Question
Edward Company reported the following costs and expenses in July: Factory utilities $21,900 Direct labour $98,700 Depreciation on factory equipment 20,850 Sales salaries 47,600 Depreciation
Edward Company reported the following costs and expenses in July:
Factory utilities | $21,900 | Direct labour | $98,700 | |
Depreciation on factory equipment | 20,850 | Sales salaries | 47,600 | |
Depreciation on delivery trucks | 6,200 | Property taxes on factory building | 2,550 | |
Indirect factory labour | 52,700 | Repairs to office equipment | 2,400 | |
Indirect materials | 86,300 | Factory repairs | 2,500 | |
Direct materials used | 147,000 | Advertising | 18,000 | |
Factory manager's salary | 22,200 | Office supplies used | 6,590 |
From the information above, answer the following.
Determine the total amount of manufacturing overhead.
Manufacturing overhead | $ |
Determine the total amount of product costs.
Product costs | $ |
Determine the total amount of period costs.
2. The controller of Gutierrez Industries has collected the following monthly expense data for use in analyzing the cost behaviour of maintenance costs:
Month | Total Maintenance Costs | Total Machine Hours | |||||
January | $2,680 | 2,950 | |||||
February | 3,250 | 4,000 | |||||
March | 3,900 | 6,400 | |||||
April | 4,560 | 8,150 | |||||
May | 3,320 | 5,300 | |||||
June | 5,410 | 8,200 |
Determine the variable-cost component using the high-low method. (Round answer to 2 decimal places e.g. 12.25.)
Variable cost | $ | per machine hour |
Determine the fixed cost component using the high-low method.
Fixed cost | $ |
Period costs | $ |
3. Par Play Company, a manufacturer of driver golf clubs, started production in November 2020. For the preceding five years, Par Play had been a retailer of sports equipment. After a thorough survey of driver golf club markets, Par Play decided to turn its retail store into a driver golf club factory. Raw materials costs will total $24 per driver. Workers on the production lines are paid on average $17 per hour. A driver usually takes 2 hours to complete. In addition, the rent on the equipment used to produce drivers amounts to $1,830 per month. Indirect materials cost $4 per driver. A supervisor was hired to oversee production; her monthly salary is $4,300. Factory janitorial costs are $1,670 monthly. Advertising costs for the drivers will be $6,300 per month. The factory building depreciation expense is $9,660 per year. Property taxes on the factory building will be $7,440 per year.
Complete the following answer sheet assuming that Par Play manufactures, on average, 2,500 drivers per month, and enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate heading. Total the dollar amounts in each of the columns.
Product Costs | |||||||||||
Cost Item | Direct Materials | Direct Labour | Manufacturing Overhead | Period Costs | |||||||
Raw materials | $ | $ | $ | $ | |||||||
Wages for workers | |||||||||||
Rent on equipment | |||||||||||
Indirect materials | |||||||||||
Factory supervisor's salary | |||||||||||
Factory janitorial costs | |||||||||||
Advertising | |||||||||||
Depreciation-factory building | |||||||||||
Property taxes-factory building | |||||||||||
$ | $ | $ | $ |
Calculate the cost to produce one driver. (Round answer to 2 decimal places, e.g. 15.25.)
Production cost per driver | $ |
4. Montana Company reports the following total costs at two levels of production. Classify each cost as variable, fixed, or mixed.
5,000 Units | 10,000 Units | |||||
Indirect labour | $ 3,000 | $ 6,000 | select a type of cost Fixed CostsMixed CostsVariable Costs | |||
Property taxes | 7,000 | 7,000 | select a type of cost Fixed CostsMixed CostsVariable Costs | |||
Direct labour | 27,000 | 54,000 | select a type of cost Fixed CostsMixed CostsVariable Costs | |||
Direct materials | 22,000 | 44,000 | select a type of cost Fixed CostsMixed CostsVariable Costs | |||
Depreciation | 4,000 | 4,000 | select a type of cost Fixed CostsMixed CostsVariable Costs | |||
Utilities | 3,000 | 5,000 | select a type of cost Fixed CostsMixed CostsVariable Costs | |||
Maintenance | 9,000 | 11,000 | select a type of cost |
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