1.
Calculate the conversion costs from the following information:
Fixed manufacturing overhead $ 2,600
Variable manufacturing overhead 1,600
Direct materials 3,100
Direct labor 2,100
A. $4,200
B. $5,200
C. $6,300
D. $6,800
$2,100 + $1,600 + $2,600 = $6,300
2. The costs of direct materials are classified as:
Conversion
Manufacturing cost
cost Prime cost
A Yes Yes Yes
B No No No
C Yes Yes No
D No Yes Yes
A. Choice A
B. Choice B
C. Choice C
D. Choice D
3. Grover Company has the following data for the production and sale of 1,400 units.
Sales price per unit $ 750 per unit
Fixed costs:
Marketing and
$ 550,000 per period
administrative
Manufacturing overhead $ 238,000 per period
Variable costs:
Marketing and
$ 50 per unit
administrative
Manufacturing overhead $ 80 per unit
Direct labor $ 100 per unit
Direct Materials $ 190 per unit
What is the conversion cost per unit?
A. $100
B. $180
C. $350
D. $370
$100 + $80 + ($238,000/1,400) = $350
4. Grover Company has the following data for the production and sale of 1,500 units.
Sales price per unit $ 800 per unit
Fixed costs:
Marketing and
$ 560,000 per period
administrative
Manufacturing overhead $ 262,500 per period
Variable costs:
Marketing and
$ 55 per unit
administrative
Manufacturing overhead $ 85 per unit
Direct labor $ 105 per unit
Direct Materials $ 200 per unit
What is the prime cost per unit?
A. $105
B. $285
C. $305
D. $565
$200 + $105 = $305
5. The following cost data for the month of May were taken from the records of the Terrence
Manufacturing Company: (CIA adapted)
Depreciation on factory
$ 1,700
equipment
Depreciation on sales office 850
Advertising 7,700
Wages of production workers 28,000
Raw materials used 42,000
Sales salaries and commissions 10,700
Factory rent 2,700
Factory insurance 850
Materials handling 2,200
Administrative salaries 2,700
Based upon this information, the manufacturing cost incurred during the month was:
A. $75,250.
B. $77,450.
C. $78,300.
D. $79,400.
$1,700 + $28,000 + $42,000 + $2,700 + $850 + $2,200 = $77,450
6. The following cost data for the month of May were taken from the records of the Terrence
Manufacturing Company: (CIA adapted)
Depreciation on factory
$ 1,000
equipment
Depreciation on sales office 500
Advertising 7,000
Wages of production workers 28,000
Raw materials used 47,000
Sales salaries and commissions 10,000
Factory rent 2,000
Factory insurance 500
Materials handling 1,500
Administrative salaries 2,000
Based upon this information, the manufacturing cost incurred during the month was:
A. $78,500.
B. $80,000.
C. $80,500.
D. $83,000.
$1,000 + $28,000 + $47,000 + $2,000 + $500 + $1,500 = $80,000
7. Tulsa Company, (a merchandising company) has the following data pertaining to the year ended
December 31, 2022: (CPA adapted)
Purchases $ 490,000
Beginning inventory 178,000
Ending inventory 214,000
Freight-in 54,000
Freight-out 77,000
What is the cost of goods sold for the year?
A. $431,000
B. $508,000
C. $531,000
D. $585,000
$178,000 + $490,000 + $54,000 − $214,000 = $508,000
8. Tulsa Company, (a merchandising company) has the following data pertaining to the year ended
December 31, 2022: (CPA adapted)
Purchases $ 450,000
Beginning inventory 170,000
Ending inventory 210,000
Freight-in 50,000
Freight-out 75,000
What is the cost of goods sold for the year?
A. $385,000
B. $460,000
C. $485,000
D. $536,000
$170,000 + $450,000 + $50,000 − $210,000 = $460,000
9. The Shoal Company's manufacturing costs for the third quarter of 2022 were as follows: (CPA
adapted)
Direct materials and direct labor $ 600,000
Other variable manufacturing costs 155,000
Depreciation of factory building and manufacturing
70,000
equipment
Other fixed manufacturing costs 12,000
What amount should be considered product costs for external reporting purposes?
A. $600,000
B. $755,000
C. $825,000
D. $837,000
$600,000 + $155,000 + $70,000 + $12,000 = $837,000
10. The Shoal Company's manufacturing costs for the third quarter of 2022 were as follows: (CPA
adapted)
Direct materials and direct labor $ 700,000
Other variable manufacturing costs 100,000
Depreciation of factory building and manufacturing
80,000
equipment
Other fixed manufacturing costs 18,000
What amount should be considered product costs for external reporting purposes?
A. $700,000
B. $800,000
C. $880,000
D. $898,000
$700,000 + $100,000 + $80,000 + $18,000 = $898,000
11. Given the following information for a retail company, what is the total cost of goods purchased for
the period?
Purchases discounts $ 3,000
Transportation-in 6,000
Ending inventory 30,000
Gross merchandise cost 306,000
Purchases returns 8,000
Beginning inventory 27,500
Sales discounts 10,000
A. $301,000
B. $298,500
C. $285,000
D. $306,000
All costs associated with the acquisition of the goods constitutes the cost of goods purchased
($306,000 + $6,000 − $3,000 − $8,000) = $301,000
12. Given the following information for a retail company, what is the total cost of goods purchased
for the period?
Purchases discounts $ 3,500
Transportation-in 6,700
Ending inventory 35,000
Gross merchandise cost 304,000
Purchases returns 8,400
Beginning inventory 27,000
Sales discounts 10,300
A. $298,800
B. $290,800
C. $282,100
D. $304,000
All costs associated with the acquisition of the goods constitute the cost of goods purchased
($304,000 + $6,700 − $3,500 − $8,400) = $298,800
13. A company had beginning inventories as follows: Direct Materials, $450; Work-in-Process, $650;
Finished Goods, $850. It had ending inventories as follows: Direct Materials, $550; Work-in-
Process, $750; Finished Goods, $950. Material Purchases, net were $2,200, Direct Labor
$2,300, and Manufacturing Overhead $2,400. What is the Cost of Goods Sold for the period?
A. $6,500.
B. $6,600.
C. $6,700.
D. $6,800.
$450 + $2,200 − $550 = $2,100 (Direct materials used in production)
$650 + $2,100 + $2,300 + $2,400 − $750 = $6,700 (COGM)
$850 + $6,700 − $950 = $6,600 (COGS)
14. A company had beginning inventories as follows: Direct Materials, $300; Work-in-Process, $500;
Finished Goods, $700. It had ending inventories as follows: Direct Materials, $400; Work-in-
Process, $600; Finished Goods, $800. Material Purchases net were $1,400, Direct Labor
$1,500, and Manufacturing Overhead $1,600. What is the Cost of Goods Sold for the period?
A. $4,100.
B. $4,200.
C. $4,300.
D. $4,400.
$300 + $1,400 − $400 = $1,300 (Direct materials used in production)
$500 + $1,300 + $1,500 + $1,600 − $600 = $4,300 (COGM)
$700 + $4,300 − $800 = $4,200 (COGS)
15. Compute the Cost of Goods Sold for 2022 using the following information:
Direct Materials, January 1, 2022 $ 45,500
Work-in-Process, December 31, 2022 70,000
Direct Labor 54,000
Finished Goods, December 31, 2022 116,000
Finished Goods, January 1, 2022 144,500
Manufacturing Overhead 75,000
Direct Materials, December 31, 2022 54,000
Work-in Process, January 1, 2022 98,000
Purchases of Direct Material 86,000
A. $265,000
B. $263,000
C. $234,500
D. $215,000
$45,500 + $86,000 − $54,000 = $77,500 (Direct materials used in production)
$98,000 + $77,500 + $54,000 + $75,000 − $70,000 = $234,500 (COGM)
$144,500 + $234,500 − $116,000 = $263,000 (COGS)
16. Compute the Cost of Goods Sold for 2022 using the following information:
Direct Materials, January 1, 2022 $ 40,000
Work-in-Process, December 31, 2022 69,000
Direct Labor 48,500
Finished Goods, December 31, 2022 105,000
Finished Goods, January 1, 2022 128,000
Manufacturing Overhead 72,500
Direct Materials, December 31, 2022 43,000
Work-in Process, January 1, 2022 87,000
Purchases of Direct Material 75,000
A. $244,000
B. $234,000
C. $211,000
D. $198,000
$40,000 + $75,000 − $43,000 = $72,000 (Direct materials used in production)
$87,000 + $72,000 + $48,500 + $72,500 − $69,000 = $211,000 (COGM)
$128,000 + $211,000 − $105,000 = $234,000 (COGS)
17. Grover Company has the following data for the production and sale of 1,100 units.
Sales price per unit $ 955 per unit
Fixed costs:
Marketing and administrative $ 154,000 per period
Manufacturing overhead $ 170,500 per period
Variable costs:
Marketing and administrative $ 60 per unit
Manufacturing overhead $ 90 per unit
Direct labor $ 110 per unit
Direct Materials $ 160 per unit
What is the full cost per unit of making and selling the product?
A. $420
B. $515
C. $575
D. $715
$160 + $110 + $90 + ($170,500/1,100) + $60 + ($154,000/1,100) = $715
18. Grover Company has the following data for the production and sale of 2,000 units.
Sales price per unit $ 800 per unit
Fixed costs:
Marketing and administrative $ 400,000 per period
Manufacturing overhead $ 200,000 per period
Variable costs:
Marketing and administrative $ 50 per unit
Manufacturing overhead $ 80 per unit
Direct labor $ 100 per unit
Direct Materials $ 200 per unit
What is the full cost per unit of making and selling the product?
A. $430
B. $480
C. $530
D. $730
$200 + $100 + $80 + ($200,000/2,000) + $50 + ($400,000/2,000) = $730
19. Grover Company has the following data for the production and sale of 2,000 units.
Sales price per unit $ 800 per unit
Fixed costs:
Marketing and administrative $ 400,000 per period
Manufacturing overhead $ 200,000 per period
Variable costs:
Marketing and administrative $ 50 per unit
Manufacturing overhead $ 80 per unit
Direct labor $ 100 per unit
Direct Materials $ 200 per unit
What is the contribution margin per unit?
A. $70
B. $320
C. $370
D. $430
$800 − $200 − $100 − $80 − $50 = $370
20. Vegas Company has the following unit costs:
Variable manufacturing overhead $ 35
Direct materials 30
Direct labor 29
Fixed manufacturing overhead 22
Variable marketing and administrative 6
Vegas produced and sold 14,500 units. If the product sells for $130, what is the contribution margin?
A. $116,000
B. $203,000
C. $435,000
D. $522,000
$130 − ($35 + $30 + $29 + $6) = $30; $30 × 14,500 = $435,000
