Jose vargas

Chapter 18

Exercise 18-1

What are the major differences between managerial accounting and financial accounting?

Financial accounting is reported at fixed intervals (monthly, quarterly, and yearly) in general purpose financial statements. Now, for the Managerial accounting the information is designed to meet the specific needs of a company’s management.

Exercise 18-2

Indicate whether the following costs of Colgate Palmolive Company would be classified as direct material cost, direct labor cost, or factory overhead cost:

Wages Paid to Packaging Department Employees: Direct Labor Cost

Maintenance Supplies: Material Cost

Plant Manager Salary for the Morristown, Tennessee, Toothpaste plant: Factory overhead cost

Packaging Material: Direct Material Cost

Depreciation on Production Machinery: Factory overhead cost

Salary of Process Engineers: Factory overhead cost

Depreciation on the Clarksville, Indiana, soap plant: Factory overhead cost

Resin for soap and shampoo products: Material cost

Scents and fragrances: Direct Material Cost

Wages of production line employees: Direct Labor cost

Exercise 18-3

Which of the following items are properly classified as part of factory overhead for Caterpillar?

Factory Supplies used in the Morganton, North Carolina, engine plants part: yes

Amortization of patents on new assembly process: yes

Steel plate

Vice president of finance’s salary

Sales incentive fees to dealers:

Depreciation of Peoria, Illinois, headquarters building:

Interest expense on debt

Plant Manager’s salary at Aurora, Illinois, Manufacturing plant: yes

Consultant fees for a study of production line employee productivity

Property taxes on the Danville, Kentucky, tractor tread plant: yes

Exercise 18-4

For apparel manufacturer Ann Taylor, classify each of the following costs as either a product cost or a period cost:

Travel cost of a salesperson: Period cost

Fabric used during production: Product cost

Salaries of distribution center personnel: Product cost

Factory janitorial supplies: Product cost

Repair and maintenance costs for sewing machines: Product cost

Corporate controller’s salary: Product cost

Depreciation on office equipment: Period cost

Advertising expenses: Period cost

Utility costs for office building; Period cost

Depreciation sewing machines: Product cost

Property taxes on factory building and equipment: Product cost

Research and development costs: Period cost

Sales commissions: Period cost

Oil used to lubricate sewing machines: Product cost

Factory supervisor’s salaries: Product cost

Wages of sewing machine operators: Product cost

Salary of production quality control supervisor: Product cost

Problem 18-2A

Products costs

Cost Direct Material Cost Direct Labor Cost Factory Overhead Cost

Period Costs

Selling Expense Administrative Expense

Chapter 21

Exercise 21-1

Following is a list of various costs incurred in producing toy robotic helicopters with respect to the production and sales of these toy helicopters, classify each cost as variable, fixed or mixed.

Oil used in manufacturing equipment VC

Hourly wages of inspectors: VC

Electricity costs $0.20per kilowatt-hour: VC

Property insurance premiums $1500 per month plus $0.006 for each dollar of property over $2,000,000:

Janitorial cost $4000 per month: FC

Pension cost $0.80 per employee hour on the job: VC

Computer chip (purchased from a vendor): VC

Hourly wages of machines operators: VC

Straight line depreciation on the production equipment: FC

Metal: V

Exercise 21-5

Classify each of the following costs and expenses as either variable or fixed

Shipping expenses: VC

Property taxes on general offices: FC

Straight line depreciation on computer equipment: VC

Salaries of human resources personnel:

President’s salary

Advertising

Sales commission:

CDs:

Packaging costs: VC

Salaries of software developers: VC

Wages of telephone order assistants

User’s guides :

Exercise 21-9

A-Bert Company budgets sales of $ 1,500,000 fixed costs of $450,000 and variable costs of $200,000.

What is the contribution margin ratio for Bert’s company?

B- if the contribution margin ratio for Ernie company is 40%, sales were $750,000 and fixed costs were $225,000. What was the income from operations?

Exercise 21-11

For the current year ending March 31, Jwork Company expects fixed costs of $440,000 a unit variable cost of $50 and a unit selling price of $75

A- Compute the anticipated break-even sales (units)B- Compute the sales(units) required to realize income from operations of $90,000

Exercise 21-13

Currently the unit selling price of a product is $280, the unit variable cost is $230 and the total fixed costs are $525,000. A proposal is being evaluated to increase the unit selling price to $300

A-Compute the current break even sales (units)

Exercise 21-1A

The manufacturing costs of Nashbar Industries for three months of the year are provided below:

Total costs Production

April $140,000 6,000 units

May $300,000 16,000

June $680,000 18,000