38 Cost Accounting Problem 1 Presented below is a list of costs and expenses usually incurred by Ram Corporation, a manufacturer of furniture, in its factory. - Metal used in manufacturing tables . Insurance on factory machines Leather used in manufacturing furniture Wages paid to machine operators . Depreciation of factory machinery . Salaries of factory supervisors . Wood used in manufacturing fuyniture Sandpaper, bolts and nails 9. Property taxes on factory building 10. Rent of factory building ONAN RYN Instructions Classify the above items into the following categories (a) direct materials, (b) direct labor and (c) manufacturing overhead. Problem 2 Classify the following as either manufacturing (M), selling'(S), or administrative (A) Metal for the manufacture of golf clubs Wages of drivers delivering goods to customers Rent on factory building Freight-in of materials purchased President's salary aye Cost of machine breakdown Power to operate factory equipment 8. Advertising 9. Commission paid to sales personnel 10. Travel expenses of salesmenChapter 2 Cost — Concepts and Classification 39 Problem 3 Rocco Delivery Services reports the following costs and expenses in June of the current year Direct materials P 220,000 Factory rent 50,000 Direct labor 180,000 Factory utilities 8,500 Supervisor's salary in the factory 60,000 Depreciation — factory equipnient 20,000 Sales commission 57,000 Advertising 47,000 Depreciation — office equipment 10,000 Salary of the president 250,000 Required: 1.Classify each of the costs using the format given below Product Cost __ Product Cost__ Direct Direct Manufacturing Selling = Administrative Cost Materials Labor Overhead NSE. xy Direct mat. P 220,000 Factory rent Direct labor Factory Utilities Supervisor's sal Depreciation-FE Sales commission ‘Advertising Depreciation-OE Salary — Pres. Total 2, Total product cost 3, Total period cost : 4. Cost per unit if the company was able wo manufacture 40,000 units40 Cost Accounting Problem 4 Classify each ofthe following costs of Bug Company in two ways: (a) as variable (V) fixed costs (F); (b) as inventoriable costs (I) or period costs (P): (a) VorF rect labor ¥ 1. Wood used in bookcases 2. Machine depreciation based on mach. Hrs. 3. Fire insurance on factory equipment ee 4, Wiring used in radios eS 5. Indirect materials 6. Sales commissions 7. Bottles used to package liquid 8. Gasoline for a delivery truck 9. Straight-line depreciation of trucks used for delivery of sales to customers 10. Machine operator's hourly wages E Example: HILT F Problem 5 Mighty Muffler, Inc. operates an automobile service facility, which specializes in replacing mufflers on cars. The following table shows the costs incurred during a month when 750 mufflers were replaced. of Muffler Ri 300, 800 Total costs Fixed costs nee 50,000 b Variable costs Tague 60,000 ~d~ Total costs oe lioo00 «=p Cost per muffler replacement nm Fixed cost 2 h ae Variable cost oir agers 1 Total cost per replacement m a in Required: Fill in the missing amounts,