COST ACCOUNTING-Acct321 1. What are the three types of management decisions

| January 30, 2017

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COST ACCOUNTING

NOTE: Be sure to show all your detailed calculations. This has the possibility of partial credit for the exercises. There isn’t any partial credit for the questions.

I. Questions

1. What are the three types of management decisions?

2. Which type of management decision involves the cost volume profit analysis?

3. What type(s) of cost are included under conversion cost and prime cost?

4. Provide two examples of committed fixed cost and two examples of discretionary fixed cost.

5. Define segment reporting and provide two examples of segments.

II. Exercises

1. Leslie Manufacturing reported the following:

Revenue

$450,000

Beginning inventory of direct materials, January 1, 2015

20,000

Purchases of direct materials

156,000

Ending inventory of direct materials, December 31, 2015

18,000

Direct manufacturing labor

21,000

Indirect manufacturing costs (factory overhead)

42,000

Beginning work-in-process January 1, 2015

38,000

Ending work-in-process December 31, 2015

62,000

Beginning inventory of finished goods, January 1, 2015

40,000

Ending inventory of finished goods, December 31, 2015

45,000

Operating costs

150,000

Required:

1) What is Leslie’s cost of goods cost of goods manufactured?

2) What is Leslie’s cost of goods sold?

3) What is Leslie’s gross profit (or gross margin)?

2. The following information is provided for Samsonite Manufacturing Company for 2015:

Ending finished goods, 12/31/15 $5,500,000

Raw material purchases during 2015 $ 650,000

Accounts payable 1/31/15 $1,810,000

Beginning raw materials inventory 1/1/15 $ 725,000

Cost of goods manufactured $3,250,000

Cost of goods sold $2,750,000

Ending raw materials inventory 1/31/15 500,000

Required:

Determine the beginning finished good at 1/1/15?

3. The Holiday Card Company, a producer of specialty cards, has asked you to complete their breakeven point (number of cards) based upon the following information:

Income tax rate 30%

Selling price per unit $6.60

Variable cost per unit $5.28

Total fixed costs $46,200.00

Required:

How many cards must be sold to earn an after-tax net income of $18,480?

4. Given the following information determine the unit variable cost:

· Unit selling price $200

· Fixed cost $100,000

· Operating income $40,000

· Number of units required 1,000

5. A company has annual fixed cost of $20,000 which is not affected by different volumes of units sold. Variable cost per unit is $10. The company estimates that its product demand under different level of demand amounts in units is as follows at various unit selling prices:

Choice

Demand in units

Unit Selling Price

1

18,000

$11

2

15,000

$12

3

11,000

$13

4

8,000

$14

Required: What price should be set for the product?

6. Consider the following information:

Units made

1,200

Units sold

950

Variable manufacturing costs per unit

$ 45

Variable selling costs per unit

$ 30

Fixed manufacturing costs per unit

$ 25

Fixed selling costs

$ 25,000

Beginning inventory (in units)

0

Ending inventory (in units)

400

Unit selling price

$200

Prepare a variable costing and absorption costing income statement.

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