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Score: 70

out of 70 points (100%)

Exercise 2-34 Computing Costs; Government Agency (LO 1, 9, 10)

[The following information applies to the questions displayed b elow.] Exercise 2-34 The state Department of Education owns a computer system, which its employees use for word processing and keeping track of education statistics. The governor's office recently began using this computer also. As a result of the increased usage, the demands on the computer soon exceeded its capacity. The director of the Department of Education was soon forced to lease several personal computers to meet the computing needs of her employees. The annual cost of leasing the equipment is $14,000. Exercise 2-34 Computing Costs; Government Agency (LO 1, 9, 10)

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10 out of 10.00 points

Exercise 2-34 Requirement 1

Requirement 1: What type of cost is this $14,000? Differential Cost Selling Cost Sunk Cost Administrative Cost Opportunity Cost Learning Objective: 02-10 Define and give examples of an opportunity cost, an out-of-pocket cost, a sunk cost, a differential cost, a marginal cost, and an average cost.

Multiple Choice

Learning Objective: 02-01 Explain what is meant by the word cost.

Exercise 2-34 Requirement 1

Learning Objective: 02-09 Distinguish among direct, indirect, controllable, and uncontrollable costs.

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Exercise 2-34 Requirement 2

Requirement 2: Should this cost be associated with the governor's office or the Department of Education? Department of Education Governor's Office Learning Objective: 02-10 Define and give examples of an opportunity cost, an out-of-pocket cost, a sunk cost, a differential cost, a marginal cost, and an average cost.

Multiple Choice

Learning Objective: 02-01 Explain what is meant by the word cost.

Exercise 2-34 Requirement 2

Learning Objective: 02-09 Distinguish among direct, indirect, controllable, and uncontrollable costs.

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Problem 2-42 Cost Terminology (LO 2, 5, 10)

[The following information applies to the questions displayed b elow.] Problem 2-42 The following cost data for the year just ended pertain to Sentiments, Inc., a greeting card manufacturer:

Direct material Advertising expense Depreciation on factory building Direct labor: wages Cost of finished goods inventory at year-end Indirect labor: wages Production supervisors salary Service department costs * Direct labor: fringe benefits Indirect labor: fringe benefits Fringe benefits for production supervisor Total overtime premiums paid Cost of idle time: production employees Administrative costs Rental of office space for sales personnel Sales commissions Product promotion costs

$2,200,000 98,000 115,000 485,000 115,000 140,000 46,000 100,000 95,000 31,000 10,000 55,000 40,000 150,000 15,000 4,000 $ 10,000

*All services are provided to manufacturing departments. Cost of idle time is an overhead item; it is not included in the direct-labor wages given above. The rental of sales space was made necessary when the sales offices were converted to storage space for raw

material.

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Prob lem 2-42 Cost Terminology (LO 2, 5, 10)

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Problem 2-42 Requirement 1

Requirement 1: Compute each of the following costs for the year just ended: (a) total prime costs, (b ) total manufacturing overhead costs, (c) total conversion costs, (d) total product costs, and (e) total period costs. (Omit the "$" sign in your response.)

a. Total prime costs b. Total manufacturing overhead c. Total conversion costs d. Total product costs e. Total period costs

2,780,000

$ 537,000 $ $ 1,117,000 3,317,000

$ 277,000

Worksheet

Learning Objective: 02-10 Define and give examples of an Learning Objective: 02-02 opportunity cost, an out-of-pocket Distinguish among product costs, cost, a sunk cost, a differential period costs, and expenses. cost, a marginal cost, and an average cost. Learning Objective: 02-05 Give examples of three types of manufacturing costs.

Prob lem 2-42 Requirement 1

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Problem 2-42 Requirement 2

Requirement 2: One of the costs listed below is an opportunity cost. Identify this cost. Product promotion costs Cost of finished-goods inventory at year-end Administrative costs Direct labor: fringe benefits Sales commissions Rental of office space for sales personnel Learning Objective: 02-10 Define and give examples of an Learning Objective: 02-02 opportunity cost, an out-of-pocket Distinguish among product costs, cost, a sunk cost, a differential period costs, and expenses. cost, a marginal cost, and an average cost. Learning Objective: 02-05 Give examples of three types of manufacturing costs.

Multiple Choice

Prob lem 2-42 Requirement 2

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Problem 2-43 Schedules of Cost of Goods Manufactured and Sold; Income Statement (LO 1, 3, 5, 6)
[The following information applies to the questions displayed b elow.]

Problem 2-43 The following data refer to San Fernando Fashions Company for the year 20x2:

Sales revenue Work-in-process inventory, December 31 Work-in-process inventory, January 1 Selling and administrative expenses Income tax expense Purchases of raw material Raw-material inventory, December 31 Raw-material inventory, January 1 Direct labor Utilities: plant Depreciation: plant and equipment Finished-goods inventory, December 31 Finished-goods inventory, January 1 Indirect material Indirect labor Other manufacturing overhead

$1,050,000 30,000 36,000 150,000 80,000 170,000 25,000 40,000 190,000 40,000 50,000 50,000 15,000 6,000 15,000 60,000

Section Break

Prob lem 2-43 Schedules of Cost of Goods Manufactured and Sold; Income Statement (LO 1, 3, 5, 6)

5.

aw ard:

10 out of 10.00 points

Problem 2-43 Requirement 1

Requirement 1: Prepare San Fernando Fashions schedule of cost of goods manufactured for the year. (Omit the "$" sign in your response. Input all amounts as positive values.)

SAN FERNANDO FASHIONS COMPANY Schedule of Cost Goods Manufactured For the Year Ended December 31, 20X2 Direct material:
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Raw-material inventory, January 1 Add : Purchases of raw material

$ 40,000 170,000 $ 210,000 25,000 $ 185,000 190,000

Raw material available for use Deduct : Raw-material inventory, December 31

Raw material used Direct labor Manufacturing overhead: Indirect material Indirect labor Utilities: plant Depreciation: plant and equipment Other manufacturing overhead Total manufacturing overhead Total manufacturing costs Add : Work-in-process inventory, January 1 $ 6,000 15,000 40,000 50,000 60,000

171,000 $ 546,000 36,000 $ 582,000 30,000 $ 552,000

Subtotal Deduct : Work-in-process inventory, December 31

Cost of goods manufactured

Worksheet

Learning Objective: 02-01 Explain what is meant by the word cost.

Learning Objective: 02-05 Give examples of three types of manufacturing costs. Learning Objective: 02-06 Prepare a schedule of cost of goods manufactured, a schedule of cost of goods sold, and an income statement for a manufacturer.

Prob lem 2-43 Requirement 1

Learning Objective: 02-03 Describe the role of costs in published financial statements.

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10 out of 10.00 points

Problem 2-43 Requirement 2

Requirement 2: Prepare San Fernando Fashions schedule of cost of goods sold for the year. (Omit the "$" sign in your response. Input all amounts as positive values.)

SAN FERNANDO FASHIONS COMPANY Schedule of Cost Goods Manufactured For the Year Ended December 31, 20X2 Finished goods inventory, January 1 Add : Cost of goods manufactured $ 15,000 552,000 $ 567,000 50,000 $ 517,000

Cost of goods available for sale Deduct : Finished-goods inventory, December 31

Cost of goods sold

Worksheet

Learning Objective: 02-01 Explain what is meant by the word cost.

Learning Objective: 02-05 Give examples of three types of manufacturing costs. Learning Objective: 02-06 Prepare a schedule of cost of goods manufactured, a schedule of cost of goods sold, and an income statement for a manufacturer.

Prob lem 2-43 Requirement 2

Learning Objective: 02-03 Describe the role of costs in published financial statements.

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Problem 2-43 Requirement 3

Requirement 3: Prepare San Fernando Fashions income statement for the year. (Omit the "$" sign in your response. Input all amounts as positive values.)

SAN FERNANDO FASHIONS COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20x2 Sales revenue Deduct : Cost of goods sold $ 1,050,000 $ 517,000 533,000 150,000 $ 383,000 80,000 $ 303,000

Gross margin Deduct : Selling and administrative expenses

Income before taxes Deduct : Income tax expense

Net income

Worksheet

Learning Objective: 02-01 Explain what is meant by the word cost.

Learning Objective: 02-05 Give examples of three types of manufacturing costs. Learning Objective: 02-06 Prepare a schedule of cost of goods manufactured, a schedule of cost of goods sold, and an income statement for a manufacturer.

Prob lem 2-43 Requirement 3

Learning Objective: 02-03 Describe the role of costs in published financial statements.

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