Question 1

Presented below is a list of costs and expenses incurred in the factory by Nu-Way Corporation, a manufacturer of recreational vehicles.

____1.Property taxes on the factory land

____2.Nails and glue used in production

____3.Cabinet maker's wages

____4.Factory supervisors' salaries

____5.Metal used in manufacturing

____6.Depreciation on factory machines

____7.Factory utilities

____8.Carpeting for the recreational vehicles

____9.Property taxes on the factory building

____10.Insurance on factory equipment

Instructions

Classify the above items into the following categories:

DM Direct Materials

DL Direct Labor

MO Manufacturing Overhead

Question 2

For each item, identify all applicable cost labels. Use the following code in your answer:

1 Product Cost

2 Period Cost

a.Advertising_________

b.Direct materials used_________

c.Sales salaries_________

d.Indirect factory labor_________

e.Repairs to office equipment_________

f.Factory manager's salary_________

g.Direct labor_________

h.Indirect materials_________

Question 3

The following information is available for Elliot Company.

Jan 1, 20162016Dec 31, 2016

Raw materials inventory$ 26,000$30,000

Work in process inventory18,50022,200

Finished goods inventory30,00021,000

Materials purchased$170,000

Direct labor230,000

Manufacturing overhead180,000

Sales800,000

Instructions

(a)Compute cost of goods manufactured.

(b)Prepare an income statement through gross profit.