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Chapter 16: Q16-5SE-i (page 886)
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
i. Life insurance on the CEO.
The life insurance for the CEO will come under the period cost.
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Computing manufacturing overhead
Sunglasses Unlimited Company manufactures sunglasses. Following is a list of costs the company incurred during May. Use the list to calculate the total manufacturing overhead costs for the month.
Glue for frames $ 250
Depreciation on company cars used by sales force 4,000
Plant depreciation 7,500
Interest Expense 1,500
Lenses 52,000
Company president’s salary 24,500
Plant foreman’s salary 3,500
Plant janitor’s wages 1,300
Oil for manufacturing equipment 150
Preparing a schedule of cost of goods manufactured Wilson Corp., a lamp manufacturer, provided the following information for the year ended December 31, 2018:
Balances: Beginning Ending
Direct Materials \( 59,000 \) 23,000
Work-in-Process Inventory 109,000 62,000
Finished Goods Inventory 41,000 44,000
Other information:
Depreciation, plant building and equipment $ 16,000
Direct materials purchases 151,000
Insurance on plant 24,000
Sales salaries 47,000
Repairs and maintenance—plant 10,000
Indirect labor 39,000
Direct labor 121,000
Administrative expenses 60,000
Requirements 2. What is the unit product cost if Wilson manufactured 3,700 lamps for the year?
Comparing managerial accounting and financial accounting
For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):
c. Helps in planning and controlling operations
Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost.
10.Salary of the factory maintenance supervisor
How does a merchandising company calculate unit cost per item?
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