Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
123) The following costs were incurred in May:
Direct materials
$
33,000
Direct labor
$
13,000
Manufacturing overhead
$
23,000
Selling expenses
$
16,000
Administrative expenses
$
34,000
Prime costs during the month totaled:
A) $36,000
B) $119,000
C) $69,000
D) $46,000
Answer: D
Explanation: Prime cost = Direct materials + Direct labor
= $33,000 + $13,000 = $46,000
Difficulty: 2 Medium
Topic: Cost Classifications for Manufacturing Companies; Cost Classifications for Preparing Financial Statements
Learning Objective: 01-02 Identify and give examples of each of the three basic manufacturing cost categories.; 01-03 Understand cost classifications used to prepare financial statements: product costs and period costs.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
124) Kneeland Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
6.80
Direct labor
$
4.15
Variable manufacturing overhead
$
1.65
Fixed manufacturing overhead
$
121,500
Sales commissions
$
1.00
Variable administrative expense
$
0.50
Fixed selling and administrative expense
$
40,500
If 10,000 units are produced, the total amount of manufacturing overhead cost is closest to:
A) $186,000
B) $138,000
C) $162,000
D) $150,000
Answer: B
Explanation:
Total variable manufacturing overhead cost ($1.65 per unit × 10,000 units)
$
16,500
Total fixed manufacturing overhead cost
121,500
Total manufacturing overhead cost (a)
$
138,000
Difficulty: 1 Easy
Topic: Cost Classifications for Manufacturing Companies; Cost Classifications for Preparing Financial Statements
Learning Objective: 01-02 Identify and give examples of each of the three basic manufacturing cost categories.; 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
125) Perteet Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows:
Average
Cost per Unit
Direct materials
$
6.70
Direct labor
$
3.25
Variable manufacturing overhead
$
1.60
Fixed manufacturing overhead
$
3.00
Fixed selling expense
$
0.70
Fixed administrative expense
$
0.40
Sales commissions
$
0.50
Variable administrative expense
$
0.55
If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:
A) $18,100
B) $28,000
C) $21,400
D) $14,800
Answer: C
Explanation:
Total variable manufacturing overhead cost ($1.60 per unit × 4,000 units)
$
6,400
Total fixed manufacturing overhead cost ($3.00 per unit × 5,000 units*)
15,000
Total manufacturing overhead cost (a)
$
21,400
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 5,000 units.
Difficulty: 2 Medium
Topic: Cost Classifications for Manufacturing Companies; Cost Classifications for Preparing Financial Statements
Learning Objective: 01-02 Identify and give examples of each of the three basic manufacturing cost categories.; 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.