Total variable selling and administrative expense ($0.95 per unit × 5,000 units sold)
$
4,750
Total fixed selling and administrative expense
($0.90 per unit × 5,000 units + $0.60 per unit × 5,000 units)
7,500
Total period (nonmanufacturing) cost
$
12,250
Difficulty: 1 Easy
Topic: Cost Classifications for Preparing Financial Statements; Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-03 Understand cost classifications used to prepare financial statements: product costs and period costs.; 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
129) Bressette Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
6.20
Direct labor
$
3.70
Variable manufacturing overhead
$
1.25
Fixed manufacturing overhead
$
10,000
Sales commissions
$
1.50
Variable administrative expense
$
0.50
Fixed selling and administrative expense
$
5,000
For financial reporting purposes, the total amount of product costs incurred to make 5,000 units is closest to:
A) $65,750
B) $10,000
C) $70,750
D) $55,750
Answer: A
Explanation:
Direct materials
$
6.20
Direct labor
3.70
Variable manufacturing overhead
1.25
Variable manufacturing cost per unit
$
11.15
Total variable manufacturing cost ($11.15 per unit × 5,000 units produced)
$
55,750
Total fixed manufacturing overhead cost
10,000
Total product (manufacturing) cost
$
65,750
Difficulty: 1 Easy
Topic: Cost Classifications for Preparing Financial Statements; Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-03 Understand cost classifications used to prepare financial statements: product costs and period costs.; 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
130) Landmann Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows:
Average
Cost per Unit
Direct materials
$
6.35
Direct labor
$
4.10
Variable manufacturing overhead
$
1.35
Fixed manufacturing overhead
$
13.50
Fixed selling expense
$
2.25
Fixed administrative expense
$
1.80
Sales commissions
$
1.00
Variable administrative expense
$
0.45
For financial reporting purposes, the total amount of product costs incurred to make 9,000 units is closest to:
A) $106,200
B) $236,700
C) $121,500
D) $227,700
Answer: D
Explanation:
Direct materials
$
6.35
Direct labor
4.10
Variable manufacturing overhead
1.35
Variable manufacturing cost per unit
$
11.80
Total variable manufacturing cost ($11.80 per unit × 9,000 units produced)
$
106,200
Total fixed manufacturing overhead cost ($13.50 per unit × 9,000 units produced)
121,500
Total product (manufacturing) cost
$
227,700
Difficulty: 1 Easy
Topic: Cost Classifications for Preparing Financial Statements; Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-03 Understand cost classifications used to prepare financial statements: product costs and period costs.; 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.