Chapter Two Finiance Accounting

ACCT 2102

CHAPTER 1

COST CONCEPTS

PRACTICE PROBLEMS

1. Carreker Company manufactures cell phones. For next year, Carreker expects to

produce 30,000 phones with the following total costs:

Direct materials

Direct labor

Manufacturing overhead

$154,300

$ 90,000

$480,000

The Company expects to purchase $147,900 of direct materials and sell 34,000

units next year. Information about the Company’s inventory accounts follows:

Beginning

Ending

Direct

Materials

Inventory

$53,400

$47,000

WIP

Inventory

$75,000

$60,000

Finished

Goods

Inventory

$151,000

$45,000

REQUIRED:

a. Prepare a statement of cost of goods sold.

b. If only 32,000 units were to be sold next year? Explain which lines of the

statement of cost of goods sold would be affected and how.

2. Sodowsky Manufacturing, Inc. produces brightly colored clog-style shoes. Next

year, Sodowsky plans to produce 150,000 units with the following total costs:

Direct materials

Direct labor

Variable overhead

Fixed overhead

$300,000

$ 90,000

$ 45,000

$420,000

REQUIRED:

a.

b.

c.

d.

Calculate the prime cost per unit.

Calculate the conversion cost per unit.

Calculate the total variable cost per unit.

Calculate total manufacturing cost per unit.

1

ACCT 2102

CHAPTER 1

COST CONCEPTS

PRACTICE PROBLEMS

3. For each of the following independent situations, calculate the missing values:

a. Assume that $143,000 of direct materials was purchased during June.

Beginning direct materials inventory was $9,000 and direct materials used

in production were $110,000. What is ending direct materials inventory?

b. Beginning WIP inventory was $20,000 and ending WIP was $18,750. If

total manufacturing costs were $40,000, what was cost of goods

manufactured?

c. If conversion cost is $84 per unit, prime cost is $70, and manufacturing

cost per unit is $120 what is the direct materials cost per unit?

d. Total manufacturing costs for August were $446,900. Prime cost was...