Hummer Company uses manufacturing cells to produce its products (a cell is a manufacturing unit dedicated to the production of subassemblies or products). One manufacturing cell produces small motors for lawn mowers. Suppose that the motor manufacturing cell is the cost object. Assume that all or a portion of the following costs must be assigned to the cell. Required: Classify each of the costs as a direct cost or an indirect cost to the motor manufacturing cell. a. Salary of cell supervisor b. Power to heat and cool the plant in which the cell is located c. Materials used to produce the motors d. Maintenance for the cell's equipment (provided by the maintenance department) e. Labor used to produce motors f. Cafeteria that services the plant's employees g. Depreciation on the plant h. Depreciation on equipment used to produce the motors i. Ordering costs for materials used in production j. Engineering support (provided by the engineering department) k. Cost of maintaining the plant and grounds l. Cost of the plant's personnel office m. Property tax on the plant and land
Hummer Company uses manufacturing cells to produce its products (a cell is a manufacturing unit dedicated to the production of subassemblies or products). One manufacturing cell produces small motors for lawn mowers. Suppose that the motor manufacturing cell is the cost object. Assume that all or a portion of the following costs must be assigned to the cell.
Required:
Classify each of the costs as a direct cost or an indirect cost to the motor manufacturing cell.
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a. |
Salary of cell supervisor |
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b. |
Power to heat and cool the plant in which the cell is located |
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c. |
Materials used to produce the motors |
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|
d. |
Maintenance for the cell's equipment (provided by the maintenance department) |
|
|
e. |
Labor used to produce motors |
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f. |
Cafeteria that services the plant's employees |
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|
g. |
Depreciation on the plant |
|
|
h. |
Depreciation on equipment used to produce the motors |
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|
i. |
Ordering costs for materials used in production |
|
|
j. |
Engineering support (provided by the engineering department) |
|
|
k. |
Cost of maintaining the plant and grounds |
|
|
l. |
Cost of the plant's personnel office |
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|
m. |
Property tax on the plant and land |
Total and Unit Product Cost
Martinez Manufacturing Inc. showed the following costs for last month:
|
Direct materials |
$7,000 |
|
Direct labor |
3,000 |
|
Manufacturing |
2,000 |
|
Selling expense |
8,000 |
Last month, 4,000 units were produced and sold.
Required:
- Classify each of the costs as product cost or period cost.
|
Direct materials |
|
|
Direct labor |
|
|
Manufacturing overhead |
|
|
Selling expense |
|
- What is the total product cost for last month?
$ - What is the unit product cost for last month?
$per unit
Product Cost in Total and Per Unit
Grin Company manufactures digital cameras. In January, Grin produced 4,000 cameras with the following costs:
|
Direct materials |
$400,000 |
|
Direct labor |
80,000 |
|
Manufacturing overhead |
320,000 |
There were no beginning or ending inventories of WIP.
Required:
- What was the total product cost in January?
The total product cost in January is $. - What was the product cost per unit in January?
The product cost per unit in January is $.
Prime Cost and Conversion Cost
Grin Company manufactures digital cameras. In January, Grin produced 4,000 cameras with the following costs:
|
Direct materials |
$400,000 |
|
Direct labor |
80,000 |
|
Manufacturing overhead |
320,000 |
There were no beginning or ending inventories of WIP.
Required:
If required, round your answers to the nearest cent.
- What was the total prime cost in January?
$ - What was the prime cost per unit in January?
$per unit - What was the total conversion cost in January?
$ - What was the conversion cost per unit in January?
$per unit
Direct Materials Used
Hannah Banana Bakers makes chocolate chip cookies for cafe restaurants. In June, Hannah Banana purchased $15,500 of materials. On June 1, the materials inventory was $3,700. On June 30, $1,600 of materials remained in materials inventory.
Required:
- What is the cost of the direct materials used in production during June?
$ - There is a difference between the cost of direct materials that were purchased during the month and the cost of direct materials that were used in production during the month. In this context which of the following is true.
Direct Materials Used, Cost of Goods Manufactured
In September, Lauren Ashley Company purchased materials costing $200,000 and incurred direct labor cost of $120,000. Overhead totaled $325,000 for the month. Information on inventories was as follows:
|
|
September 1 |
|
September 30 |
|
Materials |
$120,000 |
|
$130,000 |
|
Work in process |
80,000 |
|
90,000 |
|
Finished goods |
70,000 |
|
65,000 |
Required:
- What was the cost of direct materials used in September?
$ - What was the total
manufacturing cost in September?
$ - What was the cost of goods manufactured for September?
$
Understanding the Relationship between Cost Flows, Inventories, and Cost of Goods Sold
Ivano Company has collected cost accounting information for the following subset of items for Years 1 and 2.
Required:
Calculate the values of the missing items.
|
|
Year 1 |
Year 2 |
|
Item: |
|
|
|
Direct materials used in production |
$ |
$50,000 |
|
Direct materials: Beginning inventory |
$10,000 |
$ |
|
Direct materials purchases |
45,000 |
$ |
|
Direct materials: Ending inventory |
15,000 |
17,000 |
|
Direct labor used in production |
$ |
53,000 |
|
Manufacturing overhead costs used in production |
80,000 |
76,000 |
|
Work in process: Beginning inventory |
17,000 |
14,000 |
|
Work in process: Ending inventory |
14,000 |
19,000 |
|
Finished goods: Beginning inventory |
8,000 |
7,000 |
|
Finished goods: Ending inventory |
7,000 |
11,000 |
|
Cost of goods sold |
169,000 |
$ |
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