Managerial Accounting: Creating Value in a Dynamic Business Environment
Managerial Accounting: Creating Value in a Dynamic Business Environment
11th Edition
ISBN: 9781259569562
Author: Ronald W Hilton Proffesor Prof, David Platt
Publisher: McGraw-Hill Education
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Chapter 2, Problem 45P

Cape Cod Shirt Shop manufactures T-shirts and decorates them with custom designs for retail sale on the premises. Several costs incurred by the company are listed below. For each cost, indicate which of the following classifications best describe the cost. More than one classification may apply to the same cost item.

Cost Classifications

  1. a. Variable
  2. b. Fixed
  3. c. Period
  4. d. Product
  5. e. Administrative
  6. f. Selling
  7. g. Manufacturing
  8. h. Research and development
  9. i. Direct material
  10. j. Direct labor
  11. k. Manufacturing overhead

Cost Items

  1. 1. Cost of fabric used in T-shirts.
  2. 2. Wages of shirtmakers.
  3. 3. Cost of new sign in front of retail T-shirt shop.
  4. 4. Wages of the employee who repairs the firm’s sewing machines.
  5. 5. Cost of electricity used in the sewing department.
  6. 6. Wages of T-shirt designers and painters.
  7. 7. Wages of sales personnel.
  8. 8. Depreciation on sewing machines.
  9. 9. Rent on the building. Part of the building’s first floor is used to make and paint T-shirts. Part of it is used for the retail sales shop. The second floor is used for administrative offices and storage of raw material and finished goods.
  10. 10. Cost of daily advertisements in local media.
  11. 11. Wages of designers who experiment with new fabrics, paints, and T-shirt designs.
  12. 12. Cost of hiring a pilot to fly along the beach pulling a banner advertising the shop.
  13. 13. Salary of the owner’s secretary.
  14. 14. Cost of repairing the gas furnace.
  15. 15. Cost of insurance for the production employees.
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Cape Cod Shirt Shop manufactures T-shirts and decorates them with custom designs for retail sale on the premises. Several costs incurred by the company are listed below. For each cost, indicate which of the following classifications best describe the cost. More than one classification may apply to the same cost item.Cost Classificationsa. Variableb. Fixedc. Periodd. Producte. Administrativef. Sellingg. Manufacturingh. Research and developmenti. Direct materialj. Direct labork. Manufacturing overheadCost Items1. Cost of fabric used in T-shirts.2. Wages of shirtmakers.3. Cost of new sign in front of retail T-shirt shop.4. Wages of the employee who repairs the firm’s sewing machines.5. Cost of electricity used in the sewing department.6. Wages of T-shirt designers and painters.7. Wages of sales personnel.8. Depreciation on sewing machines.9. Rent on the building. Part of the building’s first floor is used to make and paint T-shirts. Part of it is used for the retail sales shop. The second…
Cape Cod Shirt Shop manufactures T-shirts and decorates them with custom designs for retail sale on the premises. Several costs incurred by the company are listed below. For each cost, indicate which of the following classifications best describe the cost. More than one classification may apply to the same cost item. Cost Classifications Variable Fixed Period Product Administrative Selling Manufacturing Research and Development Direct material Direct labor Manufacturing overhead   Cost Items: Cost of fabric used in T-shirts Wages of shirtmakers Cost of new sign in front of retail T-shirt shop Wages of employee who repairs the firms sewing machines Cost of electricity used in the sewing department Wages of T-shirt designers and painters Wages of sales personnel Depreciation on sewing machines Rent on the building that is used to make and paint T-shirts Cost of daily advertisements in local media Wages of designers who experiment with new fabrics, paints and T-shirt designs Cost of…
Classifying Costs The following is a list of costs incurred by several businesses. Classify each of the following costs as product costs or period costs. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. Costs Classification a.  Salary of quality control supervisor   b.  Packing supplies for products sold. These supplies are a very small portion of the total cost of the product.   c.  Factory operating supplies   d.  Depreciation of factory equipment   e.  Hourly wages of warehouse laborers   f.  Wages of company controller’s secretary   g.  Maintenance and repair costs for factory equipment   h.  Paper used by commercial printer   i.  Entertainment expenses for sales representatives   j.  Protective glasses for factory machine operators   k.  Sales commissions   l.  Cost of hogs for meat processor   m.  Cost of…

Chapter 2 Solutions

Managerial Accounting: Creating Value in a Dynamic Business Environment

Ch. 2 - How does the fixed cost per unit change as the...Ch. 2 - Prob. 12RQCh. 2 - Distinguish between volume-based and...Ch. 2 - Would each of the following characteristics be a...Ch. 2 - List three direct costs of the food and beverage...Ch. 2 - List three costs that are likely to be...Ch. 2 - Which of the following costs are likely to be...Ch. 2 - Distinguish between out-of-pocket costs and...Ch. 2 - Define the terms sunk cost and differential cost.Ch. 2 - Distinguish between marginal and average costs.Ch. 2 - Prob. 21RQCh. 2 - Two years ago the manager of a large department...Ch. 2 - Indicate whether each of the following costs is a...Ch. 2 - For each case below, find the missing amount.Ch. 2 - A foundry employee worked a normal 40-hour shift,...Ch. 2 - A loom operator in a textiles factory earns 16 per...Ch. 2 - Consider the following costs that were incurred...Ch. 2 - Alexandria Aluminum Company, a manufacturer of...Ch. 2 - Prob. 30ECh. 2 - A hotel pays the phone company 100 per month plus...Ch. 2 - Prob. 32ECh. 2 - Orbital Communications, Inc. manufactures...Ch. 2 - The state Department of Education owns a computer...Ch. 2 - Prob. 35ECh. 2 - List the costs that would likely be included in...Ch. 2 - Consider the following cost items: 1. Salaries of...Ch. 2 - The following selected information was extracted...Ch. 2 - Prob. 39PCh. 2 - Mason Corporation began operations at the...Ch. 2 - Determine the missing amounts in each of the...Ch. 2 - The following cost data for the year just ended...Ch. 2 - The following data refer to San Fernando Fashions...Ch. 2 - Highlander Cutlery manufactures kitchen knives....Ch. 2 - Cape Cod Shirt Shop manufactures T-shirts and...Ch. 2 - Heartland Airways operates commuter flights in...Ch. 2 - San Diego Sheet Metal, Inc. incurs a variable cost...Ch. 2 - Hightide Upholstery Company manufactures a special...Ch. 2 - For each of the following costs, indicate whether...Ch. 2 - Indicate for each of the following costs whether...Ch. 2 - Water Technology, Inc. incurred the following...Ch. 2 - The following terms are used to describe various...Ch. 2 - Several costs incurred by Bayview Hotel and...Ch. 2 - Refer to Exhibit 23, and answer the following...Ch. 2 - Roberta Coy makes custom mooring covers for boats....Ch. 2 - The Department of Natural Resources is responsible...Ch. 2 - Prob. 57PCh. 2 - Prob. 58PCh. 2 - CompTech, Inc. manufactures printers for use with...Ch. 2 - You just started a summer internship with the...
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