Fundamentals Of Cost Accounting (6th Edition)

6th Edition

ISBN: 9781259969478

Author: WILLIAM LANEN, Shannon Anderson, Michael Maher

Publisher: McGraw Hill Education

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Textbook Question

Chapter 2, Problem 50E

Components of Full Costs

Madrid Corporation has compiled the following information from the accounting system for the one product it sells:

Chapter 2, Problem 50E, Components of Full Costs Madrid Corporation has compiled the following information from the

Required

Determine each of the following unit costs:

a. Variable manufacturing cost.
b. Variable cost.
c. Full absorption cost.
d. Full cost.

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Chapter 2, Problem 49E

Chapter 2, Problem 51E

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Atlanta Systems produces two different products, Product A, which sells for $450 per unit, and Product B, which sells for $800 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Usage by Product A Usage by Product B Cost Design (Engineering Hours) Machining (Machine Hours) Inspection (Batches) $ 190,000 $1,800,000 $ 108 142 2,160 2,840 160,000 42 38 8 Atlanta manufactures 12,500 units of Product A and 10,200 units of Product B per month. Each unit of Product A uses $100 of direct materials and $45 of direct labor, while each unit of Product B uşes $140 of direct materials and $75 of direct labor.

Case #1 – Dorilane Company The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 2,000 sets per year. Annual cost data at full capacity follow: Direct labor $ 118,000 Advertising $50,000 Factory supervision $40,000 Property taxes, factory building $3,500 Sales commissions $80,000 Insurance, factory $2,500 Depreciation, administrative office equipment $4,000 Lease cost, factory equipment $ 12,000 Indirect materials, factory $6,000 Depreciation, factory building $ 10,000 Administrative office supplies (billing) $3,000 Administrative office salaries $60,000 Direct materials used (wood, bolts, etc.) $94,000 Utilities, factory $20,000

The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 3,800 sets per year. Annual cost data at full capacity follow: Direct labor Advertising Factory supervision Property taxes, factory building Sales commissions Insurance, factory Depreciation, administrative office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory building Administrative office supplies (billing) Administrative office salaries Direct materials used (wood, bolts, etc.) Utilities, factory $ 89,000 $ 103,000 $70,000 $ 23,000 $ 65,000 $ 6,000 $ 2,000 $ 17,000 $ 18,000 $ 106,000 $ 5,000 $ 111,000 $ 426,000 $ 46,000 Required: 1. Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classified in two ways: first, as variable or fixed with respect to the number of units produced and sold; and second, as a selling…

Chapter 2 Solutions

Fundamentals Of Cost Accounting (6th Edition)

Ch. 2 - What is the difference in meaning between the...Ch. 2 - What is the difference between product costs and...Ch. 2 - What is the difference between outlay cost and...Ch. 2 - Prob. 4RQ Ch. 2 - Is cost-of-goods sold an expense?Ch. 2 - Is cost-of-goods a product cost or a period cost?Ch. 2 - What are the similarities between the Direct...Ch. 2 - What are the three categories of product cost in a...Ch. 2 - Prob. 9RQ Ch. 2 - Prob. 10RQ

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Components of Full Costs Madrid Corporation has compiled the following information from the accounting system for the one product it sells: Required Determine each of the following unit costs: a. Variable manufacturing cost . b. Variable cost. c. Full absorption cost. d. Full cost.

Solution Summary: The author calculates the variable manufacturing cost per unit, which includes direct material, direct labor, and manufacturing overhead.

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Chapter 2 Solutions