ACCT552 W1 Homework1

ACCT552
Week 1 Homework Assignment

1. You are on a tight budget and need to decide among the following 3 texting plans:
Plan A: Pay $0.10 per text
Plan B: Pay a fixed monthly fee of $15 for up to 500 texts per month and $0.08 for each text over the 500.
Plan C: Pay a fixed monthly fee of $25 for up to 1,000 texts per month and $0.05 for each text over the 1,000. Requirements
a. Draw a graph of the total monthly cost of the three plans for different levels of texting.

b. Which plan should you choose if you expect to make:
240 texts per month? Plan B

# Text
Cost
Total Cost
Plan A
240
0.1 $ 24.00
Plan B
240
0.08 $ 15.00
Plan C
240
0.05 $ 25.00

780 texts per month? Plan C

# Text
Cost
Total Cost
Plan A
780
0.1 $ 78.00
Plan B
780
0.08 $ 37.40
Plan C
780
0.05 $ 25.00

1,250 texts per month? Plan C

# Text
Cost
Total Cost
Plan A
1250
0.1 $ 125.00
Plan B
1250
0.08 $ 75.00
Plan C
1250
0.05 $ 37.50

2. In 3–4 sentences, define the following terms and give two examples of each:
a. Direct Materials Cost.
Direct materials costs are the costs directly associated with the materials required in the manufacturing process to produce a finished product to sell. In a lumber mill the natural resource, the logs, are the direct materials used in the manufacturing process to produce the final lumber products.
b. Direct Manufacturing-Labor Costs.
Direct Manufacturing labor costs are the hourly labor costs associated with manufacturing a product. Maintenance, Quality Control, Management, and Administrative employees are not involved in direct manufacturing labor costs.

c. Manufacturing Overhead Costs.
Manufacturing overhead costs include costs that are required although not part of the manufacturing of the finished goods. Buildings are a prime example of overhead costs.
d. Indirect Materials Costs.
Indirect materials costs are the expenses required although not part of the manufacturing of the finished goods.