COST ACCOUNTING AND CONTROL

1st Term, A.Y. 2020 - 2021

BACOSTMX Module 1
Topic: Cost Accounting Fundamentals, Cost concepts, terms and classification
Activity no. 1

NAME: (surname first) Lasquite, Rosanna B. SCORE: __________________

YR./ SEC.: 2nd year – ACT195 DATE: Aug. 25, 2020

GENERAL DIRECTION:
Read and analyze the following questions and type your answer in the space provided for each items using the
color green font.

Part I.
True/False
Indicate whether the statement is true or false.

__T__ 1. An accounting information system collects, records, summarizes, analyzes, and manages data to
transform inputs into information that is provided to users.

__T__ 2. The two major subsystems of the accounting information system are the financial accounting
information system and the cost management accounting information system.

_F___ 3. Positions that have direct responsibility for basic objectives are referred to as staff positions, and
those indirectly responsible are called line positions.

__T__ 4. The Controller of a company supervises all the accounting departments and is often viewed as a
member of the top management team.

_T___ 5. Persons occupying staff positions provide support and assistance to other parts of the organization.

__F__ 6. Staff departments generally have direct authority over line departments in an organization

__T__ 7. The controller's position in a retail company is considered a line position rather than a staff position.

Part II.
Problem Solving
 A partial listing of costs incurred at Boylen Corporation during March appears below:

Direct materials.............................................................. $181,000

Utilities, factory.............................................................. $10,000
Sales commissions........................................................ $69,000
Administrative salaries................................................... $99,000
Indirect labor.................................................................. $32,000
Advertising..................................................................... $75,000
Depreciation of production equipment........................... $28,000
Direct labor.................................................................... $120,000
Depreciation of administrative equipment...................... $49,000

8. What is the total amount of product cost listed below?

Do not use money sign ($), Sample format 100,000

371,000

9. What is the total amount of period cost listed above?

Do not use money sign ($), Sample format: 100,000
292,000

Part III.
Classify the following costs for an auto manufacturer as either direct materials, direct labor, manufacturing
overhead, or period costs. (Type the letter of your answer)

a. Direct Materials c. Manufacturing Overhead

b. Direct Labor d. Period Cost
__A__10. Steel used in automobiles
__B__11. Assembly department employee wages
__D__12. Utility costs used in executive building
__D__13. Travel costs used by sales personnel
__D__14. Cost of shipping goods to customers
__C__15. Property taxes on assembly plant
__A__16. Glass used in automobiles
__C__17. Maintenance supplies
__C__18. Depreciation on assembly plant
__C__19. Plant manager's salary
__D__20. CEO's salary
__D__21. Depreciation on executive building
_D___22. Salary of marketing executive
__A__23. Tires installed on automobiles
__D__24. Advertising

Part IV.
A product cost is also known as an inventoriable cost. Classify the following costs as either product
(inventoriable) costs or period (non-inventoriable) costs in a manufacturing company by typing the letter of
your answer in the space provided for each item.

a. Product cost b. Period cost

__B__25. Depreciation on salespersons’ cars

__A__26. Rent on equipment used in the factory

__A__27. Lubricants used for machine maintenance

__A__28. Salaries of personnel who work in the finished goods warehouse

__A__29. Soap and paper towels used by factory workers at the end of a shift

__A__30. Factory supervisors’ salaries

__A__31. Heat, water, and power consumed in the factory

__B__32. Materials used for boxing products for shipment overseas (units are not normally boxed)

__B__33. Advertising costs

__A__34. Workers’ compensation insurance for factory employees

__A__35. Depreciation on chairs and tables in the factory lunchroom

__B__36. The wages of the receptionist in the administrative offices

__B__37. Cost of leasing the corporate jet used by the company's executives

__B__38. The cost of renting rooms at a Florida resort for the annual sales conference
__A__39. The cost of packaging the company’s product
Part V.
Below are a number of costs that are incurred in a variety of organizations.

Required: Classify each cost as being variable or fixed with respect to the number of units of product or
services sold by the organization by typing the letter in the space provided for each item.

a. Variable b. Fixed
__A__40. The cost of X-ray film used in the radiology lab at Virginia Mason Hospital in Seattle

__B__41. The cost of advertising a rock concert in New York City

__B__42. The cost of renting retail space for a McDonald’s restaurant in Hong Kong

__A__43. The electrical cost of running a roller coaster at Magic Mountain

__B__44. Property taxes paid by your local cinema theater

__A__45. The cost of sales commissions paid to salespersons at a Nordstrom store

__B__46. Property insurance on a Coca Cola bottling plant

__A__47. The costs of synthetic materials used to make a particular model of running shoe

__A__48. The costs of shipping Panasonic televisions to retail stores

__B__49. The cost of leasing an ultra-scan diagnostic machine at the American Hospital in Paris

Part VI.
Northwest Hospital is a full-service hospital that provides everything from major surgery and
emergency room care to outpatient clinics.

Required:
For each cost incurred at Northwest Hospital, indicate whether it would most likely to be a direct
cost or an indirect cost of the specified cost object.
a. Direct cost b. Indirect cost
__A__50. Cost: The wages of pediatric nurses
Cost Object: The pediatric department
__A__51. Cost: Prescription drugs
Cost Object: A particular patient
__B__52. Cost: Heating the hospital
Cost Object: The pediatric department
__A__53. Cost: The salary of the head of pediatrics
Cost Object: The pediatric department
__B__54. Cost: The salary of the head of pediatrics
Cost Object: A particular pediatric patient
__B__55. Cost: Hospital chaplain’s salary
Cost Object: A particular patient
__A__56. Cost: Lab tests by outside contractor
Cost Object: A particular patient
__B__57. Cost: Lab tests by outside contractor
Cost Object: A particular department

Part VII.

Northwest Hospital is a full-service hospital that provides everything from major surgery and
emergency room to outpatient clinic. The hospital’s Radiology Department is considering replacing
an old inefficient X-ray machine with a state-of-the-art digital X-ray. The new machine would provide
higher quality X-rays in less time and at a lower cost per X-ray. It would also require less power and
would use a color laser printer to produce easily readable X-ray images. Instead of investing the
funds in the new X-ray machine, the Laboratory Department is lobbying the hospital’s management
to buy a new DNA analyzer.

Required.
For each of the items below, type the letter whether it should be considered a differential cost, an
opportunity cost, a sunk cost on none of the choices in the decision to replace the old X-ray
machine with a new machine.

a. Differential cost c. Sunk cost

b. Opportunity cost d. None of the choices
__C__58. Cost of the old X-ray machine

__D__59. The salary of the head of the Radiology Department

_D___60. The salary of the head of the Pediatrics Department

__A__61. Cost of the new color laser printer

__D__62. Rent on the space occupied by Radiology

__A__63. The cost of maintaining the old machine

__B__64. Benefits from a new DNA analyzer

__D__65. Cost of electricity to run the X-ray machines

 Part VII.

Below are listed various costs that are found in organizations.

Required.
Classify each cost as being either variable or fixed with respect to the number of units produced
and sold by typing the letter in the space provided for each item.
a. Variable costs b. Fixed costs
_A___66. Hamburger buns at a Wendy’s outlet
__B__67. Advertising by a dental office
__A__68. Apples processed and canned by Del Monte
__A__69. Shipping canned apples from a Del Monte plant to customers
__B__70. Insurance on a Bausch & Lomb factory producing contact lenses
_B___71. Insurance on IBM’s corporate headquarters
__B__72. Salary of a supervisor overseeing production of printers at Hewlett-Packard
__A__73. Commissions paid to Encyclopedia Britannica salespersons
__B__74. Depreciation of factory lunchroom facilities at a General Electric plant
__A__75. Steering wheels installed in BMWs