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    Exercises Chapter 2

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    Erika May Ramirez
    This document contains 3 problems involving cost accounting concepts. Problem 1 provides cost data for a company and asks to calculate total costs. Problem 2 asks to determine the optimal production level or purchase price for an outsourced part. Problem 3 lists costs for a toy company and asks to classify each as fixed or variable, and forecast costs for the following year given a sales increase.

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    Exercises Chapter 2

    Uploaded by

    Erika May Ramirez
    145 views2 pages
    This document contains 3 problems involving cost accounting concepts. Problem 1 provides cost data for a company and asks to calculate total costs. Problem 2 asks to determine the optimal production level or purchase price for an outsourced part. Problem 3 lists costs for a toy company and asks to classify each as fixed or variable, and forecast costs for the following year given a sales increase.

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    accounting 7 exercises

    Original Title

    EXERCISES CHAPTER 2

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    This document contains 3 problems involving cost accounting concepts. Problem 1 provides cost data for a company and asks to calculate total costs. Problem 2 asks to determine the optimal production level or purchase price for an outsourced part. Problem 3 lists costs for a toy company and asks to classify each as fixed or variable, and forecast costs for the following year given a sales increase.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    145 views2 pages

    Exercises Chapter 2

    Uploaded by

    Erika May Ramirez
    This document contains 3 problems involving cost accounting concepts. Problem 1 provides cost data for a company and asks to calculate total costs. Problem 2 asks to determine the optimal production level or purchase price for an outsourced part. Problem 3 lists costs for a toy company and asks to classify each as fixed or variable, and forecast costs for the following year given a sales increase.

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    © All Rights Reserved
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    PROBLEM 1

    Ganda Ka? Company reported these cost data for the year 2018.

    Use the data to complete the amount of:


    1. Total prime costs
    2. Total manufacturing overhead costs
    3. Total conversion costs
    4. Total product costs
    5. Total period costs

    PROBLEM 2
    Piedmont Industries currently manufactures 40,000 units of part JR63 each month for use in
    production of several of its products. The facilities now used to produce part JR63 have a fixed
    monthly cost of $165,000 and a capacity to produce 74,000 units per month. If the company
    were to buy part JR63 from an outside supplier, the facilities would be idle, but its fixed costs
    would continue at $45,000. The variable production costs of part JR63 are $12 per unit.
    Required:
    1. If Piedmont Industries continues to use 40,000 units of part JR63 each month, it would realize
    a net benefit by purchasing part JR63 from an outside supplier only if the supplier’s unit price is
    less than what amount?
    2. If Piedmont Industries is able to obtain part JR63 from an outside supplier at a unit purchase
    price of $14, what is the monthly usage at which it will be indifferent between purchasing and
    making part JR63?

    PROBLEM 3
    Toledo Toy Company incurred the following costs during 20x4. The company sold all of its
    products manufactured during the year.
    Direct material............................................................................................. $4,500,000
    Direct labor .................................................................................................. 3,300,000
    Manufacturing overhead: Utilities (primarily electricity) ................................ 210,000
    Depreciation on plant and equipment ......................................................... 345,000
    Insurance ..................................................................................................... 240,000
    Supervisory salaries ...................................................................................... 450,000
    Property taxes .................................................................................................... 315,000
    Selling costs: Advertising .................................................................................... 292,500
    Sales commissions .............................................................................................. 135,000
    Administrative costs: Salaries of top management and staff.................................558,000
    Office supplies ....................................................................................................... 60,000
    Depreciation on building and equipment .............................................................. 120,000

    During 20x4, the company operated at about half of its capacity, due to a slowdown in the
    economy. Prospects for 20x5 are slightly better. Jared Lowes, the marketing manager, forecasts
    a 30 percent growth in sales over the 20x4 level.

    Required: Categorize each of the costs listed above as to whether it is most likely variable or
    fixed. Forecast the 20x5 cost amount for each of the cost items listed above.

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