ACCOUNTING FOR MANAGER

KELOMPOK 8 KELAS A192

• Dewa Ayu Gita Viakarina 1906455600

• Rarasati Prameswari Manoto 1906456181

• Aniek Martono 1906455475

 Exercise E-28
Consider the following costs that were incurred during the current year:

1. Tire costs incurred by Ford Motor Company.

2. Sales commissions paid to the sales force of Dell Inc.
3. Wood glue consumed in the manufacture of Rooms To Go furniture.
4. Hourly wages of refinery security guards employed by ExxonMobil.
5. The salary of a financial vice president of Hewlett Packard.
6. Advertising costs of Coca-Cola.
7. Straight-line depreciation on factory machinery of Boeing Corporation.
8. Wages of assembly-line personnel of Whirlpool Corporation.
9. Delivery costs incurred by Ben & Jerry’s for a shipment of their ice cream to a grocery store.
10. Newsprint consumed in printing The New York Times.
11. Plant insurance costs of Texas Instruments.
12. LED costs incurred in light-bulb manufacturing of GE Lighting.

Required: Evaluate each of the preceding and determine whether the cost is (a) a product cost or a
period cost, (b) variable or fixed in terms of behavior, and (c) for the product costs only, whether the
cost is properly classified as direct material, direct labor, or manufacturing overhead.

Answer:

1. Tire costs: Product cost, variable, direct material

2. Sales commissions: Period cost, variable
3. Wood glue: Product cost, variable, indirect material
4. Hourly wages of refinery security guards: Period cost, variable
5. Salary of a financial vice president: Period cost, fixed
6. Advertising Costs: Period cost, variable
7. Depreciation on factory machinery: Product cost, fixed, manufacturing overhead
8. Wages of assembly-line personnel: Product cost, variable, direct labor
9. Delivery costs: Period, variable
10. Newsprint: Product cost, variable, direct material
11. Plant insurance cost: Product cost, fixed, manufacturing overhead
12. LED cost: Product cost, variable, direct material
 Problem 2-40
Mason Corporation began operations at the beginning of the current year. One of the company’s
products, a refrigeration element, sells for $185 per unit. Information related to the current year’s
activities follows.

Variable costs per unit: Direct material………............................................................................ $ 20

Direct labor .............................................................................................................................. 37
Manufacturing
overhead .................................................................................................................................. 48
Annual fixed costs: Manufacturing overhead .......................................................................... $600,000
Selling and administrative ........................................................................................................ 860,000
Production and Sales activity: Production (units) .................................................................... 24,000
Sales (units) .............................................................................................................................. 20,000

Mason carries its finished-goods inventory at the average unit cost of production and is subject to a
30 percent income tax rate. There was no work in process at year-end.

Required:

1. Determine the cost of the December 31 finished-goods inventory.

Fixed manufacturing overhead per unit = Annual fixed cost (manufacturing overhead) ÷
Production
= $600,000 ÷ 24.000
= $25

Average unit cost = Direct material + Direct labor + Variable

manufacturing overhead + Fixed manufacturing
overhead
= $20 + $37 + $48 + $25
= $130

Ending finished-goods inventory = Production - Sales

= 24.000 units – 20.000 units
= 4.000 units

Cost of December 31 finished-goods inventory = Ending finished-goods inventory x Average

unit cost
= 4.000 units x $130
= $520,000

2. Compute Mason’s net income for the current year ended December 31.
Sales revenue = Sales x Price per unit
= 20.000 units x $185
= $3,700,000
 COGS = Sales x Average unit cost
= 20.000 x $130
= $2,600,000

Income before taxes = Gross margin – Selling and administrative expenses

= (Sales revenue – COGS) – Selling and administrative expenses
= ($3,700,000 - $2,600,000) - $860,000
= $1,100,000 - $860,000
= $240,000

Net Income = Income before taxes – Income tax expense

= Income before taxes – (Production x 30%)
= $240,000 – ($240,000 x 30%)
= $240,000 - $72,000
= $168,000

3. If next year’s production decreases to 23,000 units and general cost behavior patterns do
not change, what is the likely effect on:
a. The direct-labor cost of $37 per unit? Why?
Direct-labor cost merupakan variable cost yang dapat menurun karena production
cost menurun. Production yang sebelumnya 24,000 unit mengalami penurunan
menjadi 23,000 unit yang menyebabkan cost yang sebelumnya $888,000 ($37 x
24,000) menjadi $851,000 ($37 x 23,000). Jadi, penurunan terhadap cost yang
dialami perusahaan adalah sebesar $37,000 ($888,000 - $851,000).
b. The fixed manufacturing overhead cost of $600,000? Why?
Tidak ada perubahan, karena merupakan fixed cost
c. The fixed selling and administrative cost of $860,000? Why?
Tidak ada perubahan, karena merupakan fixed cost
d. The average unit cost of production? Why?
Average unit cost of production dapat meningkat.
Sebelum peningkatan:
Total cost = Fixed cost + Variable cost
= $600,000 + [($20 x 24.000) + ($37 x 24.000) + ($48 x 24.000)]
= $600,000 + $2,520,000
= $3,120,000

Average unit cost of production = $3,120,000 ÷ 24.000

= $130

Setelah peningkatan:
Total cost = Fixed cost + Variable cost
= $600,000 + [($20 x 23.000) + ($37 x 23.000) + ($48 x 23.000)]
= $600,000 + $2,415,000
= $3,015,000
 Average unit cost of production = $3,015,000 ÷ 23.000
= $131,09

Jadi, terdapat peningkatan sebesar $1,09 terhadap average unit cost of production.

Problem 2-53
Several costs incurred by Bayview Hotel and Restaurant are given in the following list. For each cost,
indicate which of the following classifications best describe the cost. More than one classification
may apply to the same cost item.

Cost Classifications

a. Direct cost of the food and beverage department

b. Indirect cost of the food and beverage department
c. Controllable by the kitchen manager
d. Uncontrollable by the kitchen manager
e. Controllable by the hotel general manager
f. Uncontrollable by the hotel general manager
g. Differential cost
h. Marginal cost
i. Opportunity cost
j. Sunk cost
k. Out-of-pocket cost

Cost Items

1. The cost of general advertising by the hotel, which is allocated to the food and beverage
department. (B, D, E, K)
2. The cost of food used in the kitchen. (A, C, E)
3. The difference in the total cost incurred by the hotel when one additional guest is registered.
(H)
4. The cost of space (depreciation) occupied by the kitchen. (A, D, J)
5. The cost of space (depreciation) occupied by a sauna next to the pool. The space could
otherwise have been used for a magazine and bookshop. (E, I)
6. The profit that would have been earned in a magazine and bookshop, if the hotel had one. (I)
7. The discount on room rates given as a special offer for a “Labor Day Getaway Special.” (E)
8. The wages earned by table-service personnel. (B, C)
9. The salary of the kitchen manager. (E, B, D)
10. The cost of the refrigerator purchased 13 months ago. The unit was covered by a warranty
for 12 months, during which time it worked perfectly. It stopped cooling after 13 months,
despite an original estimate that it would last five years. (C, J)
11. The hotel has two options for obtaining fresh pies, cakes, and pastries. The goodies can be
purchased from a local bakery for approximately $1,600 per month, or they can be made in
the hotel’s kitchen. To make the pastries on the premises, the hotel will have to hire a part-
 time pastry chef. This will cost $600 per month. The cost of ingredients will amount to
roughly $700 per month. Thus, the savings from making the goods in the hotel’s kitchen
amount to $300 per month. (E, G, I)
12. The cost of dishes broken by kitchen employees (A, K)
13. The cost of leasing a computer used for reservations, payroll, and general hotel accounting.
(E)
14. The cost of a pool service that cleans and maintains the hotel’s swimming pool. (E)
15. The wages of the hotel’s maintenance employees, who spent 11 hours (at $14 per hour)
repairing the dishwasher in the kitchen. (E, K)