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
189) A partial listing of costs incurred during March at Febbo Corporation appears below:
Factory supplies
$
9,000
Administrative wages and salaries
$
85,000
Direct materials
$
126,000
Sales staff salaries
$
30,000
Factory depreciation
$
33,000
Corporate headquarters building rent
$
43,000
Indirect labor
$
26,000
Marketing
$
65,000
Direct labor
$
99,000
The total of the manufacturing overhead costs listed above for March is:
A) $68,000
B) $35,000
C) $516,000
D) $293,000
Answer: A
Explanation: Manufacturing overhead costs include factory supplies, factory depreciation, and indirect labor. $9,000 + $33,000 + $26,000 = $68,000
Difficulty: 2 Medium
Topic: Cost Classifications for Manufacturing Companies
Learning Objective: 01-02 Identify and give examples of each of the three basic manufacturing cost categories.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
190) A partial listing of costs incurred during March at Febbo Corporation appears below:
Factory supplies
$
9,000
Administrative wages and salaries
$
85,000
Direct materials
$
126,000
Sales staff salaries
$
30,000
Factory depreciation
$
33,000
Corporate headquarters building rent
$
43,000
Indirect labor
$
26,000
Marketing
$
65,000
Direct labor
$
99,000
The total of the product costs listed above for March is:
A) $516,000
B) $68,000
C) $293,000
D) $223,000
Answer: C
Explanation: Product costs include factory supplies, direct materials, factory depreciation, indirect labor, and direct labor. $9,000 + $126,000 + $33,000 + $26,000 + $99,000 = $293,000
Difficulty: 2 Medium
Topic: Cost Classifications for Manufacturing Companies; Cost Classifications for Preparing Financial Statements
Learning Objective: 01-02 Identify and give examples of each of the three basic manufacturing cost categories.; 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
191) Fasheh 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
$
5.50
Direct labor
$
3.90
Variable manufacturing overhead
$
1.30
Fixed manufacturing overhead
$
13.50
Fixed selling expense
$
2.25
Fixed administrative expense
$
1.80
Sales commissions
$
0.50
Variable administrative expense
$
0.45
If 10,000 units are produced, the average fixed manufacturing cost per unit produced is closest to:
A) $15.00
B) $12.83
C) $13.50
D) $12.15
Answer: D
Explanation:
Total fixed manufacturing overhead cost
($13.50 per unit × 9,000 units*) (a)
$
121,500
Number of units produced (b)
10,000
Average fixed manufacturing cost per unit produced
(a) ÷ (b)
$
12.15
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 9,000 units.
Difficulty: 2 Medium
Topic: Cost Classifications for Predicting Cost Behavior
Learning Objective: 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
192) Fasheh 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: