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1. Name a characteristic (from an accounting standpoint) thatdistinguishes product costs from period costs.

2. Name three specific Product costs and which of the threeclassifications (DM, DL, or MOH) in which each belongs, as anexample Factory Equipment Depreciation is a product cost and it isclassified as Manufacturing Overhead.

3. The author discusses three methods of separating a Mixed Costinto its Fixed and Variable components. What are the threemethods?

4. In the Cost Equation - Y=a+b(x) - what does"a" represent? What does "b" represent?

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5 Jul 2019

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2. Lennox Industries manufactures two products: A and B. Areview of the company's accounting records revealed the followingper-unit costs and the current production volumes: A B Productionvolume (units) 2,500 5,000 Direct material $ 40 $ 60 Direct labor:2 hours @ $12 per hour 24 3 hours @ $12 per hour 36 Manufacturingoverhead: 2 hours at $93 per DL hour 186 3 hours at $93 per DL hour279 Manufacturing overhead is currently computed by spreadingoverhead of $1,860,000 over 20,000 direct labor hours. Managementis considering a shift to activity-based costing in an effort toimprove the firm's accounting procedures, and the following dataare available that can be used for an Activity Based Costingsystem. All the overhead costs can be divided into three cost poolsand the budgeted costs and the associated cost driver that can beused to apply the costs to the products are shown below. CostDriver Volume Cost Pool Cost Cost Driver A B Total Setups $ 240,000Number of setups 100 20 120 General factory 1,500,000 Direct laborhours 5,000 15,000 20,000 Machine processing 120,000 Machine hours2,200 800 3,000 $1,860,000 Lennox determines selling prices byadding desired profit margin (computed as 40% of total cost) to aproduct's total cost. Required: A. Compute the per-unit cost andselling price of product B by using Lennox's current costingprocedures. (4 points) B. Compute the per-unit overhead cost ofproduct B if the company switches to activity-based costing. (3points) C. Compute the total per-unit cost and selling price forproduct B under activity-based costing. (3 points) D. Lennox hasrecently encountered significant international competition forproduct B, with considerable business being lost to very aggressivesuppliers. Will activity-based costing allow the company to be morecompetitive with product B from a price perspective? Brieflyexplain. ( 2.5 points) E. Will the cost and selling price ofproduct A likely increase or decrease if Lennox changes toactivity-based costing? Why? Hint: No calculations are necessary.(2 points)

lilacspider474

20. LO.2 & LO.3 (Cost behavior and classification)Indicatewhether each of the following items is a variable (V),fixed (F), ormixed (M) cost and whether it is product/service (PT)or period (PD)cost. If some items have alternative answers,indicate thealternatives and the reasons for them.

a. Wages of factory maintenance workers.

b. Wages of forklift operators who move finished goods fromacentral warehouse to the loading dock

c. Insurance premiums paid on the headquarters of amanufacturingcompany

d. Cost of labels attached to shirt made by a company

e. Property taxes on a manufacturing plant

f. Paper towels used in factory restrooms

g. Salaries of office assistants in a law firm

h. Freight costs of acquiring raw material from suppliers

i. Computer paper used in an accounting firm

j. Cost of wax to make candles

k. Freight-in on a truckload of furniture purchasedforresale

21. LO.2 & LO.3 ( Cost behavior and classification)Classifyeach of the following cost insured in manufacturingbicycles asvariable (V), fixed (F), or mixed (M) cost (using numberof unitsproduced as the activity measure). Also indicate whetherthe costis direct material (DM), direct labor (DL), or overhead(OH).

a. Factory supervision

b. Aluminum tubing

c. Rims

d. Emblem

e. Gearbox

f. Straight-line depreciation on paint machine

g. Fenders

h. Inventory clerkâs salary

i. Inspectorâs salary

j. Handlebars

k. Metal workerâs wages

l. Roller chain

m. Spokes (assuming cost is considered significant)

n. Paint (assuming cost is considered significant)

tanchimpanzee202

18. To calculate budgeted direct labor costs, multiply thenumber of units to be produced by the number of projected directlabor hours. Next, multiply that total by the average direct costper hour.

True

False

22. A flexible budget summarizes revenues and costs for variouslevels of sales volume within a relevant range.

True

False

29. A cost variance measures the difference in quantities ofactual inputs used and the standard quantity of inputs allowed forthe actual number of units produced.

True

False

32. Unfavorable variances are subtracted from each other toarrive at a favorable variance.

True

False

34. A direct labor cost variance is unfavorable if the employerpays workers more per hour than budgeted.

True

False

36. In a standard cost system, the manufacturing overheadallocated to production equals the standard overhead allocationrate multiplied by the standard quantity of the allocation baseallowed for expected output.

True

False

37. The direct materials cost and efficiency variances make upthe total direct materials variance.

True

False

41. Which of the following statements is true of absorptioncosting?

A) It considers variable selling and administrative costs asproduct costs.

B) It considers fixed selling and administrative costs asproduct costs.

C) It considers fixed manufacturing overhead cost as productcosts.

D) It considers variable manufacturing overhead cost as periodcosts.

42) Which of the following is true of the traditional format ofthe income statement?

A) It is prepared under the variable costing method.