreases per unit
Using the following, calculate total costs:
Fixed Costs = $14,000
Variable Cost per Unit = $12
Total Units = 500
$20,000 (14,000 + 12X500)
What is the formula for determining the predetermined overhead rate using machine-hours?
What is estimated manufacturing overhead/estimated machine-hours
What is the journal entry to apply MO to production?
Debit WIP and Credit and MO
What are direct costs?
Cost that can be easily traced to a specific cost object
A product sells for $50 and has variable costs of $30 per unit.
What is the contribution margin per unit?
20
PBS produced 8,000 units and if fixed MO is 32,000 and Variable MO is 2.10 per unit how much is the total amount of MO?
What is 48,800(32,000 FMO + (VMO 2.10 X 8,000 units =16.800)?
What are prime cost?
Prepare a journal entry for Raw Materials Purchased
Direct materials and direct labor.
Raw Materials Debit
Accounts Payable Credit