Question 1

Prime costs include ________.

Accepted Answer

Prime costs refer to the direct costs involved in the production of a product, which include direct materials and direct manufacturing labor costs. Manufacturing overhead costs are not included in prime costs. Therefore, the correct answer is A, which includes only direct materials and direct manufacturing labor costs.

Question 2

Which of the following formulas determine cost of goods sold in a manufacturing entity?

Accepted Answer

The correct formula for calculating the cost of goods sold in a manufacturing entity is: Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory. This formula accounts for the total cost of goods available for sale during the period and subtracts the cost of goods that remain unsold at the end of the period.

Question 3

The following information pertains to the Emerald Corp: $$\begin{array} { l r } 
\text { Beginuning work-in-process inventory } & \$ 75,000 \
\text { Ending work-in-process inventory } & 85,000 \
\text { Beginuning finished goods inventory } & 175,000 \
\text { Ending finished goods inventory } & 200,000 \
\text { Cost of goods manufactured } & 1,200,000
\end{array}$$ What is cost of goods sold?

Accepted Answer

The answer of The following information pertains to the Emerald...

Question 4

Conversion costs include ________.

Accepted Answer

Conversion costs only include direct manufacturing labor and manufacturing overhead costs. Direct materials are not included in conversion costs.

Question 5

Helmer Sporting Goods Company manufactured 100,000 units in 2015 and reported the following costs:
 $$\begin{array} { l r l r } 
\text { Sandpaper } & \$ 32,000 & \text { Leasing costs-plant } & \$ 384,000 \
\text { Materials handling } & 320,000 & \text { Depreciation-quipment } & 224,000 \
\text { Coolants \& lubricants } & 22,400 & \text { Property taxes-equipment } & 32,000 \
\text { Indirect manufacturing labor } & 275,200 & \text { Fire insurance-equipment } & 16,000 \
\text { Direct manufacturing labor } & 2,176,000 & \text { Direct material purchases } & 3,136,000 \
\text { Direct materials, } 1 / 1 / 15 & 384,000 & \text { Direct materials, } 12 / 31 / 15 & 275,200 \
\text { Finished goods, } 1 / 1 / 15 & 672,000 & \text { Sales revenue } & 12,800,000 \
\text { Finished goods, } 12 / 31 / 15 & 1,280,000 & \text { Sales commissions } & 640,000 \
\text { Work-in-process, } 1 / 1 / 15 & 96,000 & \text { Sales salaries } & 576,000 \
\text { Work-in-process, } 12 / 31 / 15 & 64,000 & \text { Advertising costs } & 480,000 \
& & \text { Administration costs } & 800,000
\end{array}$$ Required:
a.What is the amount of direct materials used during 2015?
b.What manufacturing costs were added to WIP during 2015?
c.What is cost of goods manufactured for 2015?
d.What is cost of goods sold for 2015?

Accepted Answer

The answer of Helmer Sporting Goods Company manufactured 100,000 units...

Question 6

Leslie Manufacturing reported the following: $$\begin{array} { | l | r | } 
\hline\text { Revenue } & \$ 450,000 \
\hline \text { Beginning inventory of direct materials, January 1, 2015 } & 20,000 \
\hline \text { Purchases of direct materials } & 156,000 \
\hline \text { Ending inventory of direct materials, December 31, 2015 } & 18,000 \
\hline \text { Direct manufacturing labor } & 21,000 \
\hline \text { Indirect manufacturing costs } & 42,000 \
\hline \text { Beginning inventory of finished goods, January 1, 2015 } & 40,000 \
\hline \text { Cost of goods manufactured } & 114,000 \
\hline \text { Ending inventory of finished goods, December 31, 2015 } & 45,000 \
\hline \text { Operating costs } & 150,000 \
\hline
\end{array}$$ What is Leslie's operating income?

Accepted Answer

The answer of Leslie Manufacturing reported the following: \[\begin{array} {...

Question 7

Cost of goods sold refers to the products brought to completion,whether they were started before or during the current accounting period.

Accepted Answer

Cost of goods manufactured refers to the products brought to completion, whether they were started before or during the current accounting period.

Question 8

Inventoriable costs and period costs flow through the income statement at a merchandising company similar to the way costs flow at a manufacturing company.

Accepted Answer

Merchandising companies and manufacturing companies both have inventoriable costs, which include the cost of goods sold or cost of merchandise sold. These costs are directly related to the products that the company sells and are therefore included as a part of the cost of goods sold on the income statement. Period costs, such as rent, salaries, and advertising expenses, are not directly related to the manufacturing or sale of products and are therefore expensed in the period in which they occur on the income statement. Both types of costs flow through the income statement in the same way at both types of companies.

Question 9

Using the following information find the unknown amounts.Assume each set of information is an independent case.
 $\begin{array}{llr}
\text {a. Merchandise Inventory } & \text { Purchases } & \$ 210,000 \
& \text { Cost of goods sold } & 223,000 \
& \text { Beginuing balance } & 41,000 \
& \text { Ending balance } & ?\\
\text {b. Direct Materials } & \text { Beginuing balance } & \$ 7,000 \
& \text { Ending balance } & 14,000 \
& \text { Purchases } & 48,000 \
& \text { Direct materials used } & ?\\
\text { c.Work-in-process Inventory } & \text { Ending balance } & \$ 22,000 \
& \text { Cost of goods manufactured } & 21,000 \
& \text { Beginning balance } & 8,000 \
& \text { Current manufacturing costs } & ?\\
\text {d. Finished Goods Inventory } & \text { Cost of goods manufactured } & \$ 62,000 \
& \text { Ending balance } & 20,000 \
& \text { Cost of goods sold } & 61,000 \
& \text { Eeginuing balance } & ?
\end{array}$

Accepted Answer

The answer of Using the following information find the unknown...

Question 10

Answer the following questions using the information below:
Leslie Manufacturing reported the following:
 $$\begin{array} { | l | r | } 
\hline\text { Revenue } & \$ 450,000 \
\hline \text { Beginning inventory of direct materials, January 1, 2015 } & 20,000 \
\hline \text { Purchases of direct materials } & 156,000 \
\hline \text { Ending inventory of direct materials, December 31, 2015 } & 18,000 \
\hline \text { Direct manufacturing labor } & 21,000 \
\hline \text { Indirect manufacturing costs } & 42,000 \
\hline \text { Beginning inventory of finished goods, January 1, 2015 } & 40,000 \
\hline \text { Cost of goods manufactured } & 114,000 \
\hline \text { Ending inventory of finished goods, December 31, 2015 } & 45,000 \
\hline \text { Operating costs } & 150,000 \
\hline
\end{array}$$
-What is Leslie's gross margin (or gross profit)?

Accepted Answer

The answer of Answer the following questions using the information...

Question 11

Messinger Manufacturing Company had the following account balances for the quarter ending March 31,unless otherwise noted:
 $$\begin{array} { l r } 
\text { Work-in-process inventory (January 1) } & \$ 140,400 \
\text { Work-in-process inventory (March 31) } & 17,000 \
\text { Finished goods inventory (January 1) } & 540,000 \
\text { Finished goods inventory (March 31) } & 510,000 \
\text { Direct materials used } & 378,000 \
\text { Indirect materials used } & 84,000 \
\text { Direct manuufacturing labor } & 480,000 \
\text { Indirect manufacturing labor } & 186,000 \
\text { Property taxes on manufacturing plant building } & 28,800 \
\text { Salespersons' company vehicle costs } & 12,000 \
\text { Depreciation of manufacturing equipment } & 264,000 \
\text { Depreciation of office equipment } & 123,600 \
\text { Miscellaneous plant overhead } & 135,000 \
\text { Plant utilities } & 92,400 \
\text { General office expenses } & 305,400 \
\text { Marketing distribution costs } & 30,000
\end{array}$$ Required:
a.Prepare a cost of goods manufactured schedule for the quarter.
b.Prepare a cost of goods sold schedule for the quarter.

Accepted Answer

The answer of Messinger Manufacturing Company had the following account...

Question 12

Total manufacturing costs equal ________.

Accepted Answer

Total manufacturing costs include both direct materials and conversion costs, which consist of direct labor and manufacturing overhead. Prime costs only include direct materials and direct labor, while sunk costs are historical costs that are not relevant for decision-making.

Question 13

Answer the following questions using the information below:
Leslie Manufacturing reported the following:
 $$\begin{array} { | l | r | } 
\hline\text { Revenue } & \$ 450,000 \
\hline \text { Beginning inventory of direct materials, January 1, 2015 } & 20,000 \
\hline \text { Purchases of direct materials } & 156,000 \
\hline \text { Ending inventory of direct materials, December 31, 2015 } & 18,000 \
\hline \text { Direct manufacturing labor } & 21,000 \
\hline \text { Indirect manufacturing costs } & 42,000 \
\hline \text { Beginning inventory of finished goods, January 1, 2015 } & 40,000 \
\hline \text { Cost of goods manufactured } & 114,000 \
\hline \text { Ending inventory of finished goods, December 31, 2015 } & 45,000 \
\hline \text { Operating costs } & 150,000 \
\hline
\end{array}$$
-What is Leslie's cost of goods sold?

Accepted Answer

Cost of goods sold = Beginning inventory of finished goods + Cost of goods manufactured - Ending inventory of finished goods= 40,000 + 114,000 - 45,000= $109,000

Question 14

Which of the following formulas determine cost of goods sold in a merchandising entity?

Accepted Answer

The formula for cost of goods sold in a merchandising entity is beginning inventory plus purchases minus ending inventory. This is because the cost of goods sold represents the cost of the products that were sold during the accounting period, and this can be calculated by subtracting the cost of the ending inventory from the total cost of the goods that were available for sale during the period.

Question 15

Each of the following items pertains to one of these companies: Bedell Electronics (a manufacturing company),Gregory Food Retailers (a merchandising company),and Larson Real Estate (a service sector company).Classify each item as either inventoriable (I)costs or period (P)costs.
 $\begin{array} { |l|l|l|  }
\hline && \text { Inventoriable (I) costs }\&&\text { or period }(P) \text { costs }\
\hline  a.&\text { Salary of Bedell Electronics president }&\
\hline b.&\text { Depreciation on Bedell Electronics assembly }&\&\text { equipment }\
\hline c.&\text { Salaries of Bedell's assembly line workers }&\
\hline d.&\text { Purchase of frozen food for sale to customers by}&\&\text {Gregory Food Retailers }\
\hline e.&\text {Salaries of frozen food personnel at Gregory Food  }&\&\text {Retailing }\
\hline f.&\text {Depreciation on freezers at Gregory Food Retailing }&\
\hline g.&\text { Salary of a receptionist at Larson Real Estate}&\
\hline h.&\text { Depreciation on a computer at Larson Real Estate}&\
\hline i .&\text { Salary of a real estate agent at Larson Real Estate}&\\hline
\end{array}$

Accepted Answer

The answer of Each of the following items pertains to...

Question 16

For last year,Wampum Enterprises reported revenues of $420,000,cost of goods sold of $108,000,cost of goods manufactured of $101,000,and total operating costs of $70,000.Operating income for that year was ________.

Accepted Answer

The answer of For last year,Wampum Enterprises reported revenues of...

Question 17

The following information pertains to Max Corporation: $$\begin{array} { l r } 
\text { Beginuning work-in-process inventory } & \$ 20,000 \
\text { Ending work-int-process inventory } & 23,000 \
\text { Beginuning finished goods inventory } & 36,000 \
\text { Ending finished goods inventory } & 34,000 \
\text { Cost of goods manufactured } & 246,000 \
\text { Sales } & 300,000
\end{array}$$ What is the gross profit margin earned by the company?

Accepted Answer

Gross profit is calculated as Sales minus Cost of Goods Sold (COGS). COGS is calculated as: Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory = $36,000 + $246,000 - $34,000 = $248,000. Gross Profit = Sales - COGS = $300,000 - $248,000 = $52,000.

Question 18

A company reported revenues of $375,000,cost of goods sold of $118,000,selling expenses of $11,000,and total operating costs of $70,000.Gross margin for the year is ________.

Accepted Answer

Gross margin is calculated as revenues minus cost of goods sold. Therefore, $375,000 - $118,000 = $257,000.

Question 19

Answer the following questions using the information below:
 $\begin{array}{lr}
\text { Beginuing finished goods, 1/1/2015 } & \$ 92,000 \
\text { Ending finished goods, 12/31/2015 } & 75,000 \
\text { Cost of goods sold } & 300,000 \
\text { Sales revenue } & 450,000 \
\text { Operating expenses } & 95,000
\end{array}$
-What is the cost of goods manufactured for 2015?

Accepted Answer

The answer of Answer the following questions using the information...

Question 20

Springfield Manufacturing produces electronic storage devices,and uses the following three-part classification for its manufacturing costs: direct materials,direct manufacturing labor,and indirect manufacturing costs.Total indirect manufacturing costs for January were $300 million,and were allocated to each product on the basis of direct manufacturing labor costs of each line.Summary data (in millions)for January for the most popular electronic storage device,the Big Bertha,was:
 $$\begin{array} { | l | c | } 
\hline & \text { Big Bertha } \
\hline \text { Direct manufacturing costs } & \$ 4,500,000 \
\hline \text { Direct manufacturing labor costs } & \$ 1,500,000 \
\hline \text { Indirect manufacturing costs } & \$ 4,250,000 \
\hline \text { Units produced } & 40,000 \
\hline
\end{array}$$ Required:
a.Compute the manufacturing cost per unit for each product produced in January.
b.Suppose production will be reduced to 30,000 units in February.Speculate as to whether the unit costs in February will most likely be higher or lower than unit costs in January; it is not necessary to calculate the exact February unit cost.Briefly explain your reasoning.

Accepted Answer

The answer of Springfield Manufacturing produces electronic storage devices,and uses...

Quiz 2: An Introduction to Cost Terms and Purposes

Prime costs include ________.

Which of the following formulas determine cost of goods sold in a manufacturing entity?

Conversion costs include ________.

Cost of goods sold refers to the products brought to completion,whether they were started before or during the current accounting period.

Inventoriable costs and period costs flow through the income statement at a merchandising company similar to the way costs flow at a manufacturing company.

Total manufacturing costs equal ________.

Which of the following formulas determine cost of goods sold in a merchandising entity?

For last year,Wampum Enterprises reported revenues of $420,000,cost of goods sold of $108,000,cost of goods manufactured of $101,000,and total operating costs of $70,000.Operating income for that year was ________.

A company reported revenues of $375,000,cost of goods sold of $118,000,selling expenses of $11,000,and total operating costs of $70,000.Gross margin for the year is ________.