Week 1 Assignment from the Textbook
Week 1 Assignment from Textbook: Chapter 16
Esther Tate
ACC/400
July 6, 2015
Theresa Pekron
Brief Exercise 16.9 – Prime vs. Conversion costs
Star Repairs Co. does all the repair work for a medium-sized manufacturer of handheld computer games. The games are sent directly to Star, and after the games are repaired. Star bills the game manufacturer for cost plus a 20 percent markup. In the month of February, purchases of parts (replacement parts) by Star amounted to $97,000, the beginning inventory of parts was $38,500, and the ending inventory of parts was $15,250. Payments to repair technicians during the month of February totaled $52,500. Overhead incurred was $121,000.
a. What was the cost of materials used for repair work during the month of February? $120,250.
b. What was the prime cost for February? $173,020.
c. What was the conversion cost for February? $173,500.
d. What was the total repair cost for February? $293,750.
Exercise 16.1 - Accounting Terminology
Work in Process Inventory
Conversion costs
Period costs
Product costs
Cost of finished goods manufactured
Cost of Goods Sold
Management accounting
Manufacturing overhead
Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer “None” if the statement does not correctly describe any of the terms.
a. The preparation and use of accounting information designed to assist managers in planning and controlling the operations of a business. Management Accounting
b. All manufacturing costs other than direct materials used and direct labor. Manufacturing Overhead
c. Direct materials and direct labor used in manufacturing a product. “None” – the definition describes a prime cost
d. A manufacturing cost that can be traced conveniently and directly to manufactured units of product. Cost of Goods Sold
e. The account debited at the time that the Manufacturing Overhead account is credited.
Esther Tate
ACC/400
July 6, 2015
Theresa Pekron
Brief Exercise 16.9 – Prime vs. Conversion costs
Star Repairs Co. does all the repair work for a medium-sized manufacturer of handheld computer games. The games are sent directly to Star, and after the games are repaired. Star bills the game manufacturer for cost plus a 20 percent markup. In the month of February, purchases of parts (replacement parts) by Star amounted to $97,000, the beginning inventory of parts was $38,500, and the ending inventory of parts was $15,250. Payments to repair technicians during the month of February totaled $52,500. Overhead incurred was $121,000.
a. What was the cost of materials used for repair work during the month of February? $120,250.
b. What was the prime cost for February? $173,020.
c. What was the conversion cost for February? $173,500.
d. What was the total repair cost for February? $293,750.
Exercise 16.1 - Accounting Terminology
Work in Process Inventory
Conversion costs
Period costs
Product costs
Cost of finished goods manufactured
Cost of Goods Sold
Management accounting
Manufacturing overhead
Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer “None” if the statement does not correctly describe any of the terms.
a. The preparation and use of accounting information designed to assist managers in planning and controlling the operations of a business. Management Accounting
b. All manufacturing costs other than direct materials used and direct labor. Manufacturing Overhead
c. Direct materials and direct labor used in manufacturing a product. “None” – the definition describes a prime cost
d. A manufacturing cost that can be traced conveniently and directly to manufactured units of product. Cost of Goods Sold
e. The account debited at the time that the Manufacturing Overhead account is credited.