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Exam 2: Cost Terms, Concepts, and Classifications

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Question 41

Multiple Choice

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What was the cost of goods sold (in thousands of dollars) for the year?

A) $700.
B) $500.
C) $660.
D) $580.

E) A) and B)
F) A) and C)

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Question 42

Multiple Choice

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What was the Gross Margin (in thousands of dollars) for the year?

A) $350.
B) $130.
C) $390.
D) $190.

E) None of the above
F) A) and C)

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Question 43

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Robert Smith earns $16 per hour assembling products.For each hour over 40 he works in a week he is paid time-and-a-half.During a given week,he worked 40 hours for which 3 hours were idle time.How much of his weekly wages would be charged to direct labour?

During the first week of April,Gillian worked a total of 50 hours assembling products and had no idle time.Gillian is paid $15 per hour for regular time,and is paid time-and-a-half for all hours in excess of a 40-hour week.How much of Gillian's wages for the week should be charged to direct labour?

A manufacturing company prepays its insurance coverage for a three-year period.The premium for the three years is $2,700 and is paid at the beginning of the first year.Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities.What amounts should be considered product costs and period costs respectively for the first year of coverage?

All costs incurred in a merchandising firm are considered to be period costs.

For the majority of manufacturing companies,the distinction between period costs and product costs is essential because of its effect on net income for a period.Failure to make the distinction can affect the cost of goods manufactured and cost of goods sold. Required: Would the need to make the distinction between product costs and period costs still be essential if a manufacturing company were to adopt the just-in-time technique in the lean thinking model? Explain.

Which one of the following costs should NOT be considered an indirect cost of serving a particular customer at a Dairy Queen fast food outlet?

The gross margin for Cushing Company for the first quarter of last year was $325,000 when sales were $700,000.The beginning inventory of finished goods was $60,000,and the ending inventory of finished goods was $85,000.What was the cost of goods manufactured for the first quarter?

Stony Electronics Corporation manufactures a portable radio designed for mounting on the wall of the bathroom.The following list represents some of the different types of costs incurred in the manufacture of these radios: 1)The plant manager's salary. 2)The cost of heating the plant. 3)The cost of heating executive offices. 4)The cost of printed circuit boards used in the radios. 5)Salaries and commissions of company salespersons. 6)Depreciation on office equipment used in the executive offices. 7)Depreciation on production equipment used in the plant. 8)Wages of janitorial personnel who clean the plant. 9)The cost of insurance on the plant building. 10)The cost of electricity to light the plant. 11)The cost of electricity to power plant equipment. 12)The cost of maintaining and repairing equipment in the plant. 13)The cost of printing promotional materials for trade shows. 14)The cost of solder used in assembling the radios. 15)The cost of telephone service for the executive offices. Required: Classify each of the items above as product (inventoriable)cost or period (noninventoriable)costs for the purpose of preparing external financial statements.

What was the net income (in thousands of dollars) for the year?

The following information was provided by Grand Company for the year just ended: What was the cost of goods manufactured for the year?

Which of the following costs is often important in decision making,but is omitted from conventional accounting records?

For a manufacturing company,which of the following is an example of a period cost rather than a product cost?

During the month of May,Bennett Manufacturing Company purchases $43,000 of raw materials.The manufacturing overhead totals $27,000 and the total manufacturing costs are $106,000.Assuming a beginning inventory of raw materials of $8,000 and an ending inventory of raw materials of $6,000,what must be the total for direct labour?

Brooke Foster is employed by Wong Laboratories,Inc. ,and is directly involved in preparing and packaging the company's leading sleep aid,RestWell.Brooke's basic wage rate is $15 per hour,and she is paid time-and-a-half for any work in excess of 40 hours per week.Additionally,Wong Laboratories provides a fringe benefit package that costs the company $5 for each hour of employee time (regular or overtime).During a recent week,Brooke worked 49 hours but was idle for 3 hours due to materials shortages. Required: (a. )Assume that Wong Laboratories treats all fringe benefits as part of manufacturing overhead.Compute Brooke's total wages and fringe benefits for the week and indicate how much of her wages and fringe benefits for the week would be allocated to direct labour and how much would be allocated to manufacturing overhead. (b. )Assume that Wong Laboratories treats the part of fringe benefits related to direct labour as a component of direct labour cost.Compute Brooke's total wages and fringe benefits for the week and indicate how much of her wages and fringe benefits would be allocated to direct labour and how much would be allocated to manufacturing overhead.

During the month of June,Reardon Company incurs $17,000 of direct labour and $8,500 of manufacturing overhead,and purchases $15,000 of raw materials.Between the beginning and the end of the month,the raw-materials inventory increases by $2,000,the finished goods inventory increases by $1,500,and the work-in-process inventory decreases by $3,000.What is the cost of goods manufactured?

The advertising costs incurred by Pepsi to air its commercials during the hockey season can best be described as a:

What was the cost of goods manufactured (finished) for the year (in thousands of dollars) ?

Gabel Inc.is a merchandising company.Last month,the company's merchandise purchases totalled $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?