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Acctg 1103 - Practice Set 2

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28 views2 pages

Acctg 1103 - Practice Set 2

Uploaded by

bernardino.kaye
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ACCTG 1103 PRACTICE SET 2

BASIC Concepts

1. For each of the following statements, indicate whether it is true or false.


a. A cost is something used up to produce revenues in a particular accounting period.
b. The cost of direct materials is fixed per unit but variable in total.
c. Variable costs are direct costs; only fixed costs are indirect costs.
2. For each of the following costs incurred in a manufacturing fi rm, indicate whether the costs are most likely fixed (F) or variable
(V) and whether they are most likely period costs (P) or product costs (M) under full absorption costing:
a. Depreciation on the building for administrative staff offices.
b. Bonuses of top executives in the company.
c. Overtime pays for assembly workers.
d. Transportation-in costs on materials purchased.
e. Assembly line workers’ wages.
f. Sales commissions for sales personnel.
g. Administrative support for sales supervisors.
h. Controller’s office rental.
i. Cafeteria costs for the factory.
j. Energy to run machines producing units of output in the factory.
k. Depreciation on pollution control equipment in the plant.
l. Chief financial officer’s salary.
m. Power to operate factory equipment.
n. Commissions paid to sales personnel.
o. Office supplies for the human resources manager.
3. For each of the following costs incurred in a manufacturing operation, indicate whether they are included in prime costs (P),
conversion costs (C), or both (B):
a. Property taxes on the factory.
b. Direct materials used in the production process.
c. Transportation-in costs on materials purchased.
d. Lubricating oil for plant machines.
e. Assembly line worker’s salary.
4. Place the number of the appropriate definition in the blank next to each concept.
Problems

1. The following data apply to the provision of psychological testing services:

Required. Give the amount for each of the following (one unit one test):

a) Variable production cost per unit.


b) Variable cost per unit.
c) Full cost per unit.
d) Full absorption cost per unit.
e) Prime cost per unit.
f) Conversion cost per unit.
g) Contribution margin per unit.
h) Gross margin per unit.
i) Suppose the number of units decreases to 800 tests per month, which is within the relevant range. Which parts of (a
to h) will change? For each amount that will change, give the new amount for a volume of 800 tests.

2. Terracotta, Inc., provides you with the following data for their single product:

Required. Give the amounts for each of the following:

a) Prime cost per unit.


b) Contribution margin per unit.
c) Gross margin per unit.
d) Conversion cost per unit.
e) Variable cost per unit.
f) Full absorption cost per unit.
g) Variable production cost per unit.
h) Full cost per unit.
i) Suppose the number of units increases to 400,000 units per month, which is within the relevant range, which of
amounts a through h will change. For each that will change, give the new amount for a volume of 400,000 units.

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