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Questions and Answers

What is the formula to calculate the production cost per unit for a finished product?

$\text{Production Cost} = \frac{\text{Direct Material Cost} + \text{Direct Labor Cost}}{\text{Produced Unit (Q)}}$

$\text{Production Cost} = \frac{\text{Direct Material Cost} + \text{CIF}}{\text{Produced Unit (Q)}}$

$\text{Production Cost} = \frac{\text{Direct Labor Cost} + \text{CIF}}{\text{Produced Unit (Q)}}$

$\text{Production Cost} = \frac{\text{Direct Material Cost} + \text{Direct Labor Cost} + \text{CIF}}{\text{Produced Unit (Q)}}$ (correct)

Which method is specifically mentioned for calculating the cost of direct materials?

Division method (correct)

FIFO method

Variable costing method

Weighted average method

What is included in the calculation of the production cost per unit according to the method described?

Direct material, direct labor, and CIF (correct)

Direct material costs and overhead only

Only direct labor costs

Only direct material costs

When distributing CIF, which product types are mentioned in the context?

Both finished products and products in course Signup and view all the answers

What is the first step mentioned for calculating the direct material cost by Q for the current period?

Determine total direct materials incorporated Signup and view all the answers

What distinguishes joint production with by-products from joint production with co-products?

By-products are secondary products from the main product. Signup and view all the answers

Which of the following examples illustrates joint production with by-products?

A furniture manufacturer obtaining furniture and sawdust. Signup and view all the answers

What method is used to assess the profitability of a company that sells by-products?

Subtraction Method Signup and view all the answers

In joint production, how are by-products treated when calculating profitability?

They are considered waste with no financial value. Signup and view all the answers

Which statement about co-products is accurate?

Co-products are equally significant outputs in a joint production process. Signup and view all the answers

What is included in the production cost?

Direct material costs Signup and view all the answers

What does the commercial cost comprise?

Sales costs and operating costs Signup and view all the answers

Which of the following costs is NOT a part of the company cost?

Direct material costs Signup and view all the answers

What is the sum of the assignment cost of direct materials and the maintenance costs of the transformation section known as?

Intrinsic cost of production Signup and view all the answers

Which cost is accumulated during the time products are stored in a warehouse before they are sold?

Commercial costs Signup and view all the answers

What is the total cost incurred by adding the production cost and the commercial cost?

Company cost Signup and view all the answers

The costs associated with the organization, planning, and direction of a company are categorized as which type of cost?

Management and administration costs Signup and view all the answers

What are sales costs primarily attributed to?

Storage and distribution of products Signup and view all the answers

What is the total CIF added to the unit cost of product A from direct material?

75.00 Signup and view all the answers

Which of the following represents the unit cost of production for product B?

255.00 Signup and view all the answers

How much CIF is added for direct labor for product A?

100.00 Signup and view all the answers

What percentage is assigned to the CIF for direct costs (CD) in the analysis for both products?

50% Signup and view all the answers

Which method can be applied if the unit costs of production are the same for all products?

Cumulative Supplements Method Signup and view all the answers

If the CIF added from direct labor (MOD) for product B is 105.00, what is the calculation used?

1.5 x 70 Signup and view all the answers

What is the unit cost of production for product A found in the data?

225.00 Signup and view all the answers

What does a 150% MOD rate indicate for each euro of direct labor incorporated in the product?

An additional €1.50 is added. Signup and view all the answers

What does the joint cost Kjoint consist of?

The sum of KMD and KCC1. Signup and view all the answers

How is the cost of the by-product S determined?

By equating it to its selling price. Signup and view all the answers

What must be done to solve for kA using the equation Kjoint = NA kA + NZ kZ?

Isolate kA after substituting kZ. Signup and view all the answers

Which method is applied to derive the cost of a by-product sold in the market?

Method of Subtraction. Signup and view all the answers

What does the factor saved represent in the Recovery Method?

The monetary value of the by-product used. Signup and view all the answers

What is the purpose of the equation NS kS = N'Z kZ + KCC2?

To link the cost of the by-product to semi-finished Z. Signup and view all the answers

What happens to kz when it is associated with the selling price?

It cannot be matched due to Z not being sold. Signup and view all the answers

Which of the following illustrates the concept of a by-product used as a production factor?

Material like dowels from cutting wood used for furniture. Signup and view all the answers

What does the equation $K_{joint} = K_{MD} + K_{CC1}$ represent?

Total cost for both the main product and by-product combined Signup and view all the answers

What is the formula for calculating the cost of the by-product in the case of the by-product used as a factor after obtaining it?

$K_S = N_S k_S$ Signup and view all the answers

When using the recovery method, how is the unit cost of the by-product determined?

It's equal to the purchase price of the saved material. Signup and view all the answers

If $K_A = N_A k_A$, what can be inferred about the main product A's cost?

It depends on the quantity produced of A and its unit cost. Signup and view all the answers

In the scenario where by-products need treatment prior to sale, what happens to by-product Z after the point of separation?

It is transformed into another semi-finished product. Signup and view all the answers

How is the production cost of main product A calculated in relation to the by-product S?

$K_A = K_{joint} - N_S P_{PurchaseM}$ Signup and view all the answers

What is the implication if the sum of the costs $K_A$ and $K_S$ equals $K_{joint}$?

It indicates that all costs have been accurately assigned. Signup and view all the answers

In the context of joint costs, what does $N_A$ represent?

The quantity produced of main product A Signup and view all the answers

Study Notes

Cost Carriers: Concept and Classes

Cost carriers are the recipients of costs, used for the accumulation and allocation of costs in a company
Cost carriers accumulate all the consumption of material and intangible goods during the production process.
Full-Costing has one cost carrier, the production valued at total cost (full cost carrier)
Direct-Costing has multiple carriers: production valued at variable cost (variable cost carrier), and a carrier of the fixed cost
Full Costing Evolved has multiple carriers: production valued at intrinsic, or production cost, and the cost carrier to reintegrate.
Cost carriers include finished goods, semi-finished goods, production in progress, subproducts and waste.

Classes of Cost Carriers

Finished Production: Includes products produced by a company for sale
Semi-finished Production: Products that are still in the process of being made into a final product and aren't yet ready for sale.
Production in progress:Products are undergoing work but are not yet finished
Subproducts: Products created incidentally during the manufacture of a main product, often with some intrinsic value
Waste: Materials created as a byproduct of production which have no marketable value and may involve costs to be disposed of.

Methods of Calculating Costs: Division and Supplements

Splitting Method: Calculates a unit cost by dividing the total cost by the number of units. Can be globalized or differentiated
Pure Splitting Method: Used when a single product type is produced without any ongoing production during the accounting period.
Application Differential: Used in organic cost systems where one product treatment (or several with similar treatment) is performed. Unit cost is the sum of all the unit costs of all the centers in the company.

Methods of Calculating Costs: Joint Production

Joint Production: Occurs when several main products are created from the same resources.
Joint Production with Byproducts: Produces several main products plus secondary products with some value
Joint Production with Co-products: Produces multiple main products or major products.
By Product Sold on the Market (Subtraction Method): Byproduct costs are subtracted from the total cost to determine the cost of the main product.
By-Product Used as Factor (Recovery Method): The use of the by-product represents cost savings; the by-product cost equals the avoided costs of factors.
Production Co-products (Distribution Method): The costs of the main products are divided proportionally in relation to the revenues of both products.

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Description

Explore the essential concepts of cost carriers and their classifications within a business context. Understand how cost carriers are used for accumulating and allocating costs during the production process, and distinguish between full-costing, direct-costing, and more. This quiz covers the various types of cost carriers including finished goods and production in progress.