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70
out of 70 points (100%)out of 70 points (100%)1.
1.
awaw10 out of 10 out of ardard:: 10.00 points 10.00 pointsExercise 2-34 Computing Costs; Government Agency (LO 1, 9, 10)
Exercise 2-34 Computing Costs; Government Agency (LO 1, 9, 10)
[T
[The following information appliehe following information applie s to ts to the questions displahe questions displa yed byed b elow.elow.] ]
E
Exercise xercise 2-342-34
The state Department of Education owns a computer system, which its employees use for word processing and The state Department of Education owns a computer system, which its employees use for word processing and keeping track of educat
keeping track of education sion s tattatisticsistics . T. The governor's offhe governor's office recently ice recently began usbegan us ing this coming this com puter alsoputer also . A. As a ress a res ult of ult of the increased
the increased ususage, the demands age, the demands on the compuon the compu ter soon exceeded its capacityter soon exceeded its capacity. T. The director of the director of the Departmenhe Departmen tt of Educ
of Education was sation was s oon forcoon forced to lease ed to lease severseveral personal al personal computers to meet the computcomputers to meet the computing needs ing needs of her of her employees. T
employees. The annual coshe annual cos t of leasing the equipmt of leasing the equipm ent is $14,000.ent is $14,000.
Section Break
Section Break Exercise 2-34 CompuExercise 2-34 Computing Coststing Costs;; Government Agency (LO 1, 9, 10)
Government Agency (LO 1, 9, 10)
Exercise 2-34 Requirement 1
Exercise 2-34 Requirement 1
Requirement 1: Requirement 1: What t
What tyype of cospe of cos t is this t is this $14,000?$14,000? Diff
Differential Coserential Cos tt Selling Cost Selling Cost Sunk Cost Sunk Cost A
Admdminisinis trativtrative Cose Cos tt Opportunit
Opportunity Cosy Cos tt
Multiple Choice
Multiple Choice Learning Learning ObjectObjectivive: 02-01 e: 02-01 ExExplainplain
what is m
what is meant by eant by the word cost.the word cost.
Learning
Learning ObjectObjectivive: 02-10 e: 02-10 DefineDefine
and give ex
and give examamples ples of anof an
opportunity cost, an o
opportunity cost, an out-ofut-of-pocket-pocket
cost, a su
cost, a sunk cost, a differentnk cost, a differentialial
cost, a marginal cos
cost, a marginal cost, t, and anand an
av
average coserage cost.t.
Exercise 2-34 Requireme
Exercise 2-34 Requirement 1nt 1
Learning
Learning ObjectObjectivive: 02-09e: 02-09
Distinguish among direct, indirect,
Distinguish among direct, indirect,
controllable, and uncontrollable
controllable, and uncontrollable
costs.
2.
aw ard:10 out of 10.00 pointsExercise 2-34 Requirement 2
Requirement 2:
Should this cos t be ass ociated with the governor's office or the Department of Education? Department of Education
Governor's Office
Multiple Choice Learning Objective: 02-01 Explain what is m eant by the word cost.
Learning Objective: 02-10 Define and give examples of an
opportunity cost, an o ut-of-pocket cost, a su nk cost, a differential cost, a marginal cos t, and an average cos t.
Exercise 2-34 Requireme nt 2
Learning Objective: 02-09
Distinguish among direct, indirect, controllable, and uncontrollable costs.
ezto.mhecloud.mcgraw-hill.com/hm_accounting.tpx?todo=printview 3/9
[The following information applie s to the questions displa yed b elow.]
Problem 2 -42
The following cos t data for the year just end ed pertain to Sentim ents, Inc., a greeting card m anufacturer:
Direct material $2,200,000
Advertising expense 98,000
Depreciation on factory building 115,000
Direct labor: wages 485,000
Cost of finished goods inventory at year-end 115,000
Indirect labor: wages 140,000
Production supervisor’s salary 46,000
Service department costs* 100,000
Direct labor: fringe benefits 95,000
Indirect labor: fringe benefits 31,000
Fringe benefits for production supervisor 10,000
Total overtime premiums paid 55,000
Cost of idle time: production employees§ 40,000
Administrative costs 150,000
Rental of office space for sales personnel† 15,000
Sales commissions 4,000
Product promotion costs $ 10,000
* All services are provided to manufacturin g departments.
§Cos t of idle time is an overhead item; it is not included in the direct-labor wages given above.
†The rental of sales space was made neces sary when the s ales offices were converted to storage space for raw material.
Section Break Problem 2-42 Cost Terminology
3.
aw ard:10 out of 10.00 pointsProblem 2-42 Requirement 1
Requirement 1:
Compute each of the following cos ts for the year just ended: (a)total prime costs,(b )total m anufacturing overhead costs,(c)total conversion costs ,(d) total product costs , and(e)total period costs. (Omit the "$" sign in your response.)
a. Total prime costs $ 2,780,000
b. Total manufacturing overhead $ 537,000 c. Total conversion costs $ 1,117,000
d. Total product costs $ 3,317,000
e. Total period costs $ 277,000
Worksheet
Learning Objective: 02-02
Distinguish am ong product costs, period costs, and expenses .
Learning Objective: 02-10 Define and give examples of an
opportunity cost, an o ut-of-pocket cost, a su nk cost, a differential cost, a marginal cos t, and an average cos t.
Problem 2-42 Requirement 1
Learning Objective: 02-05 Give examples of three types of manufacturing costs.
ezto.mhecloud.mcgraw-hill.com/hm_accounting.tpx?todo=printview 5/9 Requirement 2:
One of the cos ts lis ted below is an opportunity cost. Identify this cos t. Product promotion costs
Cost of finis hed-goods inventory at year-end Adminis trative costs
Direct labor: fringe bene fits Sales commis sions
Rental of office space for sales personnel
Multiple Choice
Learning Objective: 02-02
Distinguish am ong product costs, period costs, and expenses .
Learning Objective: 02-10 Define and give examples of an
opportunity cost, an o ut-of-pocket cost, a su nk cost, a differential cost, a marginal cos t, and an average cos t.
Problem 2-42 Requirement 2
Learning Objective: 02-05 Give examples of three types of manufacturing costs.
5.
aw ard:10 out of 10.00 pointsProblem 2-43 Schedules of Cost of Goods Manufactured and Sold; Income Statement (LO 1, 3, 5,
6)
[The following information applie s to the questions displa yed b elow.]
Problem 2-43
The following data refer to San Fernando Fashions Company for the year 20x2:
Sales revenue $1,050,000
Work-in-process inventory, December 31 30,000 Work-in-process inventory, January 1 36,000 Selling and administrative expenses 150,000
Income tax expense 80,000
Purchases of raw material 170,000
Raw-material inventory, December 31 25,000
Raw-material inventory, January 1 40,000
Direct labor 190,000
Utilities: plant 40,000
Depreciation: plant and equipment 50,000
Finished-goods inventory, December 31 50,000 Finished-goods inventory, January 1 15,000
Indirect material 6,000
Indirect labor 15,000
Other manufacturing overhead 60,000
Section Break
Probl em 2-43 Schedu les of Cost of Goods Manufactured and Sold; Incom e Statement (LO 1, 3, 5, 6)
ezto.mhecloud.mcgraw-hill.com/hm_accounting.tpx?todo=printview 7/9
Deduct : Raw-material inventory, December 31 25,000
Raw ma terial used $ 185,000
Direct labor 190,000
Manufacturing overhead:
Indirect material $ 6,000
Indirect labor 15,000
Utilitie s: pla nt 40,000
Depreciation: plant and equipment 50,000
Other manufacturing overhea d 60,000
Total manufacturing overhead 171,000
Total manufacturing costs $ 546,000
Add : Work-in-process inventory, January 1 36,000
Subtotal $ 582,000
Deduct : Work-in-process inventory, December 31 30,000
Cost of goods manufactured $ 552,000
Worksheet Learning Objective: 02-01 Explain what is m eant by the word cost.
Learning Objective: 02-05 Give examples of three types of manufacturing costs.
Problem 2-43 Requirement 1
Learning Objective: 02-03 Des cribe the role of costs in published financial s tatements.
Learning Objective: 02-06 Prepare a schedule of cost of goods
manufactured, a schedule of cost of goods sold, and an income statemen t for a m anufacturer.
6.
aw ard:10 out of 10.00 pointsProblem 2-43 Requirement 2
Requirement 2:
Prepare San Fernando Fashions ’ schedu le of cost of goods sold for the year. (Omit the "$" sign in your response. Input all amounts as positive values.)
SAN FERNANDO FASHIONS COMPANY Schedule of Cost Goods Manufactured For the Year Ended December 31, 20X2
Finished goods inventory, January 1 $ 15,000
Add : Cost of goods manufactured 552,000
Cost of goods available for sale $ 567,000
Deduct : Finished-goods inventory, December 31 50,000
Cost ofgoods sold $ 517,000
Worksheet Learning Objective: 02-01 Explain what is m eant by the word cost.
Learning Objective: 02-05 Give examples of three types of manufacturing costs.
Problem 2-43 Requirement 2
Learning Objective: 02-03 Des cribe the role of costs in published financial s tatements.
Learning Objective: 02-06 Prepare a schedule of cost of goods
manufactured, a schedule of cost of goods sold, and an income statemen t for a m anufacturer.
ezto.mhecloud.mcgraw-hill.com/hm_accounting.tpx?todo=printview 9/9 Requirement 3:
Prepare San Fernando Fashions ’ income s tatement for the year. (Omit the " $" sign in your response. Input all amounts as positive values.)
SAN FERNANDO FASHIONS COMPANY INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 20x2
Sales revenue $1,050,000
Deduct : Cost of goods sold 517,000
Gross margin $ 533,000
Deduct : Selling and administrative expenses 150,000
Income before taxes $ 383,000
Deduct : Income tax expense 80,000
Net income $ 303,000
Worksheet Learning Objective: 02-01 Explain what is m eant by the word cost.
Learning Objective: 02-05 Give examples of three types of manufacturing costs.
Problem 2-43 Requirement 3
Learning Objective: 02-03 Des cribe the role of costs in published financial s tatements.
Learning Objective: 02-06 Prepare a schedule of cost of goods
manufactured, a schedule of cost of goods sold, and an income statemen t for a m anufacturer.
