Course Assignments
Worksheet # I: Cost Classification
Study Questions
1.
Distinguish between direct and indirect costs.
2.
Distinguish between prime cost and conversion costs.
3. The current assets sections of the balance sheets of three companies follow. Which company is a service company? Which is a merchandiser? Which is a manufacturer? How can you tell?
X-TREME
Cash……………….
$2,500
Accounts Receivable
5,500
Inventory…………..
8,000
Prepaid Expenses….
300
Total……………….
$16,800
Y-NOT?
ZESTO
Cash……………….
$3,000 Cash……………………..
$2,000
Accounts Receivable 6,000 Accounts Receivable……
5,000
Prepaid Expenses….
500 Materials Inventory……..
1,000
Total……………….
$9,500 Work in process inventory
800
Finished goods inventory
4,000
Total…………………….
$12,800
4. Francis manufacturers, a manufacturer of wood doors and windows, has prepared the following list of accounts
Advertising
Assemblers wages
Production supervisor’s salary
Depreciation of machinery
Factory utilities
Lathe (machine for shaping wood) Operators wages
Machinery repairs
Office salaries
Purchase of glue
Purchase of screws and nails
Purchase of pine
Purchase of oak
$36,000
84,200
21,400
9,200
55,600
66,400
22,600
113,800
1,600
800
99,000
250,000
There is no beginning or ending inventory.
Calculate the following:
(a)
Direct material used
(b) Direct labour cost
(c)
Factory overhead
(d)
(e)
(f)
Prime cost
Conversion cost
Production cost
-1-
5. Compute cost of goods manufactured and cost of goods sold from the following amounts
Direct materials inventory
Work in process inventory
Finished goods inventory
Purchases of direct materials
Direct labour
Manufacturing overhead
Beginning of
Year
$22,000
38,000
18,000
End of Year
$26,000
30,000
23,000
75,000
82,000
39,000
6. Clyde’s Pets manufactures chewing bones for puppies. At the end of December 2008, his accounting records showed the following:
Inventories
Materials
Work
Study Questions
1.
Distinguish between direct and indirect costs.
2.
Distinguish between prime cost and conversion costs.
3. The current assets sections of the balance sheets of three companies follow. Which company is a service company? Which is a merchandiser? Which is a manufacturer? How can you tell?
X-TREME
Cash……………….
$2,500
Accounts Receivable
5,500
Inventory…………..
8,000
Prepaid Expenses….
300
Total……………….
$16,800
Y-NOT?
ZESTO
Cash……………….
$3,000 Cash……………………..
$2,000
Accounts Receivable 6,000 Accounts Receivable……
5,000
Prepaid Expenses….
500 Materials Inventory……..
1,000
Total……………….
$9,500 Work in process inventory
800
Finished goods inventory
4,000
Total…………………….
$12,800
4. Francis manufacturers, a manufacturer of wood doors and windows, has prepared the following list of accounts
Advertising
Assemblers wages
Production supervisor’s salary
Depreciation of machinery
Factory utilities
Lathe (machine for shaping wood) Operators wages
Machinery repairs
Office salaries
Purchase of glue
Purchase of screws and nails
Purchase of pine
Purchase of oak
$36,000
84,200
21,400
9,200
55,600
66,400
22,600
113,800
1,600
800
99,000
250,000
There is no beginning or ending inventory.
Calculate the following:
(a)
Direct material used
(b) Direct labour cost
(c)
Factory overhead
(d)
(e)
(f)
Prime cost
Conversion cost
Production cost
-1-
5. Compute cost of goods manufactured and cost of goods sold from the following amounts
Direct materials inventory
Work in process inventory
Finished goods inventory
Purchases of direct materials
Direct labour
Manufacturing overhead
Beginning of
Year
$22,000
38,000
18,000
End of Year
$26,000
30,000
23,000
75,000
82,000
39,000
6. Clyde’s Pets manufactures chewing bones for puppies. At the end of December 2008, his accounting records showed the following:
Inventories
Materials
Work