Cost Behavior and classification: indicate whether the following are fixed (F), variable
(V) or mixed (M) as well as a product service (PT) or period cost (PD)
Wages of factory maintenance workers V - PT
Wages of forklift operators who move finished goods from a central warehouse to the
loading dock V - PT
Insurance premiums paid on the headquarters of a manufacturing company F - PD
Cost of labels attached to shirts made by a company V - PT
Property taxes on a manufacturing plant F - PT
Paper towels used in factory restrooms V - PT
Salaries of office assistants in a law firm F - PT
Freight costs of acquiring raw material from suppliers F - PT
Computer paper used in an accounting firm V - PT
Cost of wax to make candles V - PT
Freight in on a truckload of furniture purchased for resale F - PT
Cost behavior and classification: (costs associated in the manufacturing of bicycles)
indicate whether the following are fixed (F), variable (V) or mixed (M) (using number of
units produced as the activity measure) as well as a direct material (DM) direct labor
(DL) or Overhead (OH)
Factory supervision F - OH
Aluminum tubing V - DM
Rims V - DM
Emblem V - DM
Gearbox V - DM
Straight-line depreciation on paint machine F - OH
Fenders V - DM
Inventory clerks salary F - OH
Inspectors salary F - OH
Handlebars V - DM
Metal workers’ wages V - DL
Roller chain V - DM
Spokes (assuming cost is considered significant) V - DM
Paint (assuming cost is considered significant) V - DM
(CGM;CGS)
The cost of goods sold in March 2008 for Raggae Rocks Co. was $2,300,000. March 31
Works in Process Inventory was 40 percent of the March 1 Work in Process Inventory.
Overhead was 225 percent of Direct labor cost. During March $1,182,000 of direct
material was purchased. Other March information follows:
Inventories
March 1
March 31
Direct Material
$30,000
$42,000
Work in Process
90,000
?
Finished Goods
125,000
24,000
a.
b.
c.
d.
a
Prepare a schedule of the cost of goods sold for March
Prepare the March cost of goods manufactured schedule
What was the amount of prime cost incurred in March
What was the amount of conversion cost incurred in March
Finished Goods Inventory, beginning
Cost of Goods Manufactured
Total FGI Available
Finished Goods Inventory, ending
Cost of Goods Sold
$ 125,000
2,199,000
$2,324,000
(24,000)
$2,300,000
b
WIP, beginning
Manufacturing Costs:
Direct Materials Used:
DMI, beginning
Purchases
Total DM Available
DMI, ending
Direct Labor
Manufacturing Overhead
Total Cost to Account For
WIP, ending
Cost of Goods Manufactured
$
$ 30,000
1,182,000
$1,212,000
(42,000)
$1,170,000
300,000
675,000
90,000
2,145,000
$2,235,000
(36,000)
$2,199,000
c. Prime Cost = Direct Material + Direct Labor = $1,170,000 + $300,000 = $1,470,000
d. Conversion Cost = Direct Labor + MOH = $300,000 + $675,000 = $975,000