Chapter 1 Problem Packet
1. The proper sequence for the planning and controlling process is
a. Set objectives, set goals, develop plans, implement plans, evaluate performance, and
modify goals or plans as needed
b. Develop plans, set objectives, set goals, implement plans, evaluate performance, and
modify goals or plans as needed.
c. Set goals, set objectives, develop plans, implement plans, evaluate performance, and
modify goals or plans as needed.
d. Set goals, develop plans, set objectives, implement plans, evaluate performance, and
modify goals and plans as needed.
2. ___F__Product costs are the costs and resources consumed as part of administrative and selling
activities during a fiscal period.
3. __F___The costs of the significant raw materials from which a product is manufactured are
classified as direct labor costs.
4. ___T__If the cost of tracking an item exceeds the benefit or value of that information, the cost
of the item should be assigned to an overhead category and later allocated to products in a
logical manner.
5. Period expenses are most closely associated with
a. Cost of direct materials for the product
b. Cost of goods manufactured
c. Product expenses
d. Selling and administrative expenses
6. Which of the following is not a product cost?
a. Fire insurance on factory equipment
b. Hourly wages for shipping clerks
c. Supplies for factory equipment operators
d. Depreciation on factory building
7. Which of the following would be considered part of manufacturing overhead?
a. Hourly wages for employees in the accounting department
b. Monthly salary expense for factory maintenance personnel
c. Monthly salary expense for finished good warehouse personnel
d. Sales commissions paid to sales personnel directly related to product sales
8. During the month of October, Smythe Productions purchased $35,000 of raw materials. Total
manufacturing costs were $130,000. Indirect labor was $20,000 and direct labor was $40,000.
There was no beginning raw materials inventory, but ending raw materials inventory was
$5,000. Total manufacturing overhead costs must have been
a. $130,000
b. $ 60,000
c. $ 55,000
d. $ 40,000
9. Which costs are sometimes found on the income statement and sometimes found on the
balance sheet?
a. Period costs
b. Product costs
c. Both period and product costs
d. Neither period nor product costs
10. Product vs Period costs
Classify each of the following costs as period expenses (PE) or product costs (PC)
_PC__ 1. Direct labor
_PC__ 2. Indirect labor
_PE__ 3. Interest expense
_PE__ 4. Shipping expense
_PC__ 5. Raw materials used
_PE__ 6. Office salaries
_PC__ 7. Factory equipment depreciation
_PE__ 8. Sales commissions
_PC__ 9. Factory equipment repairs
_PC__ 10. Factory rent
11. Problem – COGM and COGS
The following partial data is available for the month of February.
Raw materials inventory, February 1
Work-in-process inventory, February 1
Work-in-process inventory, February 28
Finished goods inventory, February 1
Finished goods inventory, February 28
Raw materials purchased in February
Direct materials used in February
Indirect materials used in February
Direct labor, February
Indirect labor, February
Equipment depreciation for February
Sales commissions for February sales
$ 15,000
10,000
12,000
48,000
37,000
93,000
63,000
12,000
72,000
30,000
5,000
45,000
Calculate the following missing information
a.
b.
c.
d.
Ending raw materials inventory
Total manufacturing overhead costs
Total cost of good manufactured
Total cost of goods sold.
Problem 12
Cabinets Inc.
Cost of Good Manufactured/Cost of Goods Sold
Cabinets, Inc. provides the following data for year 2020:
Work in process inventory, December 31, 2019
Work in process inventory, December 31, 2020
Insurance, factory
Depreciation, factory
Depreciation, general office
Indirect labor cost
Utilities, factory
General office supplies
Purchases of raw materials
Raw materials inventory, December 31, 2019
Raw materials inventory, December 31, 2020
Direct labor cost
$ 6,000
7,500
6,000
24,000
2,000
10,000
8,000
7,500
30,000
7,000
4,000
40,000
Manufacturing overhead is applied to production at the rate of $5 per machine hour. Production
records reveal that a total of 10,000 machine hours were used for year 2020.
Required:
1. Compute the amount of under or over applied overhead.
2. Prepare a schedule of cost of goods manufactured for year 2020.
Problem 13
Helen company
Use the following data for Helen Company to prepare a Cost of Goods Manufactured in good
form:
Raw materials inventory, January 1
Raw materials inventory, December 31
Work in process, January 1
Work in process, December 31
Finished goods, January 1
Finished goods, December 31
Raw materials purchases
Direct labor
Factory utilities
Indirect labor
Factory depreciation
$ 10,000
10,000
8,000
5,000
20,000
16,000
200,000
120,000
50,000
25,000
100,000