Problem 1: For each item below, indicate whether the cost is direct or indirect with respect to the cost object listed next to it. 1. Wages of carpenters on a home building site. Cost object: a particular home 2. Cost of wiring used in making a personal computer. Cost object: a particular personal computer 3. Hotel manager's salary at a hotel that is part of a chain of hotels. Cost object: a particular hotel guest 4. Hotel manager's salary at a hotel that is part of a chain of hotels. Cost object: the particular hotel 5. Cost of aluminum mast installed by a yacht manufacturer. Cost object: the particular yacht 6. Monthly lease cost of X-ray equipment at a hospital. Cost object: the radiology department 7. Cost of screws used in manufacturing yachts. Cost object: the particular yacht 8. Cost of electronic navigation system installed in a yacht. Cost object: the particular yacht 9. Cost of a replacement battery installed in a car at the service department of an auto dealership. Cost object: the service department 10. Cost of a Covid vaccine administered at an outpatient clinic. Cost object: the particular patient Several of the above costs are technically direct but typically treated as indirect for accounting purposes. Which costs are in that category? Problem 2: Lyhether a company uses process costing or job-order costing depends on its industry. Indicate whether the following companies would be more likely to use a job-order costing system or a process costing system. a. Flour mill b. Dairy farm c. Electric utility d. Custom boat builder e. Management consulting firm f. Winery that produces a number of varietal wines: Problem 3: Danous Manufacturing Corporation has a job-cost system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHS). The company has two products, widgets and dochickies. Widgets Doohickies Direct materials per unit $24.80 $56.30 Direct labor per unit $24.10 $63.20 Direct labor-hours per unit 0.70 2.40 Annual units produced 38.800 18.300 The company's estimated total manufacturing overhead for the year is $3,224,840 and the company's estimated total direct labor-hours for the year is 71,080. a. Calculate the predetermined overhead rate used to apply manufacturing overhead. b. What is the per-unit cost of each product? Problem 4: Dominguez Corporation has provided the following data for the month of January: Raw Materials inventory Work in Process inventory Finished Goods inventory January 1 $25.000 17,000 48.000 January 31 $21,000 10.000 56,000 Additional information: Raw materials purchased $72.000 Direct labor cost 92.000 Manufacturing overhead cost incurred 42.000 Indirect materials included in manufacturing overhead cost incurred 4,000 Manufacturing overhead cost applied to Work in Process 41,000 Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold. Problem 5: Ertle, Inc, uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department for December: Work in process, December 1: Units in process 400 Percent complete with respect to materials 90% Percent complete with respect to conversion 40% Costs in the beginning inventory: Materials cost $ 756 Conversion cost $4,448 Units started into production during December 13,000 Units completed and transferred out 13,300 Costs added to production during December: Materials cost $29.949 Conversion cost $362,127 Work in process, December 31: Units in process 100 Percent complete with respect to materials 50% Percent complete with respect to conversion 30% a. Using the weighted average method, determine the equivalent units of production for materials and conversion costs. b. Determine the cost per equivalent unit for materials and conversion costs. Determine the cost of units transferred out of the department during December d. Determine the cost of ending work in progress inventory in the department. c. Problem 6: Natalie Estrada found this troubling memo that had been left in the printer. The memo is from her boss, Lynn Tan, an Executive Vice President at Buchanan Toys, to Francisco Rodriguez, Buchanan's controller. BUCHANAN TOYS INTERNAL MEMO Sept 15 To: Francisco Rodriguez, Controller Fm: Lynn Tan, Executive Vice President As you know, we won't start recording many sales until October when stores start accepting shipments from us for the Christmas season. Meanwhile, we are building up our finished goods inventories so that we will be ready to ship next month. Unfortunately, we are in a bind right now since it looks like the net income for the quarter ending on Sept 30 is going to be pretty awful. This may get us in trouble with the bank since they always review the quarterly financial reports and may call in our loan if they don't like what they see. Is there any possibility that we could change the classification of some of our period costs to product costs-such as the rent on the finished goods warehouse? Please let me know as soon as possible. The President is pushing for results. Natalie didn't know what to do about the memo. It wasn't intended for her, but its contents were alarming Required: I know we didn't specifically talk about the issue raised here, but we did discuss (in chapter one) period and product costs and how they differ in the way they affect the financial Unfortunately, we are in a bind right now since it looks like the net income for the quarter ending on Sept 30 is going to be pretty awful. This may get us in trouble with the bank since they always review the quarterly financial reports and may call in our loan if they don't like what they see. Is there any possibility that we could change the classification of some of our period costs to product costs-such as the rent on the finished goods warehouse? Please let me know as soon as possible. The President is pushing for results. Natalie didn't know what to do about the memo. It wasn't intended for her, but its contents were alarming. Required: I know we didn't specifically talk about the issue raised here, but we did discuss (in chapter one) period and product costs and how they differ in the way they affect the financial statements. Use that knowledge to suggest answers to the following two questions: a. Why has Lynn Tan suggested reclassifying some period costs as product costs? b. Why do you think Natalie found the memo alarming