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ACCT 2020 Study Guide - Midterm Guide: Indirect Costs, Sunk Costs, Regional Policy Of The European Union

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cyanmacaw404
25 Jun 2017
School
UNT
Department
Accounting
Course
ACCT 2020
Professor
Tanzila

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Document Summary

Preparing an income statement and balance sheet balance sheet. Cost classifications (cid:129) product costs (cid:129) direct materials. Direct materials (cid:129) direct labor (cid:129) manufacturing overhead (cid:129) period costs (nonmanufacturing costs) S lli t (cid:129) selling costs (cid:129) administrative costs. Predicting changes in cost due to changes in activity. Variable costs (cid:129) fixed costs (cid:129) direct costs (cid:129) indirect costs (cid:129) differential costs (cid:129) sunk costs (cid:129) costs. Lucas manufacturing has three cost objects that it uses to accumulate costs for its manufacturing plants. Cost object #1: the physical buildings and equipment. Cost object #2: the use of buildings and equipment. The following manufacturing overhead cost categories are found in the accounting records: depreciation on buildings and equipment, lubricants for machines c property insurance, property insurance, supervisors" salaries, fringe benefits, property taxes, utilities. Required: assign each of the above costs to the most appropriate cost object. Learning objective: define and illustrate a cost object.

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Related Questions

Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month:

Direct materials $ 82,000
Direct labor $ 41,500
Variable manufacturing overhead $ 20,200
Fixed manufacturing overhead 31,900
Total manufacturing overhead $ 52,100
Variable selling expense $ 14,600
Fixed selling expense 23,200
Total selling expense $ 37,800
Variable administrative expense $ 5,300
Fixed administrative expense 27,600
Total administrative expense $ 32,900

Required:

1. With respect to cost classifications for preparing financial statements:

a. What is the total product cost?

b. What is the total period cost?

1a. Total product cost
1b. Total period cost

Listed below are seven technical accounting terms introduced oremphasized in this chapter.


Job Order costing

Overhead application rate

Overapplied overhead

Activity-based costing

Cost driver

Cost of finished goods manufactured

Job cost sheet


Each of the following statements may (or may not) describe thsestechinial terms. For each statment, indicate the term described, oramswer "None" if the statement does not correctly describe any ofthe terms.


a. An activity base that can b etraced directly to unitsproduced and can be used as a denominator in computing an overheadapplication rate.

b. The total of all direct lavor, direct materials andmanufacturing overhead transferred from work in process to finishedgoods.

c. A means of assigning indirect product costs to work inprocess during the period.

d. A debit balance remaining in the Manufacturing Overheadaccount at teh end of the period.

e. The type of cost accounting system likely to be used by aconstruction company.

f. The type of cost accounting method likely to be used foroverhead costs.

EXERCISE 6-6 Variable and Absorption Costing Unit Product Costs and Income Statements [L06-1, L06-2] Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials ............. Direct labor .............................. Variable manufacturing overhead .... Variable selling and administrative .......... Fixed costs per year: Fixed manufacturing overhead .......... Fixed selling and administrative ............. $300,000 $190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit. Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.