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  • Solutions (9/1) Exercise 1-9: Selling and Cost Behavior Administrative Product Cost Item Variable Fixed Cost Cost

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    This document contains sample solutions to exercises involving the classification of costs and inventory valuation. Exercise 1-9 provides examples of different types of costs, such as product cost, variable cost, opportunity cost, etc. Exercise 1-10 classifies example cost items as variable, fixed, selling/administrative or product costs. Exercise 1-12 walks through the inventory and cost of goods sold calculations for a company that produces motorcycles using batteries as raw materials. It shows the costs in different inventory and income statement accounts.

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    This document contains sample solutions to exercises involving the classification of costs and inventory valuation. Exercise 1-9 provides examples of different types of costs, such as product cost, variable cost, opportunity cost, etc. Exercise 1-10 classifies example cost items as variable, fixed, selling/administrative or product costs. Exercise 1-12 walks through the inventory and cost of goods sold calculations for a company that produces motorcycles using batteries as raw materials. It shows the costs in different inventory and income statement accounts.

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    14 views3 pages

    Solutions (9/1) Exercise 1-9: Selling and Cost Behavior Administrative Product Cost Item Variable Fixed Cost Cost

    Uploaded by

    ppaulyni33
    This document contains sample solutions to exercises involving the classification of costs and inventory valuation. Exercise 1-9 provides examples of different types of costs, such as product cost, variable cost, opportunity cost, etc. Exercise 1-10 classifies example cost items as variable, fixed, selling/administrative or product costs. Exercise 1-12 walks through the inventory and cost of goods sold calculations for a company that produces motorcycles using batteries as raw materials. It shows the costs in different inventory and income statement accounts.

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    of 3

    Solutions (9/1)

    Exercise 1-9
    1.
    2.
    3.
    4.
    5.
    6.
    7.
    8.
    9.
    10.

    Product cost; variable cost


    Conversion cost
    Opportunity cost
    Prime cost
    Sunk cost
    Period cost; variable cost
    Product cost; period cost; fixed cost
    Product cost
    Period cost
    Fixed cost; product cost; conversion cost

    Exercise 1-10
    Cost Behavior
    Cost Item
    1. Hamburger buns at a
    Wendys outlet...................

    Variable

    Fixed

    Selling and
    Administrative

    Product

    Cost

    Cost

    2. Advertising by a dental
    office..................................

    X
    X

    3. Apples processed and canned


    by Del Monte.....................

    4. Shipping canned apples from


    a Del Monte plant to
    customers...........................

    X
    X
    X

    5. Insurance on a Bausch &


    Lomb factory producing
    contact lenses.....................

    6. Insurance on IBMs
    corporate headquarters......

    7. Salary of a supervisor
    overseeing production of

    X
    X

    printers at HewlettPackard..............................
    8. Commissions paid to
    Encyclopedia Britannica
    salespersons.......................

    9. Depreciation of factory
    lunchroom facilities at a
    General Electric plant........
    10. Steering wheels installed in
    BMWs...............................

    Exercise 1-12
    a. Batteries purchased.........................................................................................
    Batteries drawn from inventory......................................................................
    Batteries remaining in inventory....................................................................
    Cost per battery...............................................................................................
    Cost in Raw Materials Inventory at April 30..................................................

    8,000
    7,600
    400
    $10
    $4,000

    b. Batteries used in production (7,600 100).....................................................


    Motorcycles completed and transferred to Finished Goods (90% 7,500)...
    Motorcycles still in Work in Process at April 30............................................
    Cost per battery...............................................................................................
    Cost in Work in Process Inventory at April 30...............................................

    7,500
    6,750
    750
    $10
    $7,500

    c. Motorcycles completed and transferred to Finished Goods (see above)........


    Motorcycles sold during the month
    (70% 6,750).............................................................................................
    Motorcycles still in Finished Goods at April 30.............................................
    Cost per battery...............................................................................................
    Cost in Finished Goods Inventory at April 30................................................

    6,750
    4,725
    2,025
    $10
    $20,250

    d. Motorcycles sold during the month (above)...................................................


    Cost per battery...............................................................................................
    Cost in Cost of Goods Sold at April 30..........................................................

    4,725
    $10
    $47,250

    e. Batteries used in salespersons motorcycles...................................................


    Cost per battery...............................................................................................
    Cost in Selling Expense at April 30................................................................

    100
    $10
    $ 1,000

    2. Raw Materials Inventorybalance sheet


    Work in Process Inventorybalance sheet
    Finished Goods Inventorybalance sheet
    Cost of Goods Soldincome statement
    Selling Expenseincome statement

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