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Exercise 1

1. The document provides information on unit costs, overhead costs, inventory costs, and direct/indirect costs for various companies. It includes 4 exercises with multiple questions each that require calculating and identifying various cost components. 2. The exercises require identifying conversion costs, prime costs, total variable costs, total costs, overhead costs, inventoriable costs, cost of goods sold, inventory costs, direct variable costs, direct fixed costs, and unavoidable costs using data on production levels, expenses, direct labor hours, and departmental costs. 3. The goal is to understand how to classify, calculate, and report different types of costs using traditional cost accounting methods and data provided on production activities and financial statements.

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1K views

Exercise 1

1. The document provides information on unit costs, overhead costs, inventory costs, and direct/indirect costs for various companies. It includes 4 exercises with multiple questions each that require calculating and identifying various cost components. 2. The exercises require identifying conversion costs, prime costs, total variable costs, total costs, overhead costs, inventoriable costs, cost of goods sold, inventory costs, direct variable costs, direct fixed costs, and unavoidable costs using data on production levels, expenses, direct labor hours, and departmental costs. 3. The goal is to understand how to classify, calculate, and report different types of costs using traditional cost accounting methods and data provided on production activities and financial statements.

Uploaded by

TAETAE
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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STRATEGIC COST MANAGEMENT Chapter 1

Exercises

1. Prime costs, conversions, etch. The estimated unit costs for CNR Inc., when it is operating at a
production and sales level of 12,000 units, are as follows:

Expense Estimated Unit Cost


Direct materials P 32
Direct labor 10
Variable factory overhead 15
Fixed factory overhead 6
Variable distribution and administrative 3
Fixed distribution and administration 4

Required:

1. Identify the estimated conversion cost per unit.


2. Identify the estimated prime cost per unit.
3. Determine the estimated total variable cost per unit.
4. Compute the total cost that would be incurred during a month with a production level of
12,000 units and a sales level of 8,000 units.

2. Overhead costs. During the month of July, the records of Arthur Company revealed the following
data:
Indirect materials and factory supplies P 68,000
Supervisory salaries 90,000
Repairs and maintenance 40,000
Heat, light, and power 28,000
Overtime premium – plant workers 20,000
Fringe benefits for plant workers 15,000
Depr 190,000
eciation – plant
Insurance - plant 22,000
Promotional expenses 20,000
Patent amortization expense 30,000
Delivery expense 25,000

The company applies its factory overhead at a rate of P 7.50 per direct labor hours. The payroll for the
month showed a total direct labor hours worked at 71,000.

Required: Determine the following data for July financial statements:

1. Total actual factory overhead costs.


2. Total applied factory overhead costs.
3. The underapplied/ overapplied factory overhead.
4. Total factory overhead costs to be shown on the Statement of Cost of Goods Manufactured.

Understanding Expenses Page 1


STRATEGIC COST MANAGEMENT Chapter 1

3. Inventoriable costs. Tarsier Company produced 400,000 units in August and used the following
production costs:
Direct materials P 750,000
Direct labor 800,000
Factory overhead
Variable 80,000
Fixed 110,000

The company sold 360,000 units during the month. there was no inventory of finished goods on August
1.

Required: Using the traditional cost accounting system, calculate the following:

1. Inventoriable cost per unit.


2. Cost of goods sold during the period.
3. Cost of inventory on August 31.

4. Direct and Indirect costs. The total factory costs of Macopa Company for the month of September
showed the following, among others:

Department A Department B
Direct materials P 800,000 P 1,200,000
Direct labor 600,000 660,000
Depreciation for machinery and equipment 140,000 220,000
Factory supplies 20,000 60,000
Allocated costs from corporate headquarter 130,000 190,000
Supervisory salaries 48,000 72,000
Repairs and maintenance (allocated on the basis of number of hours spent to maintain machine, 120
hours for A and 280 hours for B), P 250,000.
Factory rent-building (allocated on the basis of floor space, 20% to A and 80% to B), P 200,000.
Plant executive’s salaries (allocated on the basis of hours spent to each department 40% to A and 60%
to B), P 380,000.
In an event a department is discontinued, the supervisors assigned to the department shall be
dismissed. The factory plant is covered by a 20-year lease agreement.

Required: Determine the following for each department:

1. Direct variable costs.


2. Total controllable direct fixed costs.
3. Total noncontrollable direct fixed costs.
4. Total direct fixed costs.
5. Total direct costs.
6. Total indirect costs.
7. Total unavoidable costs in case of production stoppages.

Understanding Expenses Page 2

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