Chapter 2 Managerial Accounting Solutions

Chapter 2 Solutions, A&B

Exercise 2-1 (10 minutes)

1. The wages of employees who build the sailboats: direct labor cost.

2. The cost of advertising in the local newspapers: marketing and selling cost.

3. The cost of an aluminum mast installed in a sailboat: direct materials cost.

4. The wages of the assembly shop’s supervisor: manufacturing overhead cost.

5. Rent on the boathouse: a combination of manufacturing overhead, administrative, and marketing and selling cost. The rent would most likely be prorated on the basis of the amount of space occupied by manufacturing, administrative, and marketing operations.

6. The wages of the company’s bookkeeper: administrative cost.

7. Sales commissions paid to the company’s salespeople: marketing and selling cost.

8. Depreciation on power tools: manufacturing overhead cost.

Exercise 2-2 (15 minutes)

| | Product

Cost | Period

Cost |

1. | The cost of the memory chips used in a radar set | X | |

2. | Factory heating costs | X | |

3. | Factory equipment maintenance costs | X | |

4. | Training costs for new administrative employees | | X |

5. | The cost of the solder that is used in assembling the radar sets | X | |

6. | The travel costs of the company’s salespersons | | X |

7. | Wages and salaries of factory security personnel | X | |

8. | The cost of air-conditioning

executive offices | | X |

9. | Wages and salaries in the department that handles billing customers | | X |

10. | Depreciation on the equipment in the fitness room used by factory workers | X | |

11. | Telephone expenses incurred by factory management | X | |

12. | The costs of shipping completed radar sets to customers | | X |

13. | The wages of the workers who assemble the radar sets | X | |

14. | The president’s salary | | X |

15. | Health insurance premiums for factory personnel | X | |

Exercise 2-3 (15 minutes)

1. | |...