ACCT 203 Lecture Notes - Lecture 7: Direct Labor Cost

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brownduck883

22 May 2018

School

George Mason University

Department

Accounting

Course

ACCT 203

Professor

Harley

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GMU ACCOUNTING 203 Lecture 7

Managerial Accounting:

Provides information to aid management in planning and controlling business

activities

Which of these statements is true regarding product and period costs?

A)Factory maintenance is a product cost and sales commission is a period cost.

B)Sales commission is a product cost and depreciation on factory equipment is a

product cost.

C)Sales commission is a product cost and factory rent is a period cost.

D)Factory wages are a product cost and direct material is a period cost.

A)Factory maintenance is a product cost and sales commission is a period cost.

Which of these statements is true regarding fixed and variable costs?

A)Fixed costs stay the same and variable costs increase in total as activity volume

increases.

B)Both fixed and variable costs increase as activity volume increases.

C)Both fixed and variable costs stay the same in total as activity volume increases.

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Document Summary

Provides information to aid management in planning and controlling business activities. B)sales commission is a product cost and depreciation on factory equipment is a product cost. C)sales commission is a product cost and factory rent is a period cost. D)factory wages are a product cost and direct material is a period cost. A)factory maintenance is a product cost and sales commission is a period cost. B)both fixed and variable costs increase as activity volume increases. C)both fixed and variable costs stay the same in total as activity volume increases. D)fixed costs increase and variable costs decrease in total as activity volume decreases. A)fixed costs stay the same and variable costs increase in total as activity volume increases. The following costs are included in a recent summary of data for a company: advertising expense, ,500; depreciation expense - factory building, ,500; direct labor, ,500; direct material used, ,500; factory utilities, ,500; and sales salaries expense, ,500.

Related Questions

Mansah Co., Ltd., of Ghana is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Level of Activity Low High Direct labor-hours 56,100 74,800 Total factory overhead costs $ 276,310 $ 315,580 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 56,100-hour level of activity as follows: Indirect materials (variable) $ 95,370 Rent (fixed) 130,000 Maintenance (mixed) 50,940 Total factory overhead costs $ 276,310 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $315,580 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $315,580 consists of indirect materials and rent. Think about the behavior of variable and fixed costs

viridianantelope156

PROBLEM 2-17 High-Low Method; Predicting Cost [LO2-4, LO2-5] Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctu- ate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Level of Activity High Direct labor-hours ................. Total factory overhead costs ........ Low 50,000 $14,250,000 75,000 $17,625,000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The com- pany has analyzed these costs at the 50,000-hour level of activity as follows: Indirect materials (variable) ...... Rent (fixed) .... Maintenance (mixed) ...... Total factory overhead costs ..... $ 5,000,000 6,000,000 3,250,000 $14,250,000 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $17,625,000 factory overhead cost at the high level of activity con- sists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $17,625,000 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) 2. Using the high-low method, estimate a cost formula for maintenance. 3. What total factory overhead costs would you expect the company to incur at an operating level of 70,000 direct labor-hours?

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:

$5,500

$8,300

$12,500

$7,000

Kesterson Corporation has provided the following information:

	Cost per Unit		Cost per Period
Direct materials	$	6.20
Direct labor	$	3.10
Variable manufacturing overhead	$	1.35
Fixed manufacturing overhead			$	14,000
Sales commissions	$	1.50
Variable administrative expense	$	0.40
Fixed selling and administrative expense			$	4,500

If the selling price is $21.90 per unit, the contribution margin per unit sold is closest to:

$12.60

$9.35

$8.45

$5.65

At a volume of 5,000 units, Pwerson Company incurred $32,000 in factory overhead costs, including $14,000 in fixed costs. If volume increases to 6,000 units and both 5,000 units and 6,000 units are within the relevant range, then the company would expect to incur total factory overhead costs of: (Round intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-06-28

$21,600

$35,600

$32,000

$18,000

ACCT 203 Lecture Notes - Lecture 7: Direct Labor Cost

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