Final Review
Problems Test
1. A company sells one product. The following data relates to the product:
| Sales | 18,000 units | $360,000 |
| Direct material costs | $ 72,000 | |
| Direct labor costs | $ 90,000 | |
| Fixed manufacturing overhead costs | $ 50,000 | |
| Fixed selling and admin costs | $ 20,000 | |
| Variable selling costs | $ 36,000 | |
A. Compute the number of units the company must sell to earn a profit of $40,000.
B. Compute the break even point in sales dollars. (Use the formula for sales dollars.)
C. The company has a target profit of $60,000 and expects to sell 15,000 units. Compute the selling price that the company must charge to earn the target profit.
Answer
See Cost Volume Profit Analysis
1st Compute the sales price at $20 per unit – $360,000 / 18,000 units
2nd Identify the variable costs as follows:
| Direct materials | $ 72,000 |
| Direct labor | $ 90,000 |
| Variable selling | $ 36,000 |
| Total variable | $198,000 |
| / Units | 18,000 |
| = $11 per unit | |
3rd Contribution margin per unit is
$20 sales – $11 variable cost = $9 per unit
4th Contribution margin ratio is
$9 CM / $20 sales = 0.45 or 45%
5th Total fixed costs are
$50,000 + $20,000 = $70,000
A. Total fixed costs + Desired profit / CM per unit
$70,000 + $40,000 / $9 = 12,222 units
B. Fixed Costs / CM %
$70,000 / 0.45 = $155,555
C. Use the contribution margin income statement – work up from desired income
| Sales | $ ? |
| – all VC | $ 11 per unit |
| = CM | $ ? |
| – all FC | $ 70,000 total |
| = Target Income | $ 60,000 total |
$130,000 / 15,000 units = $8.67 per unit
Sales must be $19.67 per unit to get $8.67 CM per unit
2. A Company incurred $75,000 in overhead costs making 20,000 units in April.
The company made 12,000 units and incurred $47,000 in overhead costs in May.
During the year, the company averaged 14,000 units at a cost of $56,000 monthly.
A. Compute the fixed and variable components of the overhead cost.
B. Calculate the total cost that is expected to be incurred if 18,000 are produced.
Answer
See Mixed Costs
A. Variable Cost =
|
Cost at high activity level – Cost at the low activity level $75,000 – $47,000 = $28,000 = $3.50 per unit |
Use either the high or low total cost and the associated activity
Total Cost = $FC + ($VC per activity x # activity)
$75,000 = ? + ($3.50 x 20,000 = 70,000)
FC = $5,000
B. Total Cost = FC + ($VC per unit x # units)
$5,000 + ($3.50 x 18,000) = $68,000 total cost
3. A manufacturing company applies manufacturing overhead based on direct labor dollars. Total annual estimated manufacturing overhead is $600,000 and total estimated direct labor hours for the year is 60,000 at a cost of $800,000. Total estimated machine hours for the year is 25,000 and many parts of the manufacturing are automated.
Record the following transactions.
A. Raw materials were purchased on account for $23,000.
B. Labor was incurred: $87,000 direct labor for 6,500 hours, $26,000 executive and administrative salaries, $ 8,000 for warehouse salaries, $15,000 for manufacturing supervisor salaries
C. Actual factory overhead costs incurred: $49,234. Included in this amount is $3,600 depreciation expense.
D. Materials moved to the production line: $18,000 direct and $1,200 indirect.
E. $99,000 of goods were completed
F. $67,000 of finished goods were sold for $95,000.
Compute the balance in Work in Process and finished goods at the end of the period.
There are no beginning inventories.
Answer
See Job Costing
|
a. raw materials purchased on account, $23,000 Raw materials $23,000 |
b. Labor Incurred: $87,000 direct labor for 4,500 hours, $26,000 executive and administrative salaries, $ 8,000 for warehouse salaries, $15,000 for manufacturing supervisor salaries.
| Work in Process $87,000 Manufacturing Overhead $ 15,000 Administrative salary expense $ 26,000 Warehouse salary expense $ 8,000 Salaries payable $136,000 |
c. Actual factory overhead costs incurred: $49,234. Included in this amount is $3,600 depreciation expense.
| Manufacturing Overhead $49,234 Accounts Payable $45,634 Accumulated Depreciation $ 3,600 |
d. Materials moved to the production line: $18,000 direct and $1,200 indirect
| Work in Process $18,000 Manufacturing O/H $ 1,200 Raw materials $19,200 |
Before you can move WIP to FG, you must apply overhead and make the overhead
account = 0. Do not automatically use direct labor hours, look to see what the
overhead rate is based on. In this problem, direct labor dollars is used.
Calculate the overhead rate:
| $600,000 = 0.75 x direct labor dollars $800,000 |
| Actual direct labor hours used 87,000 x Rate per direct labor hour x 0.75 = Manufacturing overhead applied $65,250 |
| Work in Process $65,250 Manufacturing Overhead $65,250 |
| Applied Overhead | $65,250 |
| Actual Overhead | $65,434 |
| Under applied | $ 184 |
Actual Overhead = $15,000 + $49,234 + $1,200
| Cost of Goods Sold $184 Manufacturing Overhead $184 |
When under applied, you have to add costs. This is done with a debit to CGS (or WIP if only one product) since it is not significant.
e. $99,000 of goods were completed
| Finished Goods $99,000 Work in Process $99,000 |
f. $67,000 of finished goods were sold for $95,000.
|
Cost of Goods Sold $67,000 Accounts Receivable $95,000 |
Compute the balance in Work in Process and finished goods at the end of the period.
4. The Cabinet Shoppe is considering dropping a line of kitchen cabinets from its current product lines. Expected financial information for the cabinet line follows:
| Annual sales | 7,000 |
| Selling price per unit | $380 |
| Variable Production cost per unit | $210 |
| Selling cost per unit | $ 15 |
| Direct fixed production costs | $740,000 |
| Direct fixed selling costs | $ 80,000 |
| Unavoidable fixed costs | $180,000 |
| Allocated common fixed costs | $245,000 |
Contribution margin of other product lines is expected to increase by $225,000 each year if the kitchen cabinet line is dropped.
Answer
See Short-term Decisions
The format used to analyze dropping a product line is:
Lost Contribution Margin (Sales – all Variable Costs)
– Fixed saved (avoidable or direct) costs
= Lost if dropped
Keep the product line if “lost if dropped” is positive
| Sales (per unit) $380 – All Variable Costs (per unit) $225 = Contribution Margin (per unit) $155 x Units Sold 7,000 = Total Contribution Margin $1,085,000 – Avoidable (Direct) Fixed Costs $820,000 = Net Lost Contribution if Dropped $265,000 |
The company will lose more than they save if the line is dropped.
Do not drop the product line.
Allocated common costs are ignored because they will be incurred regardless of which product lines the company has.
5. Bilbo, Inc. expects the following results for the current year.
| Product A | Product B | |
| Fixed costs – avoidable | 20,000 | 30,000 |
| Sales in units | 100,000 | 200,000 |
| Variable costs | 140,000 | 100,000 |
| Fixed costs – common | 50,000 | 100,000 |
| Sales | 200,000 | 300,000 |
A. Prepare a segment income statement
B. Compute the total company income if product A is dropped and the units sales of B increase by 30%.
C. Compute total company income if Product A were replaced by a new Product C. Product C is expected to sell 10,000 units at a sales price of $10, have variable costs of $6 per unit and have avoidable fixed costs of $10,000
Answer
See Segment Reporting and Cost Volume Profit Analysis
A.
| Product A | Product B | Total | |
| Sales | 200,000 | 300,000 | 500,000 |
| – All Variable Costs | 140,000 | 100,000 | 240,000 |
| = Contribution Margin | 60,000 | 200,000 | 260,000 |
| – Fixed – Avoidable | 20,000 | 30,000 | 50,000 |
| = Segment Contribution Margin | 40,000 | 170,000 | 210,000 |
| – Fixed Costs – Common | 150,000 | ||
| = Operating Income | 60,000 |
B.
| Product B CM | 200,000 |
| + 30% | 60,000 |
| New CM | 260,000 |
| – Fixed Avoidable | (30,000) |
| = New Segment Income of B | 230,000 |
| Lost Segment CM Product A | (40,000) |
| – Common Fixed Costs | (150,000) |
| Total Company Income | 40,000 |
C.
| Total Company Operating Income | 60,000 |
| – Lost Segment Income Product A | (40,000) |
| + New Product C Contribution Margin | 40,000 |
| – Avoidable Fixed Costs Product C | (10,000) |
| = Projected Company Income | 50,000 |
6. A company had two divisions, electronics and appliances. The electronics division manufactures an electronic computer chip that can be sold externally and is also used by the appliance division. The following information is available for the computer chip:
| List Selling Price: | $25.00 10% lower than competitors |
| Variable Production Costs: | $11.00 |
| Total Units Produced Annually: | 200,000 |
| Internal Requirements: | 50,000 |
| Units Sold Externally: | 180,000 |
| Fixed Overhead Costs | $300,000 allocated on the basis of units produced |
| Variable Selling Costs | $2; includes $1 per unit in sales commissions |
| Fixed Selling Costs | $300,000 |
A. Determine the minimum transfer price using the incremental cost method
B. Determine the maximum transfer price:
Answer
See Transfer Pricing
A. For the units that there is excess capacity, the minimum transfer price should be the total of incremental costs. Incremental costs are all variable costs plus any fixed costs that must be added to service the division.
| Variable production costs | $11 |
| Variable selling costs | $ 1 |
| Total incremental costs | $12 No added fixed costs |
Minimum transfer price is $12 for the first 20,000 units where there is capacity.
For the 30,000 that there is no excess capacity, the minimum transfer price should be the price to external customers; $25
B. The maximum transfer price should be the lowest price the division can purchase from the external supplier.
The electronics division currently sells at $25 which is 10% lower than the
external supplier cost of $27.78 ($25/.90)
The maximum transfer price should be $27.78 which is higher than the current
sales price—this maximum applies to both capacity and out of capacity.
The selling division could negotiate between $25 and $27.78.
7. Zorro, Inc. manufactures a single product. It keeps inventory of finished goods at 150% of the next months expected sales. It keeps inventory of raw materials at twice the next months required production in units. Each unit of product requires 3 pounds of raw materials at a cost of $4 per pound. Sales in units follows:
| January | 10,000 |
| February | 12,000 |
| March | 13,000 |
| April | 16,000 |
| May | 15,000 |
A. Compute the budgeted production in units for March.
B. Compute the budgeted materials purchases for March in pounds and dollars.
Answer
See Comprehensive Master Budgets
| A. | February | March | April |
| Budget Sales in Units | 12,000 | 13,000 | 16,000 |
| + Desired Inventory | 19,500 | 24,000 | 22,500 |
| – Beginning Inventory | 18,000 | 19,500 | 24,000 |
| Required Production | 13,500 | 17,500 | 14,500 |
| B. | February | March | April |
| Required Units Production | 13,500 | 17,500 | 14,500 |
| Quantity per Unit | 3 | ||
| Units of RM for Production | 52,500 | ||
| Desired Ending Inventory | 35,000 | 29,000 | |
| Beginning Inventory | (35,000) | ||
| Purchases – pounds | 46,500 | ||
| Cost per Pound | $4 | ||
| Material Purchases | $186,000 |
8. Ripper Corp. has the following sales budget
| March | $50,000 |
| April | $56,000 |
| May | $60,000 |
| June | $74,000 |
Ripper Corp. pays for purchases 20% in the month of purchase and 80% the month after purchase. Sales are expected to be collected 30% in the current month and 65% in the month following the sale. Monthly fixed expenses are $8,000, which includes depreciation expense. Fixed costs are paid as incurred. Accounts receivables are $35,000 and accounts payable is $20,000 on February 28th. The cash balance on May 1st is expected to be $15,000.
A. Prepare a schedule of cash receipts for the Month of May.
B. Determine the ending accounts receivable balance on May 31st.
Answer
See Comprehensive Master Budgets
A. Set up the table as follows:
|
Amounts Collected In: |
||||
| Sales Dollars | March | April | May | |
| March | 50,000 | 30% | 65% | |
| April | 56,000 | 30% | 65% | |
| May | 60,000 | 30% | ||
Now, multiply the amount on the left times the % on the same row to get dollars expected to be collected during that month.
| Amounts Collected In: | ||||
| Sales Dollars | March | April | May | |
| March | 50,000 | $15,000 | $32,500 | |
| April | 56,000 | $16,800 | $36,400 | |
| May | 60,000 | $18,000 | ||
| Total | $54,400 | |||
B. Accounts receivable at the end of May is 70% of May sales that are not yet collected = $42,000. The 5% bad debt expense for May sales is a receivable until it is written off and will be recorded in the allowance for uncollectible accounts.
9. Werty Co. is considering replacing a machine that has the following characteristics:
| Book Value | 200,000 |
| Remaining Useful Life | 4 Years |
| Annual Depreciation Expense | 50,000 |
| Current Market Value | 120,000 |
| Annual Other Operating Costs | 150,000 |
The replacement (new) machine is expected to cost $300,000, have a 4-year useful life, and save $100,000 in annual cash operating costs. The new machine would be depreciated using straight-line with no residual value. Werty Co.’s desired rate of return is 10%
A. Calculate the net present value of the incremental cash flows that will result from replacing the machine.
B. Determine the internal rate of return for the purchase of the new machine
C. Determine the accounting rate of return (simple rate) for the purchase of the new machine.
Answer
See Capital Investments
A. NPV
| Cash Flow | Years | Cash Flow | Factor | Present Value |
| Purchase | Now | ($300,000) | 1.0 | ($300,000) |
| Net Other Costs | 1-4 | $100,000 | 3.170 | $317,000 |
| Sell Old Machine | Now | $120,000 | 1.0 | $120,000 |
| Total NPV | $137,000 |
B. Internal Rate of Return
$300,000 / $100,000 = 3.0 PV Factor
PV Factor for 4 periods, 12% is 3.037
The internal rate of return is approximately 12%
C. Accounting Rate of Return
Annual CF – Depreciation Expense
Investment
| $100,000 – $75,000 = $25,000 $300,000 |
= 8.3%
$300,000 / 4 years = $75,000 Depreciation Expense
10. The following data relates to a product manufactured by TRW Corp.:
Standard Costs:
| Materials: | 2 pounds, | $3 per pound |
| Labor: | 3 hours, | $12 per hour |
| Variable Overhead: | $12 per pound of material used | |
| Budgeted fixed production costs | $140,000 | |
| Budgeted production for the year | 4,000 units | |
Actual Costs:
| Material purchased: | 8,000 pounds, total cost of $23,200 |
| Material used: | 7,200 pounds |
| Labor: | 10,360 hours, total cost of $129,500 |
| Variable overhead | $84,700 |
| Fixed overhead | $138,500 |
| Units produced | 3,200 units |
A. Calculate all variable cost variances. Correctly label the variances and note favorable or unfavorable.
B. Calculate all fixed overhead variances. Correctly label the variances and note favorable or unfavorable.
Answer
See Variable Cost Variance and Fixed Overhead Variance
Material:
|
AQ x AP AQ x SP AQ x SP SQ x SP $23,200 8,000 x $3 7,200 x $3 3,200 x 2 x $3 Variance $800 F $2,400 UNF |
Labor:
|
AQ x AP AQ x SP SQ x SP $129,500 10,360 x $12 3,200 x 3 x $12 Variance $5,180 UNF $9,120 UNF |
Variable Overhead: Quantity is pounds since the cost per is per pound
|
AQ x AP AQ x SP SQ x SP $84,700 7,200 x $12 3,200 x 2 x $12 Variance $1,700 F $9,600 UNF |
Fixed Overhead:
|
Actual Budget Applied Variance $1,500 F $28,000 UNF |
Fixed overhead rate = $140,000 / 4,000 units = $35 per unit
11. Amos Corp. sells a single product for $30. There were no beginning inventories.
Information for the year is as follows:
| Sales 24,000 units | $720,000 |
| Production costs: | |
| Variable costs per unit | $16 |
| Fixed costs – total | $150,000 |
| Administrative costs: | |
| Variable costs per unit | $5 |
| Fixed costs – total | $50,000 |
| Actual units produced | 26,000 units |
| Budgeted production | 25,000 units |
A. Prepare a variable cost income statement
B. Prepare an absorption cost income statement
C. Reconcile the difference between the two income statements.
Answer
See Variable Cost and Absorption Cost Income Statements
A.
| Sales ($30 x 24,000 units sold) | $720,000 |
| – Variable production costs ($16 | $384,000 |
| – Variable admin costs ($5) | $120,000 |
| = Total Contribution Margin | $216,000 |
| – All Fixed Expenses: | |
| Administrative | $ 50,000 |
| Fixed Production costs | $150,000 |
| = Total Operating Income | $ 16,000 |
B.
| Sales ($30 x 24,000 units sold) | $720,000 |
| – Variable production costs ($16) | $384,000 |
| – Fixed production costs ($5.77) | $138,480 |
| = Gross Profit | $197,520 |
| – Variable admin costs ($5) | $120,000 |
| – Fixed administrative | $ 50,000 |
| = Total operating income | $ 27,520 |
Fixed production cost per unit = $150,000 / 26,000 = $5.77 per unit
C. Reconcile the difference between variable cost income and absorption cost income
| Units Made | 26,000 |
| – Units Sold | (24,000) |
| = Inventory Change in Units | 2,000 |
| x Fixed M O/H rate per unit | x $5.77 |
| = Difference in absorption costing and variable costing income |
$11,540 |
Difference in two statements: $11,520
$20 difference due to rounding
Inventory increased;
Absorption cost is higher than variable cost income
12. Authentic Furniture, Inc. applies overhead on the basis of direct labor cost. At the beginning of the period the following amounts were budgeted:
| Direct labor costs | $4,000,000 |
| Total overhead | $5,000,000 |
| Direct labor hours | 425,000 |
| Machine hours | 125,000 |
The first two jobs manufactured in the current year were job no. X5-01 and X5-02.
The cost of the jobs and the production status on January 31st are as follows:
| X5-01 | X5-02 | |
| Direct Materials | $22,000 | $48,000 |
| Direct labor | $40,000 | $75,000 |
| Direct labor hours | 4,000 | 7,500 |
| Status: | In process | Finished, not yet sold |
At the end of the current year, actual direct labor hours totaled 442,000, actual direct
labor costs totaled $4,200,000 and actual overhead incurred totaled $5,180,000.
A. Compute the total cost of each job as of January 31st
B. Calculate the amount of over or under applied overhead for the year.
Answer
See Job Costing
1st – Calculate the predetermined overhead rate for the year:
| $5,000,000 / $4,000,000 = 1.25 x Direct Labor $ Man O/H D L $ base |
A.
| X5-01 | X5-02 | |
| Direct Materials | $22,000 | $48,000 |
| Direct labor | $40,000 | $75,000 |
| Manufacturing O/H (1.25 x DL$) | $50,000 | $93,750 |
| Total cost of the job | $112,000 | $216,750 |
B.
| Actual direct labor $ | $4,200,000 |
| x Manuf. O/H rate | x 1.25 |
| = Amount applied | $5,250,000 |
| – Actual Manuf. O/H | $5,180,000 |
| = Over applied | $ 70,000 |
13. The following data was taken from the cost records of a manufacturing company:
| Utilities, factory | 8,000 |
| Sales commissions | 20,000 |
| Indirect labor | 59,000 |
| Rent, factory building | 70,000 |
| Purchases of raw materials | 264,000 |
| Assembly labor cost | 90,000 |
| Advertising expense | 40,000 |
| Supplies, factory | 1,500 |
| Corporate office rent expense | 42,000 |
| Warehouse rent expense | 33,000 |
| Maintenance, factory equipment | 10,000 |
| Shipping to customers | 21,000 |
| Depreciation – sales autos | 4,000 |
| Inventories: | Beginning | Ending |
| Raw Materials | 39,000 | 45,000 |
| Work in Process | 16,000 | 29,000 |
| Finished Goods | 199,000 | 132,000 |
A. Prepare a schedule of cost of goods manufactured
B. Calculate cost of goods sold
Answer
See Cost of Goods Manufactured
A.
| Beginning Raw Materials Inventory | 39,000 |
| + Purchases of Raw Materials | 264,000 |
| – Ending Raw Materials Inventory | (45,000) |
| Materials Used in Production | 258,000 |
| Direct labor | 90,000 |
| Supplies, factory | 1,500 |
| Indirect Labor | 59,000 |
| Maintenance, factory equipment | 10,000 |
| Utilities, factory | 8,000 |
| Rent, factory building | 70,000 |
| Total manufacturing overhead | 148,500 |
| + Beginning WIP | 16,000 |
| – Ending WIP | (29,000) |
| Cost of Goods Manufactured | 483,500 |
B.
| Beginning finished goods | 199,000 |
| + Cost of goods manufactured | 483,500 |
| – Ending finished goods | (132,000) |
| = Cost of goods sold | 550,500 |
14. Queen, Inc. uses the FIFO method for its process cost system. The following data is relative to the operations of the company for January.
| Work in Process, Beginning: | |
| Units in process | 1,000 |
| Materials cost, 80% complete | $ 27,500 |
| Conversion cost, 60% complete | $ 4,500 |
| Units started into production during the month | 60,000 |
| Units completed and transferred out | 59,000 |
| Material added to production during January | $129,000 |
| Conversion added to production during January | $ 36,000 |
Work in Process, January 31st:
Materials, 50% complete
Conversion, 30% complete
A. Determine the equivalent units of production for material and conversion.
B. Determine the cost per equivalent unit for material and conversion.
C. Prepare a cost reconciliation report
Answer
See Process Costing
A.
| Quantity | |||
| Beginning Inventory | 1,000 | ||
| +Started In Production | 60,000 | ||
| =Total Units to be accounted for: | 61,000 | ||
| Equivalent Units | |||
| Quantity | Material | Conversion | |
| Beginning Inventory | 1,000 | 200 | 400 |
| +Started and Completed : | 58,000 | 58,000 | 58,000 |
| +Ending – 50% complete for | |||
| material and 30% conversion | 2,000 | 1,000 | 600 |
| =Total units accounted for | 61,000 | 59,200 | 59,000 |
B.
| (labor + O/H) | ||
| Costs: | Materials | Conversion |
| Beginning Inventory * | $ 0 | $ 0 |
| Current Period | $129,000 | $ 36,000 |
| Total Costs | $129,000 | $ 36,000 |
| / Equivalent Units above | 59,200 | 59,000 |
| = Cost per Eq. Unit | $2.18 | $0.61 |
FIFO beginning inventory dollars are not included in the cost per equivalent unit
C.
Value WIP:
| Material: 1,000 x $2.18 = $2,180 Conversion: 600 x $0.61 = $ 366 Total cost of WIP: $2,546 |
Value FG:
| Beginning inventory dollars | $32,000 |
| Beginning units: | |
| Material: 200 x $2.18 = | $ 436 |
| Conversion: 400 x $0.61 = | $ 244 |
| Started and Completed 58,000 x $2.79 = | $161,820 |
| Total Finished Goods | $ 194,500 |
15. A company produces three products in a single production plant. Budgeted sales and production information is as follows:
| Product X | Product Y | Product Z | |
| Units produced and sold | 20,000 | 30,000 | 50,000 |
| Selling price per unit | $12 | $32 | $50 |
| Total Assembly Hours | 10,000 | 30,000 | 60,000 |
| Number of batches | 50 | 100 | 350 |
| Number of purchase orders | 1,000 | 2,000 | 7,000 |
| Direct Cost per unit | $ 7 | $ 14 | $28 |
Total paid to indirect labor is $250,000. Total batch set-up costs for the company are $290,000. Total cost to the company to purchase parts is $350,000. Costs are allocated using the activity bases of assembly hours, batches, and parts as applicable.
A. Calculate the cost per unit of activity for each type of activity:
Assembly Hours
Batches
Purchase Orders
B. Prepare a product income statement using activity-based costing for product Z.
Answer
See Activity Based Costing
1st Step: Add the activity of all three products together and get the total for the company:
| Total company | |
| Assembly hours | 100,000 |
| Number of batches | 500 |
| Number of purchase orders | 10,000 |
2nd step: Calculate rate per activity:
Total $ / Total activity for the company
A.
| Indirect labor | $250,000 / 100,000 = | $ 2.50 |
| Batches | $290,000 / 500 = | $580.00 |
| Purchase Orders | $350,000 / 10,000 = | $ 35.00 |
B.
| Product Z | ||
| Sales | $2,500,000 | ($50 x 50,000) |
| Direct Costs | $1,400,000 | ($28 x 50,000) |
| – Indirect labor | $ 150,000 | ($2.50 x 60,000) |
| – batch costs | $ 203,000 | ($580 x 350) |
| – purchase order | $ 245,000 | ($35 x 7,000) |
| Product Income | $ 502,000 |
16. Determine if the following is a fixed or variable cost. Determine if the following costs are product or period cost and the type of product or period cost.
The company manufactures pancake syrup.
1. Rent on the manufacturing facility
2. Bottles the syrup is placed in
3. Corn syrup, an ingredient
4. Workers who operate the filling machine
5. Utilities at the manufacturing plant
6. Insurance on the manufacturing plant
7. Janitors salary at the plant
8. Utilities at corporate headquarters
9. Supervisor at the manufacturing plant
10. Worker who place the labels on the syrup bottle
11. Depreciation on the machine that cooks the syrup
12. Manufacturing plant manager
13. Inspectors at the manufacturing plant
14. Salesmen travel expenses
15. Oil and parts for the manufacturing machines
16. Lids for the bottles
17. Shipping to customers
18. Advertising the syrup – a percent of sales dollars
19. Rent on corporate headquarters
20. Office supplies at corporate, set monthly amount
Answer
See Product and Period Costs & Cost Behavior, Fixed and Variable
| 1. Rent on the manufacturing facility | Fixed | Product – M O/H |
| 2. Bottles the syrup is placed in | Variable | Product – DM |
| 3. Corn syrup, an ingredient | Variable | Product – DM |
| 4. Workers who operate the filling machine | Variable | Product – DL |
| 5. Utilities at the manufacturing plant | Variable | Product – M O/H |
| 6. Insurance on the manufacturing plant | Fixed | Product – M O/H |
| 7. Janitors salary at the manufacturing plant | Fixed | Product – M O/H |
| 8. Utilities at corporate headquarters | Fixed | Period – Admin |
| 9. Supervisors salary at the manufacturing plant | Fixed | Product – M O/H |
| 10. Worker who place the labels on the syrup bottle | Variable | Product – DL |
| 11. Depreciation on the machine that cooks the syrup | Fixed | Product – M O/H |
| 12. Manufacturing plant manager salary | Fixed | Product – M O/H |
| 13. Inspectors salary at the manufacturing plant | Fixed | Product – M O/H |
| 14. Salesmen travel expense | Variable | Period – Selling |
| 15. Oil and parts for the manufacturing machines | Variable | Product – M O/H |
| 16. Lids for the bottles | Variable | Product – DM |
| 17. Shipping to customers | Variable | Period – Selling |
| 18. Advertising the syrup – a percent of sales $ | Variable | Period – Selling |
| 19. Rent on corporate headquarters | Fixed | Period – Admin |
| 20. Office supplies at corporate, set monthly amount | Fixed | Period – Admin |