Cost Calculations - Managerial Accounting

Problem 1 Page 40

a- Cost of goods manufactured
= Direct cost + Indirect cost
= [Direct Cost of Material + Direct Cost of Labor] + [Indirect Cost of Material + Indirect Cost of Labor + Utilities Overhead]
= Total Cost of Material + Total Cost of Labor + Utilities Overhead
= 120,000 + 90,000 + 40,000 = $ 250,000

b- Total Cost of Operation
= Cost of goods manufactured + Selling, General admin. and expenses.
= 250,000 + 60,000
= $ 310,000

c- Prime Cost
=Direct Material Cost + Direct Labor Cost
= 80,000 + 65,000
= $ 145,000

d- Conversion Cost
= Direct Labor + Factory Overhead
= Direct labor + [Indirect Material + Indirect Labor + Utilities Overhead]
= 65,000 + 40,000 +25,000 + 40,000
= $ 170,000

e- Product Cost
= Cost of goods manufactured
= $ 250,000

f- Period Cost
= Selling, general admin. and expenses
= $ 60,000

g- Unit Cost
= Total Cost of goods manufactured/Number of unit product
= $ 250,000/10,000
= $ 25 per unit

Problem 2 Page 40

a- Cost of goods manufactured
= Total Cost of goods put into production + [Difference between Beginning & Ending work-in-process]
= [Total Direct Cost + Factory Overhead Cost] + [25,000-10,000]
= [Direct Material Cost + Direct Labor Cost + Factory Overhead Cost] + 15,000
= [95,000+110,000+70,000]+15,000
= $ 290,000

b- Cost of goods sold
= Cost of goods manufactured + [Difference between Beginning & Ending finished goods inventory]
= 290,000 + [(30,000)]
= $ 260,000

c- Net Income or Loss
= Sales – Cost of goods manufactured - Selling , general admin. and expenses
= 300,000 – 260,000 – 75,000
= ($ 35,000) ; Net Loss

Exercise # 1 Page 43

Direct Material Cost = $ 8,000
Indirect Material Cost = $ 2,000
Direct Labor Cost = $ 3,500
Indirect Labor Cost = $ 1,500
Factory Overhead = $ 5,000
Selling Expenses = $ 7,500
General admin. Expenses = $ 8,500

a- Cost of goods manufactured
= Total Direct Cost + Total