Questions and Answers
Research and development costs are classified as:
Which of the following would not be classified as a product cost?
Dixon's product costs total?
$1,050,000
Which of the following is a period cost?
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Younkin's period costs total?
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The total of Guaranteed's direct labor cost was?
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The costs of direct materials are classified as:
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Falcon's cost of goods manufactured is?
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What was the cost of goods sold for Dorsett Technologies for the year?
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As activity decreases, unit variable cost:
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The true statement about cost behavior is that:
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Total expenses for $168,000 sales level?
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As production takes place, all manufacturing costs are added to the:
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When using normal costing, the total production cost of a job is composed of:
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The 20X1 predetermined overhead rate based on machine hours was?
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A review of Hsu Company's records should reveal a:
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The company's year-end overhead was:
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The overhead cost that would be assigned to the Deluxe product line is closest to?
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Study Notes
Research and Development Costs
- Classified as period costs, not product costs or inventoriable costs.
Product Costs Classification
- Direct materials, direct labor, and manufacturing overhead are classified as product costs.
- Sales bonuses related to meeting quotas are not considered product costs.
Dixon Company's Product Costs
- Total product costs calculated as:
- Direct materials: $250,000
- Direct labor: $425,000
- Manufacturing overhead: $375,000
- Product costs total $1,050,000.
Period Costs Identification
- Advertising expense is recognized as a period cost, while direct materials, indirect labor, and factory salaries are product costs.
Younkin Corporation's Period Costs
- Total period costs include sales commissions and administrative expenses, resulting in $250,000.
Guaranteed Appliance Co.'s Direct Labor Costs
- Only assembly-line workers' costs ($180,000) qualify as direct labor.
Cost of Goods Manufactured for Falcon Company
- Calculated as:
- Raw materials: $60,000
- Direct labor: $125,000
- Manufacturing overhead: $360,000
- Resulting cost of goods manufactured equals $519,000 after accounting for changes in work-in-progress.
Cost of Goods Sold for Dorsett Technologies
- Calculated as:
- Cost of goods manufactured: $385,000
- Change in finished goods inventory: $5,200
- Resulting cost of goods sold equals $390,200.
Behavior of Unit Variable Costs
- Unit variable costs remain constant regardless of activity level.
Cost Behavior Understanding
- Variable costs are constant per unit and vary in total with changes in activity levels.
- Fixed costs remain constant per unit but vary in total as activity changes.
Collins Company Expense Calculation
- For sales of $168,000, total expenses calculated as $51,800 based on commission adjustments.
Manufacturing Account Management
- All manufacturing costs are added to Work-in-Process Inventory while production occurs.
Normal Costing Overview
- Total production cost includes direct material, direct labor, and applied manufacturing overhead.
Metalica Company's Predetermined Overhead Rate
- Calculated as $25 per machine hour based on estimated overhead and machine hours.
Depreciation Accounting for Hsu Company
- Depreciation for production facilities results in a debit to Manufacturing Overhead for $72,000 (80% of $90,000).
Overhead Application for Boston, Inc.
- Underapplied overhead calculated as $580,000 due to the difference between actual overhead and applied overhead based on predetermined rates.
Activity-Based Costing at Rocket Products
- Overhead costs are allocated based on direct labor hours; Deluxe product line overhead closest to $456,471 based on total labor hours.
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Description
Test your knowledge with these practice flashcards designed for Midterm 1 in Accounting. Each card covers key concepts related to costs such as product costs, period costs, and classifications. Prepare effectively for your exam with these concise question-answer pairs.
