Sales commissions
$
1.00
Variable administrative expense
$
0.50
The incremental manufacturing cost that the company will incur if it increases production from 5,000 to 5,001 units is closest to:
A) $16.20
B) $10.80
C) $13.80
D) $14.30
Answer: B
Explanation:
Direct materials
$
6.05
Direct labor
3.05
Variable manufacturing overhead
1.70
Incremental manufacturing cost
$
10.80
Difficulty: 1 Easy
Topic: Cost Classifications for Decision Making
Learning Objective: 01-05 Understand cost classifications used in making decisions: differential costs, sunk costs, and opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
150) Haack Inc. is a merchandising company. Last month the company's cost of goods sold was $84,000. The company's beginning merchandise inventory was $20,000 and its ending merchandise inventory was $18,000. What was the total amount of the company's merchandise purchases for the month?
A) $86,000
B) $82,000
C) $84,000
D) $122,000
Answer: B
Explanation: Cost of goods sold = Beginning merchandise inventory + Purchases – Ending merchandise inventory
$84,000 = $20,000 + Purchases – $18,000
Purchases = $84,000 – $20,000 + $18,000 = $82,000
Difficulty: 2 Medium
Topic: Using Different Cost Classifications for Different Purposes
Learning Objective: 01-06 Prepare income statements for a merchandising company using the traditional and contribution formats.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
151) Gabel Inc. is a merchandising company. Last month the company's merchandise purchases totaled $63,000. The company's beginning merchandise inventory was $13,000 and its ending merchandise inventory was $15,000. What was the company's cost of goods sold for the month?
A) $91,000
B) $63,000
C) $65,000
D) $61,000
Answer: D
Explanation: Cost of goods sold = Beginning merchandise inventory + Purchases – Ending merchandise inventory = $13,000 + $63,000 – $15,000 = $61,000
Difficulty: 1 Easy
Topic: Using Different Cost Classifications for Different Purposes
Learning Objective: 01-06 Prepare income statements for a merchandising company using the traditional and contribution formats.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
152) The following cost data pertain to the operations of Quinonez Department Stores, Inc., for the month of September.
Corporate headquarters building lease
$
77,000
Cosmetics Department sales commissions—Northridge Store
$
4,000
Corporate legal office salaries
$
59,000
Store manager's salary—Northridge Store
$
11,000
Heating—Northridge Store
$
10,000
Cosmetics Department cost of sales—Northridge Store
$
37,000
Central warehouse lease cost
$
16,000
Store security—Northridge Store
$
12,000
Cosmetics Department manager's salary—Northridge Store
$
4,000
The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores.
What is the total amount of the costs listed above that are direct costs of the Cosmetics Department?
A) $78,000
B) $45,000
C) $41,000
D) $37,000
Answer: B
Explanation: Direct costs of the Cosmetics Department = Cosmetics Department sales commissions + Cosmetics Department cost of sales + Cosmetics Department manager's salary = $4,000 + $37,000 + $4,000 = $45,000
Difficulty: 1 Easy
Topic: Cost Classifications for Assigning Costs to Cost Objects
Learning Objective: 01-01 Understand cost classifications used for assigning costs to cost objects: direct costs and indirect costs.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
153) The following cost data pertain to the operations of Quinonez Department Stores, Inc., for the month of September.