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# 1/15/14

## Assignment Print View

Score: 50outof50points(100%)

1.

award:

10outof 10.00points

Exercise13FixedandVariableCostBehavior[LO3] Koffee Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expenseofacoffeestandis\$2,300andthevariablecostpercupofcoffeeservedis\$0.34.
Required: 1. Fill in the following table with your estimates of total costs and average cost per cup of coffee at the indicatedlevelsofactivityforacoffeestand.(Roundyouranswerstonearestdollaramount.Round the"Averagecostpercupofcoffee"to3decimalplaces.) Fixedcost Variablecost Totalcost Averagecostpercupofcoffeeserved CupsofCoffeeServedinaWeek 1,400 1,500 1,600 \$2,300 \$2,300 \$2,300 476 510 544 \$2,776 \$1.983 \$2,810 \$1.873 \$2,844 \$1.778

## 2. Doestheaveragecostpercupofcoffeeservedincrease,decrease,orremainthesameasthenumber ofcupsofcoffeeservedinaweekincreases? Decreases

LearningObjective:0103Understandcostbehavior patternsincludingvariablecosts,fixedcosts,andmixed costs.

Worksheet

Exercise13FixedandVariableCostBehavior[LO3]

Exercise13FixedandVariableCostBehavior[LO3] Koffee Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expenseofacoffeestandis\$2,300andthevariablecostpercupofcoffeeservedis\$0.34.
Required: 1. Fill in the following table with your estimates of total costs and average cost per cup of coffee at the indicatedlevelsofactivityforacoffeestand.(Roundyouranswerstonearestdollaramount.Round the"Averagecostpercupofcoffee"to3decimalplaces.) Fixedcost Variablecost Totalcost Averagecostpercupofcoffeeserved CupsofCoffeeServedinaWeek 1,500 \$ 2,300 510 \$ \$ 2,810 1.873

## 2. Doestheaveragecostpercupofcoffeeservedincrease,decrease,orremainthesameasthenumber ofcupsofcoffeeservedinaweekincreases? Decreases

Explanation: 1.

Averagecostpercupofcoffeeserved=TotalcostCupsofcoffeeservedinaweek
2.

The average cost of a cup of coffee served declines as the number of cups of coffee served increases becausethefixedcostisspreadovermorecupsofcoffee.

2.

award:

10outof 10.00points

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Numberofunitssold Sellingpriceperunit Variablesellingexpenseperunit Variableadministrativeexpenseperunit Totalfixedsellingexpense Totalfixedadministrativeexpense Merchandiseinventory,beginningbalance Merchandiseinventory,endingbalance Merchandisepurchases \$ \$ \$ \$ \$ \$ \$ \$ 11,000 16 2 1.5 18,000 14,000 9,000 26,000 87,000

## Assignment Print View

2. Prepareacontributionformatincomestatement.(Inputallamountsaspositivevaluesexceptlosses whichshouldbeindicatedbyaminussign.) Redhawk,Inc. ContributionFormatIncomeStatement Sales Variableexpenses: Sellingexpenses Administrativeexpenses Costofgoodssold Contributionmargin Fixedexpenses: Sellingexpenses Administrativeexpenses Netoperatingincome

## \$ 22,000 16,500 70,000 18,000 14,000

\$176,000

108,500 67,500

32,000 \$35,500

Worksheet

Numberofunitssold Sellingpriceperunit Variablesellingexpenseperunit Variableadministrativeexpenseperunit Totalfixedsellingexpense Totalfixedadministrativeexpense Merchandiseinventory,beginningbalance Merchandiseinventory,endingbalance Merchandisepurchases \$ \$ \$ \$ \$ \$ \$ \$ 11,000 16 2 1.5 18,000 14,000 9,000 26,000 87,000

70,500 35,500

2. Prepareacontributionformatincomestatement.(Inputallamountsaspositivevaluesexceptlosses whichshouldbeindicatedbyaminussign.)

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Redhawk,Inc. ContributionFormatIncomeStatement Sales Variableexpenses: Costofgoodssold Sellingexpenses Administrativeexpenses Contributionmargin Fixedexpenses: Sellingexpenses Administrativeexpenses Netoperatingincome
Explanation:

## 176,000 108,500 67,500 32,000

35,500

3.

award:

10outof 10.00points

Exercise11ClassifyingManufacturingCosts[LO1] Your Boat, Inc., assembles custom sailboats from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a Gig Harbor, Washington,boathouse.Belowarelistedsomeofthecoststhatareincurredatthecompany.

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## Assignment Print View

Worksheet

Exercise11ClassifyingManufacturingCosts[LO1]

LearningObjective:0101Identifyandgiveexamplesof eachofthethreebasicmanufacturingcostcategories.

Exercise11ClassifyingManufacturingCosts[LO1] Your Boat, Inc., assembles custom sailboats from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a Gig Harbor, Washington,boathouse.Belowarelistedsomeofthecoststhatareincurredatthecompany.
Required: For each cost, indicate whether it would most likely be classified as direct labor, direct materials, manufacturing overhead, selling, or an administrative cost. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and doubleclicktheboxwiththequestionmarktoemptytheboxforawronganswer.) 1. Thewagesofemployeeswhobuildthesailboats. Directlaborcost Directmaterialscost Manufacturingoverheadcost Marketingandsellingcost Administrativecost 2. Thecostofadvertisinginthelocalnewspapers. Directlaborcost Directmaterialscost

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Explanation:

## Assignment Print View

4.

award:

10outof 10.00points

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## Assignment Print View

Problem123ACostClassificationandCostBehavior[LO2,LO3,LO6] Heritage Company manufactures a beautiful bookcase that enjoys widespread popularity. The company hasabacklogofordersthatislargeenoughtokeepproductiongoingindefinitelyattheplant'sfullcapacity of4,100bookcasesperyear.Annualcostdataatfullcapacityfollow:
Directmaterialsused(woodandglass) Administrativeofficesalaries Factorysupervision Salescommissions Depreciation,factorybuilding Depreciation,administrativeofficeequipment Indirectmaterials,factory Factorylabor(cuttingandassembly) Advertising Insurance,factory Administrativeofficesupplies(billing) Propertytaxes,factory Utilities,factory \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ 427,000 115,000 70,000 58,000 109,000 2,000 16,000 86,000 105,000 7,000 5,000 24,000 44,000

Required: 1. Enterthedollaramountofeachcostitemundertheappropriateheadings.Notethateachcostitemis classified in two ways: first, as either variable or fixed with respect to the number of units produced and sold and second, as either a selling and administrative cost or a product cost. (If the item is a product cost, it should also be classified as either direct or indirect.) (Leave no cells blank be certaintoenter"0"whereverrequired.) CostItem Directmaterialsused(wood,glass) Administrativeofficesalaries Factorysupervision Salescommissions Depreciation,factorybuilding Depreciation,admin.office equipment Indirectmaterials,factory Factorylabor(cuttingandassembly) Advertising Insurance,factory Administrativeofficesupplies(billing) Propertytaxes,factory Utilities,factory Totalcosts CostBehavior Variable \$427,000 0 0 58,000 0 0 16,000 86,000 0 0 5,000 0 44,000 \$636,000 Fixed \$0 115,000 70,000 0 109,000 2,000 0 0 105,000 7,000 0 24,000 0 \$432,000 Sellingor Administrative Cost \$0 115,000 0 58,000 0 2,000 0 0 105,000 0 5,000 0 0 \$285,000 ProductCost Direct \$427,000 0 0 0 0 0 0 86,000 0 0 0 0 0 \$513,000 Indirect \$0 0 70,000 0 109,000 0 16,000 0 0 7,000 0 24,000 44,000 \$270,000

2. Compute the average product cost per bookcase. (Round your answer to the nearest dollar amount.) Averageproductcost \$191 perbookcase

3. Due to a recession, assume that production drops to only 2,000 bookcases per year. Would you expecttheaverageproductcostperbookcasetoincrease,decrease,orremainunchanged? Increase
LearningObjective:0102Distinguishbetweenproduct costsandperiodcostsandgiveexamplesofeach. LearningObjective:0103Understandcostbehavior patternsincludingvariablecosts,fixedcosts,andmixed costs. LearningObjective:0106Understandthedifferences betweenthedirectandindirectcosts.

## Worksheet Problem123ACostClassificationandCostBehavior [LO2,LO3,LO6]

Problem123ACostClassificationandCostBehavior[LO2,LO3,LO6] Heritage Company manufactures a beautiful bookcase that enjoys widespread popularity. The company hasabacklogofordersthatislargeenoughtokeepproductiongoingindefinitelyattheplant'sfullcapacity of4,100bookcasesperyear.Annualcostdataatfullcapacityfollow:
Directmaterialsused(woodandglass) Administrativeofficesalaries Factorysupervision Salescommissions Depreciation,factorybuilding Depreciation,administrativeofficeequipment Indirectmaterials,factory Factorylabor(cuttingandassembly) Advertising Insurance,factory Administrativeofficesupplies(billing) Propertytaxes,factory Utilities,factory Required: \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ 427,000 115,000 70,000 58,000 109,000 2,000 16,000 86,000 105,000 7,000 5,000 24,000 44,000

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## Assignment Print View

1. Enterthedollaramountofeachcostitemundertheappropriateheadings.Notethateachcostitemis classified in two ways: first, as either variable or fixed with respect to the number of units produced and sold and second, as either a selling and administrative cost or a product cost. (If the item is a product cost, it should also be classified as either direct or indirect.) (Leave no cells blank be certaintoenter"0"whereverrequired.) CostItem Directmaterialsused(wood,glass) Administrativeofficesalaries Factorysupervision Salescommissions Depreciation,factorybuilding Depreciation,admin.office equipment Indirectmaterials,factory Factorylabor(cuttingandassembly) Advertising Insurance,factory Administrativeofficesupplies(billing) Propertytaxes,factory Utilities,factory Totalcosts CostBehavior Variable \$ 427,000 0 0 58,000 0 Fixed \$ 0 115,000 70,000 0 109,000 Sellingor Administrative Cost \$ 0 115,000 0 58,000 0 2,000 0 0 105,000 0 5,000 0 0 \$ \$ ProductCost Direct \$ 427,000 0 0 0 0 Indirect \$ 0 0 70,000 0 109,000

## 2,000 0 0 105,000 7,000 0 24,000 0

0 0 86,000 0 0 0 0 0 \$

## 0 16,000 0 0 7,000 0 24,000 44,000

636,000

432,000

285,000

513,000

270,000

2. Compute the average product cost per bookcase. (Round your answer to the nearest dollar amount.) Averageproductcost \$ 191 perbookcase

3. Due to a recession, assume that production drops to only 2,000 bookcases per year. Would you expecttheaverageproductcostperbookcasetoincrease,decrease,orremainunchanged? Increase
Explanation:

## \$513,000 270,000 \$783,000

\$783,0004,100bookcases=\$191perbookcase
3.

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## Assignment Print View

award: 10outof 10.00points

5.

Problem121ACostClassification[LO2,LO3,LO6] Listed below are costs found in various organizations. For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold and then whether it would be a sellingcost,anadministrativecost,oramanufacturingcost.Ifitisamanufacturingcost,indicatewhether it would typically be treated as a direct cost or an indirect cost with respect to units of product. Three sampleanswersareprovidedforillustration.

CostItem Ex. Directlabor Executivesalaries Factoryrent 1.Depreciation,executivejet 2.Costsofshippingfinishedgoodstocustomers 3.Woodusedinmanufacturingfurniture 4.Salesmanagerssalary 5.Electricityusedinmanufacturingfurniture 6.Secretarytothecompanypresident 7.Aerosolattachmentplacedonaspraycan producedbythecompany 8.Billingcosts 9.Packingsuppliesforshippingproductsoverseas 10.Sandusedinmanufacturingconcrete 11.Supervisorssalary,factory 12.Executivelifeinsurance 13.Salescommissions 14.Fringebenefits,assemblylineworkers 15.Advertisingcosts 16.Propertytaxesonfinishedgoodswarehouses 17.Lubricantsforproductionequipment

VariableorFixed Variable Fixed Fixed Fixed Variable Variable Fixed Variable Fixed Variable Variable Variable Variable Fixed Fixed Variable Variable Fixed Fixed Variable

## AdministrativeCost No Yes No Yes No No No No Yes No Yes No No No Yes No No No No No

Manufacturing(Product)Cost Direct Indirect Yes No No No No Yes No No No No Yes No No No No Yes No No Yes No No Yes No No No Yes No No No No No No No Yes No No Yes No No Yes

Worksheet

## LearningObjective:0102Distinguishbetweenproduct costsandperiodcostsandgiveexamplesofeach. LearningObjective:0103Understandcostbehavior patternsincludingvariablecosts,fixedcosts,andmixed costs.

LearningObjective:0106Understandthedifferences betweendirectandindirectcosts.

Problem121ACostClassification[LO2,LO3,LO6]

Problem121ACostClassification[LO2,LO3,LO6] Listed below are costs found in various organizations. For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold and then whether it would be a sellingcost,anadministrativecost,oramanufacturingcost.Ifitisamanufacturingcost,indicatewhether it would typically be treated as a direct cost or an indirect cost with respect to units of product. Three sampleanswersareprovidedforillustration.

CostItem Ex. Directlabor Executivesalaries Factoryrent 1.Depreciation,executivejet 2.Costsofshippingfinishedgoodstocustomers 3.Woodusedinmanufacturingfurniture 4.Salesmanagerssalary 5.Electricityusedinmanufacturingfurniture 6.Secretarytothecompanypresident 7.Aerosolattachmentplacedonaspraycan producedbythecompany 8.Billingcosts 9.Packingsuppliesforshippingproductsoverseas 10.Sandusedinmanufacturingconcrete 11.Supervisorssalary,factory 12.Executivelifeinsurance 13.Salescommissions 14.Fringebenefits,assemblylineworkers 15.Advertisingcosts 16.Propertytaxesonfinishedgoodswarehouses 17.Lubricantsforproductionequipment
Explanation:

VariableorFixed Variable Fixed Fixed Fixed Variable Variable Fixed Variable Fixed Variable Variable Variable Variable Fixed Fixed Variable Variable Fixed Fixed Variable

## AdministrativeCost No Yes No Yes No No No No Yes No Yes No No No Yes No No No No No

Manufacturing(Product)Cost Direct Indirect Yes No No No No Yes No No No No Yes No No No No Yes No No Yes No No Yes No No No Yes No No No No No No No Yes No No Yes No No Yes