Question 1 The Manager and Management Accounting Pfizer, a pharmaceutical company, incurs the following costs Payment of booth registration fee at a medical conference to promote new products to physicians Cost of redesigning an insulin syringe to make it less painful Cost of a toll free telephone line used for customer inquiries about drug usage, side effects of drugs, and so on Equipment purchased to conduct experiments on drugs yet to be approved by the government Sponsorship of a professional golfer Labor costs of workers in the packaging area of a production facility Bonus paid to a salesperson for exceeding a monthly sales quota Cost of FedEx courier service to deliver drugs to hospitals Required Classify each of the cost items ( ah ) into one of the business functions of the value chain Question 2 An Introduction to Cost Terms and Purposes The following account balances pertain to Peterson Company for the year 2017 Account balances 01 01 2017 31 12 2017 Direct materials inventory $21,000 $23,000 Work in process inventory $26,000 $25,000 Finished goods inventory $13,000 $20,000 Purchases of direct materials $74,000 Direct manufacturing labor $22,000 Indirect manufacturing labor $17,000 Plant insurance $7,000 Depreciationplant, building, and equipment $11,000 Repairs and maintenanceplant $3,000 Marketing, distribution, and customer service costs $91,000 General and administrative costs $24,000 Required 1 Prepare a schedule for the cost of goods manufactured for 2017 2 Revenues for 2017 were $310,000 Prepare the income statement for 2017 Question 3 Flexible Budgets, Direct Cost Variances, and Management Control Milan Statuary manufactures bust statues of famous historical figures All statues are the same size Each unit requires the same amount of resources The following information is from the static budget for 2017 Expected production and sales 6,100 units Expected selling price per unit $700 Total fixed costs $1,350,000 Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labor Standard Quantity Standard Price Standard Unit Cost Direct materials 16 pounds $14 per pound $224 Direct manufacturing labor 3 8 hours $30 per hour $114 During 2017, actual number of units produced and sold was 5,100, at an average selling price of $730 Actual cost of direct materials used was $1,149,400, based on 70,000 pounds purchased at $16 42 per pound Direct manufacturing labor hours actually used were 17,000, at the rate of $33 70 per hour As a result, actual direct manufacturing labor costs were $572,900 Actual fixed costs were $1,200,000 There were no beginning or ending inventories Required 1 Calculate the sales volume variance and flexible budget variance for operating income 2 Compute price and efficiency variances for direct materials and direct manufacturing labor

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Question 1 The Manager and Management Accounting Pfizer, a pharmaceutical company, incurs the following costs: Payment of booth registration fee at a medical conference to

Question 1 The Manager and Management Accounting

Pfizer, a pharmaceutical company, incurs the following costs:

Payment of booth registration fee at a medical conference to promote new products to physicians
Cost of redesigning an insulin syringe to make it less painful
Cost of a toll-free telephone line used for customer inquiries about drug usage, side effects of drugs, and so on
Equipment purchased to conduct experiments on drugs yet to be approved by the government
Sponsorship of a professional golfer
Labor costs of workers in the packaging area of a production facility
Bonus paid to a salesperson for exceeding a monthly sales quota
Cost of FedEx courier service to deliver drugs to hospitals

Required:

Classify each of the cost items (ah) into one of the business functions of the value chain.

Question 2 An Introduction to Cost Terms and Purposes

The following account balances pertain to Peterson Company for the year 2017:

Account balances	01/01/2017	31/12/2017
Direct materials inventory	$21,000	$23,000
Work-in-process inventory	$26,000	$25,000
Finished-goods inventory	$13,000	$20,000
Purchases of direct materials		$74,000
Direct manufacturing labor		$22,000
Indirect manufacturing labor		$17,000
Plant insurance		$7,000
Depreciationplant, building, and equipment		$11,000
Repairs and maintenanceplant		$3,000
Marketing, distribution, and customer-service costs		$91,000
General and administrative costs		$24,000

Required:

1. Prepare a schedule for the cost of goods manufactured for 2017.

2. Revenues for 2017 were $310,000. Prepare the income statement for 2017.

Question 3 Flexible Budgets, Direct-Cost Variances, and Management Control

Milan Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2017:

Expected production and sales	6,100 units
Expected selling price per unit	$700
Total fixed costs	$1,350,000

Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labor:

	Standard Quantity	Standard Price	Standard Unit Cost
Direct materials	16 pounds	$14 per pound	$224
Direct manufacturing labor	3.8 hours	$30 per hour	$114

During 2017, actual number of units produced and sold was 5,100, at an average selling price of $730. Actual cost of direct materials used was $1,149,400, based on 70,000 pounds purchased at $16.42 per pound. Direct manufacturing labor-hours actually used were 17,000, at the rate of $33.70 per hour. As a result, actual direct manufacturing labor costs were $572,900. Actual fixed costs were $1,200,000. There were no beginning or ending inventories.

Required:

1. Calculate the sales-volume variance and flexible-budget variance for operating income.

2. Compute price and efficiency variances for direct materials and direct manufacturing labor.