Scribd
Upload
17 views

Assignment chapter 2 cb

The document contains exercises related to cost classification in accounting, including direct labor, direct materials, manufacturing overhead, and period costs. It also discusses the high-low method for estimating fixed and variable electricity costs based on occupancy days. Additionally, it categorizes costs associated with a hotel and provides a table for identifying direct and indirect costs.

Uploaded by

alahraminvestment0021
Copyright
© © All Rights Reserved
Available Formats
Download as ODT, PDF, TXT or read online on Scribd
17 views

Assignment chapter 2 cb

The document contains exercises related to cost classification in accounting, including direct labor, direct materials, manufacturing overhead, and period costs. It also discusses the high-low method for estimating fixed and variable electricity costs based on occupancy days. Additionally, it categorizes costs associated with a hotel and provides a table for identifying direct and indirect costs.

Uploaded by

alahraminvestment0021
Copyright
© © All Rights Reserved
Available Formats
Download as ODT, PDF, TXT or read online on Scribd
You are on page 1/ 4

Mohamed Abd El Fattah

Co. 20 - 24

Assignment Chapter 2

Exercise 2-1

1. The wages of employees who build the sailboats - Direct Labor


2. The cost of advertising in the local newspapers - Selling
3. The cost of an aluminum mast installed in a sailboat - Direct Materials
4. The wages of the assembly shop’s supervisor - Manufacturing Overhead
5. Rent on the boathouse - Manufacturing Overhead
6. The wages of the company’s bookkeeper - Administrative
7. Sales commissions paid to the company’s salespeople - Selling
8. Depreciation on power tools - Manufacturing Overhead

Exercise 2=2

1. The cost of the memory chips used in a radar set - Product Cost

2. Factory heating costs - Product Cost

3. Factory equipment maintenance costs - Product Cost

4. Training costs for new administrative employees - Period Cost

5. The cost of the solder that is used in assembling the radar sets - Product Cost

6. The travel costs of the company’s salespersons - Period Cost

7. Wages and salaries of factory security personnel - Product Cost

8. The cost of air-conditioning executive offices - Period Cost

9. Wages and salaries in the department that handles billing customers - Period Cost

10. Depreciation on the equipment in the fitness room used by factory workers - Product Cost

11. Telephone expenses incurred by factory management - Product Cost

12. The costs of shipping completed radar sets to customers - Product Cost

13. The wages of the workers who assemble the radar sets - Product Cost
14. The president’s salary - Period Cost
15. Health insurance premiums for factory personnel - Product Cost
Mohamed Abd El Fattah
Co. 20 - 24

Exercise 2-4

To estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-
day using the high-low method, we need to first identify the highest and lowest points of occupancy
days and their respective electrical costs.

1. Identifying highest and lowest points:

Highest Occupancy Days: August - 3,608 occupancy days - Electrical Costs: $8,111
Lowest Occupancy Days: October - 186 occupancy days - Electrical Costs: $1,712

Variable cost per occupancy-day and the fixed cost per month:

Variable Cost per Occupancy-Day:


Variable Cost = (Highest Electrical Costs - Lowest Electrical Costs) / (Highest Occupancy Days -
Lowest Occupancy Days)
Variable Cost = ($8,111 - $1,712) / (3,608 - 186)
Variable Cost = $6,399 / 3,422
Variable Cost ≈ $1.87 per occupancy-day

Using the highest data set:

Fixed Cost = Total Cost - (Variable Cost per Unit × Number of Units)
Fixed Cost = $8,111 - ($1.87 × 3,608)
Fixed Cost = $8,111 - $6,746.96
Fixed Cost ≈ $1,364 (rounded to the nearest whole dollar)

Therefore, according to the high-low method:


- Fixed cost of electricity per month is approximately $1,364.
- Variable cost of electricity per occupancy-day is approximately $1.87.

2. Other factors that are likely to affect the variation in electrical costs from month to month include:
- Seasonal Changes: Variations in weather conditions might influence the heating or cooling needs,
affecting electrical usage.
- Promotions or Events: Special events or promotional activities might impact guest numbers and
facility usage, influencing electricity consumption.
- Maintenance and Repairs: Repairs or maintenance work may require additional electrical usage
during certain months.
- Changes in Equipment: Upgrades or changes in electrical equipment efficiency or usage can affect
costs.
Mohamed Abd El Fattah
Co. 20 - 24

Exercise 2-6

The Empire Hotel is a four-star hotel located in downtown Seattle.


Required:
For each of the following costs incurred at the Empire Hotel, indicate whether it would most likely be a
direct cost or an indirect cost of the specified cost object by placing an X in the appropriate column.

Indirect Direct
Cost Object Cost
Cost Cost
X A particular hotel guest Ex. Room service beverages
x The hotel’s restaurant 1. The salary of the head chef
x A particular restaurant customer 2. The salary of the head chef
x A particular hotel guest 3. Room cleaning supplies
x A particular hotel guest 4. Flowers for the reception desk
x A particular hotel guest 5. The wages of the doorman
x The housecleaning department 6. Room cleaning supplies
x The hotel’s gym 7. Fire insurance on the hotel building
x The hotel’s gym 8. Towels used in the gym

Exercise 2-9

Period (Selling
Variable Fixed Direct Direct Manufacturing and Opportunity Sunk
Name of the Cost
Cost Cost Materials Labor Overhead Administrative) Cost Cost
Cost
Rental revenue x
Direct materials cost x x
Supervisor's salary x
Rental cost for
x
warehouse space
Equipment rental
x
cost
Depreciation on the
x
building
Advertising costs x
Shipping costs x x x
Mohamed Abd El Fattah
Co. 20 - 24

Period (Selling
Variable Fixed Direct Direct Manufacturing and Opportunity Sunk
Name of the Cost
Cost Cost Materials Labor Overhead Administrative) Cost Cost
Cost
Electrical costs x x
Return from
temporary x
investments

You might also like