Direct labor
$
3.35
Variable manufacturing overhead
$
1.75
Fixed manufacturing overhead
$
8,800
Sales commissions
$
1.00
Variable administrative expense
$
0.40
Fixed selling and administrative expense
$
4,000
If 3,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
A) $5,250
B) $11,850
C) $8,800
D) $14,050
Answer: D
Explanation:
Total variable manufacturing overhead cost
($1.75 per unit × 3,000 units)
$
5,250
Total fixed manufacturing overhead cost
8,800
Total indirect manufacturing cost
$
14,050
Difficulty: 1 Easy
Topic: Cost Classifications for Assigning Costs to Cost Objects; Cost Classifications for Manufacturing Companies; Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-01 Understand cost classifications used for assigning costs to cost objects: direct costs and indirect costs.; 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
164) Schwiesow Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
7.05
Direct labor
$
3.50
Variable manufacturing overhead
$
1.65
Fixed manufacturing overhead
$
11,000
Sales commissions
$
1.00
Variable administrative expense
$
0.40
Fixed selling and administrative expense
$
5,500
For financial reporting purposes, the total amount of product costs incurred to make 5,000 units is closest to:
A) $72,000
B) $77,000
C) $11,000
D) $61,000
Answer: A
Explanation:
Direct materials
$
7.05
Direct labor
3.50
Variable manufacturing overhead
1.65
Variable manufacturing cost per unit
$
12.20
Total variable manufacturing cost
($12.20 per unit × 5,000 units produced)
$
61,000
Total fixed manufacturing overhead cost
11,000
Total product (manufacturing) cost
$
72,000
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
165) Schwiesow Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
7.05
Direct labor
$
3.50
Variable manufacturing overhead
$
1.65
Fixed manufacturing overhead
$
11,000
Sales commissions
$
1.00
Variable administrative expense
$
0.40
Fixed selling and administrative expense
$
5,500
For financial reporting purposes, the total amount of period costs incurred to sell 5,000 units is closest to:
A) $12,500
B) $8,300
C) $7,000
D) $5,500
Answer: A
Explanation:
Sales commissions
$
1.00
Variable administrative expense
0.40
Variable selling and administrative expense per unit
$
1.40