Direct Labor Identification: Production Wages questions

Acct 5000Chapter 16 Handout
14. In its production facilities for picture frames, Take A Picture pays the following wages:
‘$1,750 to employees who repair production facility equipment, $5,000 paid to employees who
cut the glass used in the frames, $2,000 for daily cleaning services of production facility, and
$3,000 to employees who sand and stain wood used in the frames. Which of the wages paid
would be considered a direct labor cost?
15. When producing tables, a company incurs the following costs: $30 for screws, $6,500 for
wood, $80 for wood stain, $5,000 paid to janitors who clean the production facilities, $2,100
paid to employees who saw and prepare wood for production, and $1,600 for depreciation on
equipment. How much factory overhead cost would need to be allocated to the tables produced?
16. In its production of shirts, a company incurs the following costs: $15,000 for production
workers, $8,000 for fabric, $3,500 for electricity in production facilities, and $300 for buttons.
Calculate the following:
a. Prime costs
b. Conversion costs
17. Calculate the prime costs and conversion costs if a company incurs the following to
produce wine glasses: $4,000 for molten glass, $15,000 paid to employees who create the
glasses, and
$2,000 paid to employees who repair equipment used in the production facilities.
28. As of January 1, 20Y5, Tippy Cup Co. had a balance of $15,000 for raw materials inventory.
The company’s ending balance of raw materials inventory totaled $13,900. Every four months,
the company purchases 250 pounds of raw materials at $25 a pound. Calculate the cost of direct
materials used for the year.
29. Tippy Cup Co. also incurred $10,550 for factory overhead and 250 hours of direct labor at
$10.30 per hour. Using the cost of direct materials used calculated in Exercise 28, determine the
total manufacturing costs incurred for the year.
30. As of January 1, 2018, Tippy Cup Co.’s work in process inventory had a beginning balance
of $98,750. The ending balance of work in process inventory totaled $92,350. Using the
information calculated in Exercise 29, calculate the cost of goods manufactured for the year.
31. Using the information calculated in Exercises 28-30, prepare a statement of cost of
goods manufactured for Tippy Cup Co.
36. Each finished product of Carolina Cup requires two pounds of Product A and five pounds of
Product B. Throughout the year, the company purchases enough raw materials to produce 500
finished products. Each pound of Product A costs $7, and each pound of Product B costs $8. The
beginning and ending balances of raw materials inventory totaled $8,900 and $10,100,
respectively. Calculate the cost of direct materials used for the year.
37. Carolina Cup employs five production employees who are paid an hourly wage of $9 per
hour. Each employee works 800 hours a year. The company also incurred $42,000 of
overhead, half of which should be allocated to the factory. Using the cost of direct materials
calculated in Exercise 36, determine the total manufacturing costs for the year.
38. Carolina Cup’s beginning work in process inventory had a balance of $45,750. The
ending work in process inventory was exactly½ of the beginning balance. Using the
manufacturing costs incurred calculated in Exercise 37, determine the cost of goods
manufactured during the year.
39. Use the information found in Exercises 36-38 to prepare Carolina Cup’s statement of cost of
goods manufactured for the 20Y5 fiscal year ended September 30
Acct 5000
Chapter 20 Handout
5. With the information for the first four months of production, determine the variable cost per unit and
the fixed cost using the high-low method.
January
February
March
April
Total Cost
$155,100
166,350
158,100
157,350
Units Produced
9,000
9,750
9,200
9,150
8. During 20Y5, Cards by Shannon sold 50,000 finished products with a contribution margin of 55%. The
variable costs totaled $40,500 for the year. Calculate the sales, contribution margin, and unit
contribution margin
14. The production manager at Athletix would like to know the break-even point for the company’s
goods in sales dollars and units. During the past year, the company earned an income from operations of
$69,600. The contribution margin for the year was $120,000 after selling 50,000 units at $4 each.
Determine the break-even point in dollars and units.
18. In 20Y5, a paper manufacturer has the income from operations shown below for sales of 7,500 units.
Determine the new break-even sales in each situation. Round answers to the nearest whole sales dollar.
Sales
Variable costs
Contribution margin
$60,000
24,000
$36,000
Fixed costs
19,200
Income from operations
$16,800
a. Decrease in selling price per unit by 20%
b. Increase in fixed costs by $2,000
c. Decrease in variable costs by $1.20
28. Cold Weather Gear manufactures two products, Jackets and Hats. During the past year, the company
incurred $124,800 of fixed costs. Use the information shown below to calculate the break-even point in
units of each product and total sales for the company. Use the sales mix to determine the mixed
product.
Unit selling price
Unit variable cost
Units sold
Jackets
$55
15
95,000
Hats
$15
3
30,000