CHAPTER 2
Assignment: Exercises 2, 3, 4, 5, 7, 8, 9 & All multiple choice questions
Exercise 2
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
r.
s.
t.
Cost Item
Transportation-in costs on materials
purchased
Assembly-line workers’ wages
Property taxes on work in process
inventories
Salaries of top executives in the
company
Overtime premium for assembly workers
Sales commissions
Sales personnel office rental
Production supervisory salaries
Controller’s office supplies
Executive office heat and air conditioning
Executive office security personnel
Supplies used in assembly work
Factory heat and air conditioning
Power to operate factory equipment
Depreciation on furniture for sales staff
Varnish used for finishing product
Marketing personnel health insurance
Packaging materials for finished product
Salary of the quality control manager
who checks work on the assembly line
Assembly-line workers’ dental insurance
Fixed (F)
Variable (V)
Period (P)
Product (R)
V
V
V
R
R
R
F
P
V
V
F
F
F
F
F
V
F
V
F
V
F
V
R
P
P
R
P
P
P
R
R
R
P
R
P
R
F
F
R
R
Exercise 3 (Cost Classifications; Manufacturer)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
a, d, g, i
a, d, g, j
b, f
b, d, g, k
a, d, g, k
a, d, g, j
b, c, f
b, d, g, k
b, c and d*, e and f and g*, k*
* The building is used for several purposes.
b, c, f
b, c, h
b, c, f
b, c, e
b, c and d†, e and f and g†, k†
†
The building that the furnace heats is used for several purposes.
b, d, g, k
Exercise 4 (Economic Characteristics of Costs)
1. marginal cost
2. sunk cost
3. average cost
4. opportunity cost
5. differential cost
6. out-of-pocket cost
Exercise 5 (Cost Classifications; Hotel)
1. a, c, e, k
2. b, d, e, k
3. d, e, i
4. d, e, i
5. a, d, e, k
6. a, d, e, k
7. d, e, k
8. b, d†, e, k
†
Unless the dishwasher has been used improperly.
9. h
10. a, d, e*, j
* The hotel general manager may have some control over the total space allocated to the kitchen.
11. i
12. j
13. a, c, e
14. e, k
Exercise 6
Pickup Truck Output
3,000 trucks
P
29,640,000
39,200,000
4,500,000
13,660,000
P 87,000,000
6,000 trucks
P
59,280,000
39,200,000
9,000,000
13,660,000
P121,140,000
9,000 trucks
P
88,920,000
39,200,000
13,500,000
13,660,000
P155,280,000
Selling price per truck
46,000
40,100
35,900
Unit cost
29,000
20,190
17,253
Profit per truck
17,000
19,910
18,647
Variable production costs
Fixed production costs
Variable selling costs
Fixed selling costs
Total costs
Exercise 7
Exercise 8
1. Direct labor
2. Selling
3. Direct materials
4. Manufacturing overhead
5. Manufacturing overhead / Selling / Administrative
6. Administrative
7. Selling
8. Manufacturing overhead
Exercise 9
1.
2.
3.
4.
5.
6.
7.
8.
Cost
The salary of the head chef
The salary of the head chef
Room cleaning supplies
Flowers for the reception desk
The wages of the doorman
Room cleaning supplies
Fire insurance on the hotel building
Towels used in the gym
MULTIPLE CHOICE
1. B
7.
2. D
8.
3. B
9.
4. A
10.
5. C
11.
6. D
12.
C
D
C
C
A
C
13.
14.
15.
16.
17.
18.
D
D
B
A
C
C
Cost Object
The hotel’s restaurant
A particular restaurant customer
A particular hotel guest
A particular hotel guest
A particular hotel guest
The housecleaning department
The hotel’s gym
The hotel’s gym
19.
20.
21.
22.
23.
24.
A
A
B
B
C
C
25.
26.
27.
28.
29.
30.
C
B
B
A
A
B
Direct
Cost
X
Indirect
Cost
X
X
X
X
X
X
X