1. Which of the following is NOT a period cost?

a. Marketing Cost
b. General and administrative costs
c. Research and development costs
d. Manufacturing costs

Answer the following question using the information below:

Beginning finished goods, 1/1/20X3 $ 80 000

Ending finished goods, 12/31/20X3 $ 67 000

Cost of goods sold $ 270 000

Sales revenue $ 500 000

Operating expenses $ 145 000

2. What is cost of goods manufactured for 20X3?

270 000 + 67 000 – 80 000 = 257 000

3. What is gross margin for 20x3?

$500,000 - $270,000 = $230,000

4. What is operating income for 20x3?

$500,000 - $270,000 - 145,000 = $85,000

5. What are the variable costs per unit associated with product Alta?

UC=60+10+18+4=92

6. What are the fixed costs per unit associated with product Alta?

Fixed cost per unit = total fixed cost / number of unites

FC=32+16=48
 7. The selling price per unit less the variable cost per unit is the:
a. Fixed cost per unit
b. Gross margin
c. Margin of safety
d. Contribution margin per unit

Company sells a single product. 7 000 units were sold resulting in $ 70 000 of sales revenue. $ 28 000 of
variable costs and $ 12 000 of fixed costs.

8. Contribution margin per unit is:

($70,000 - $28,000) / 7,000 units = $6 per unit

9. Breakeven point in units is:

$12,000 / $6 = 2,000 units

10. If sales increase by $25 000 operating income will increase by:

[($70,000 - $28,000) / $70,000] x $25,000 = $15,000

Problem #1

Company sells car batteries to service stations for an average of $30 each. The variable cost of each battery
is $20 and monthly fixed manufacturing costs total $10 000. Other monthly fixed costs of the company
total $3 000.

a) What is the breakeven point in batteries?

b) What is the margin of safety, assuming sales total $60 000?
c) What is the breakeven level in batteries, assuming variable costs increase by 20%?
d) What is the breakeven level in batteries, assuming the selling price goes up by 10%, fixed
manufacturing costs decline by 10% and other fixed costs decline by $100?
Problem #2

Company had the following actives during 20X5:

Direct materials:
Beginning inventory $40 000

Purchases $123 200

Ending Inventory $20 800

Direct manufacturing labor $32 000

Manufacturing overhead $24 000

Beginning work-in-process inventor $1 600

Ending work-in-process inventory $8 000

Beginning finished goods inventory $48 000

Ending finished goods inventory $32 000

a) What is the cost of direct materials used during 20X5?

b) What is cost of goods manufactured for 20X5?
c) What is cost of goods sold for 20X5?
d) What amount of prime costs was added to production during 20X5?
e) What amount of conversion costs was added to production during 20X5?

a) $40,000 + $123,200 – $20,800 = $142,400

b) $142,400 + $32,000 + $24,000 + $1,600 – $8,000 = $192,000

c) $192,000 + $48,000 – $32,000 = $208,000

d) $142,400 + $32,000 = $174,400

e) $32,000 + $24,000 = $56,000