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
174) Lambeth Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
4.90
Direct labor
$
2.95
Variable manufacturing overhead
$
1.25
Fixed manufacturing overhead
$
8,000
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) $8,000
B) $11,750
C) $9,750
D) $3,750
Answer: B
Explanation:
Total variable manufacturing overhead cost
($1.25 per unit × 3,000 units)
$
3,750
Total fixed manufacturing overhead cost
8,000
Total indirect manufacturing cost
$
11,750
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
175) Mccaskell 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
$
6.30
Direct labor
$
3.65
Variable manufacturing overhead
$
1.75
Fixed manufacturing overhead
$
9.90
Fixed selling expense
$
2.25
Fixed administrative expense
$
1.80
Sales commissions
$
1.00
Variable administrative expense
$
0.50
If 8,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:
A) $79,600
B) $93,600
C) $87,600
D) $172,800
Answer: A
Explanation:
Direct materials
$
6.30
Direct labor
3.65
Direct manufacturing cost per unit (a)
$
9.95
Number of units produced (b)
8,000
Total direct manufacturing cost (a) × (b)
$
79,600
Difficulty: 2 Medium
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
176) Mccaskell 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
$
6.30
Direct labor
$
3.65
Variable manufacturing overhead
$
1.75