Requirement 3 Any of the requirements because the management will pay for the same amount for the party. But, if the manager consider the unit cost per peron requirement 2 will be the best choice.
Requirement 2 The unit costs computed in part 1 is of no relevance since 15 flights have already been booked and the charge is fixed per flight. Units costs per passenger will not make any difference to the total air flight costs to be paid. Exercise 3 ( Classificationof cost, merchandising sector)
Requirement 1 and 2 Cost D or I V or F Annual retainer paid to video distributor D F Electricity cost of EEC store (single bill covers entire store) I F Cost of video purchased for sale to customers D V Subscription Leasing to Videosoftware of computer trend magazine used for financial budgeting at EEC D F store I F
I V Cost of popcorn provided free to all customers of EEC Earthquake insurance policy for EEC store D F Freight-in cost of video purchased by EEC D V Exercise 4 (Classification of cost, prime and conversion cost)
Requirement 1 (in thousand)
a. Direct Materials 430 Direct Manufacturing Labor 110 Subcontracting 120 Prime costs 660
b. Direct Manufacturing Labor 110
Subcontracting costs 120
Manufacturing Overhead 340 Conversion costs 570
Requirement 2 a. Direct Materials 430 Direct Manufacturing Labor 110 Subcontracting 120 Fringe benefit on direct manufacturing labor 40 Production setup 60 Prime cost 760
b. Direct Materials 430
Direct Manufacturing Labor 110 Subcontracting 120 Fringe benefit on direct manufacturing labor 40 Production setup 60 Other manufacturing overhead 240,000 Conversion Cost 240,760
Requirement 3 Number of setups Number of direct manufacturing laborers Exercise 5 (Cost of goodsmanufactured and cost) (in thousand) Direct Material used 87,000 Direct manfacturing labour 34,000 Manufacturing Overhead Property tax on Plant building 3,000 Plant utilities 17,000 Depreciation on Plant Building 9,000 Depreciation on Plant Equipment 11,000
Plant repairs and maintainance 16,000
Indirect manfacturing labour 23,000 Indirect Material used 11,000 Miscellaneous Plant overhaed 4,000 94,000 Total Manufacturing Cost 215,000 Work in process- beg 20,000 Work in process- end (26,000) Cost of Goods Manfactured 209,000 Finished Goods Inventory- beg. 27,000 Finished Goods Inventory- end. (34,000) Cost of Goods Sold 202,000 Exercise 6 (Cost of Good sold Manufactured)
Requirement 1 Cost of Direct Material Used Direct Material Inventory- beg 22,000 Add: Direct Material purchase 75,000 Less: Direct Material Inventory- end. (26,000) 71,000 Direct Labour Cost 25,000 Manufacturing Cost
Depreciation expense-plant. Building and equipment 11,000
Less: Work in Process- end. (20,000) Cost of goods manufactured 136,000
Requirement 2 Revenue 300,000 Less: Cost of goods sold Finished goods inventory- beg. 18,000 Add: Cost of goods manufactured 136,000 Total goods available for sale 154,000 Less: Finished goods inventory- end. (23,000) (131,000) Gross Margin 169,000 Less: Operating Expenses Marketing, distribution, and customer-service costs 93,000 General and administrative costs 29,000 (122,000) Net Profit 47,000 Exercise 7 (Finding unknown balances) A. Revenue 32,000 Less: Gross Margin (11,300) Cost of good sold (Case 1) 20,700
B. Opening Finished Goods 4,000
Direct material used 8,000 Direct manufacturing Labour 3,000 Indirect Maufacturing Cost 7,000
Less: Cost of goods sold (20,700)
Finished goods inventory- end. (Case 1) 1,300
C. Revenue 31,800 Less: Cost of goods sold (20,000) Gross margin (Case 2) 11,800
D. Cost of goods sold 20,000
Finished Goods-end 5,300 Less: Finished Goods- beg (4,000) Direct material used (12,000) Direct manufacturing Labor (5,000) Indirect manufacturing cost (Case 2) 4,300
