Variable administrative expense
$
0.40
Fixed selling and administrative expense
$
4,500
The incremental manufacturing cost that the company will incur if it increases production from 5,000 to 5,001 units is closest to:
A) $10.65
B) $13.45
C) $16.25
D) $13.95
Answer: A
Explanation:
Direct materials
$
6.20
Direct labor
3.10
Variable manufacturing overhead
1.35
Incremental manufacturing cost
$
10.65
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
182) Vignana Corporation manufactures and sells hand-painted clay figurines of popular sports heroes. Shown below are some of the costs incurred by Vignana for last year:
Cost of clay used in production
$
65,000
Wages paid to the workers who paint the figurines
$
90,000
Wages paid to the sales manager's secretary
$
22,000
Cost of junk mail advertising
$
47,000
What is the total of the direct costs above?
A) $65,000
B) $112,000
C) $155,000
D) $202,000
Answer: C
Explanation: Direct costs include the cost of clay used in production and the wages paid to the workers who paint the figurines.
$65,000 + $90,000 = $155,000
Difficulty: 2 Medium
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
183) Vignana Corporation manufactures and sells hand-painted clay figurines of popular sports heroes. Shown below are some of the costs incurred by Vignana for last year:
Cost of clay used in production
$
65,000
Wages paid to the workers who paint the figurines
$
90,000
Wages paid to the sales manager's secretary
$
22,000
Cost of junk mail advertising
$
47,000
What is the total of the product costs above?
A) $0
B) $69,000
C) $155,000
D) $159,000
Answer: C
Explanation: Product costs include the cost of clay used in production and the wages paid to the workers who paint the figurines. $65,000 + $90,000 = $155,000
Difficulty: 2 Medium
Topic: Cost Classifications for Preparing Financial Statements
Learning Objective: 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
184) Vignana Corporation manufactures and sells hand-painted clay figurines of popular sports heroes. Shown below are some of the costs incurred by Vignana for last year:
Cost of clay used in production
$
65,000
Wages paid to the workers who paint the figurines
$
90,000
Wages paid to the sales manager's secretary
$
22,000
Cost of junk mail advertising
$
47,000
What is the total of the conversion costs above?
A) $65,000
B) $69,000
C) $90,000
D) $155,000
Answer: C
Explanation: Conversion costs include only the wages paid to the workers who paint the figurines.
Difficulty: 2 Medium
Topic: Cost Classifications for Preparing Financial Statements
Learning Objective: 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
185) A partial listing of costs incurred at Archut Corporation during September appears below:
Direct materials
$
113,000
Utilities, factory