Question 1.1 (Total: 18 marks)

The following information was taken from the accounting records of Dunbar Mifflin Company in 2018.

Beginning of 2018 Ending of 2018

Direct materials inventory 135,000 83,000

Work-in-process inventory 185,000 154,000

Finished-goods inventory 255,000 216,000

Purchases of direct materials 270,000

Direct manufacturing labor 225,000

Indirect manufacturing labor 103,000

Plant insurance 11,000

Depreciation-plant, building, and equipment 48,000

Plant utilities 29,500

Repairs and maintenance-plant 13,500

Equipment leasing costs 66,800

Marketing, distribution, and customer-service costs 129,500

General and administrative costs 72,500

Required:

1. Prepare a schedule of cost of goods manufactured.

Question 1.2 (Total: 38 marks)

Following are the account balances for the DC Company in 2018:

Beginning of 2018 Ending of 2018

Direct materials inventory 26,500 27,000

Work-in-process inventory 30,500 28,400

Finished-goods inventory 16,500 22,100

Purchases of direct materials 79,000

Direct manufacturing labor 24,500

Indirect manufacturing labor 18,600

Plant insurance 7,900

Depreciation-plant, building, and equipment 11,800

Repairs and maintenance-plant 3,500

Marketing, distribution, and customer-service costs 87,900

General and administrative costs 26,500

Required:

1. Prepare a schedule for the cost of goods manufactured for 2018.
2. Revenues for 2018 was $425,000. Prepare the income statement for 2018.

Question 1.3 (Total: 30 marks)

Identify if the following costs are "product" or "period" costs:

COST	Period Cost or Product Cost?
1. Television advertisements for Bailey's products
2. Lubricants used in running bottling machines
3. Research and Development related to the elimination of antibiotic residues in milk
4. Gasoline used to operate refrigerated trucks delivering finished dairy products to grocery stores
5. Company president's annual bonus
6. Depreciation on refrigerated trucks used to collect raw milk
7. Plastic gallon containers in which milk is packaged
8. Property insurance on dairy processing plant
9. Cost of milk purchased from local dairy farmers
10. Depreciation on tablets used by sales staff
11. Depreciation on chairs and tables in the factory lunchroom.
12. The cost of packaging the company's product.
13. The wages of the receptionist in the administrative offices.
14. Cost of leasing the corporate jet used by the company's executives.
15. The cost of renting rooms at a BC resort for the annual conference.

Question 1.4 (Total: 14 marks)

The Trump International Hotel & Tower is a five-star hotel located in downtown Toronto. The hotel's operations vice president would like to replace the hotel's legacy computer terminals at the registration desk with attractive state-of-the-art flat-panel displays. The new displays would take less space, consume less power than the old computer terminals, and provide additional security since they can be viewed only from a restrictive angle. The new computer displays would not require any new wiring. However, the hotel's chef believes the funds would be better spent on a new bulk freezer for the kitchen.

Submission Instructions

1. Classify each item as a differential cost, an opportunity cost, or a sunk cost in the decision to replace the old computer terminals with new flat-panel displays. Add an "X" in the right field. If none of the categories apply for a particular item, select "None".

Item	Differential Cost	Opportunity Cost	Sunk Cost	None
Cost of the old computer terminals
Rent on the space occupied by the registration desk
Benefits from a new freezer
Cost of removing the old computer terminals
Cost of the new flat-panel displays
Wages of registration desk personnel
Cost of existing registration desk wiring