rca solutions mod1

8/10/2019 RCA Solutions Mod1

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C. Manufacturing overhead consists of indirect materials, indirect labor,plant depreciation, factory utilities, and other factory-related costs.This cost component reflects all manufacturing costs other than directmaterials and direct labor. Direct labor, in contrast, consists of wagesof those employees who work directly on the goods in production(machine operators, assembly-line workers, and so forth).

PROBLEM 4A. PC, VB. MOH, FC. MOH, FD. DL, VE. MOH, VF. DM, VG. PC, FH. PC, FI. MOH, F

PROBLEM 5

Product or Period Cost Variable or Fixed CostItem Product Period Variable FixedA X XB X XC X XD X XE X XF X XG X XH X XI X X

PROBLEM 6

A. Fixed manufacturing overhead per unit:$400,000 20,000 scrapers produced = $20

Average unit manufacturing cost:Direct materials $ 25

Direct labor 35

Variable manufacturing overhead 60

Fixed manufacturing overhead 20

Average unit cost 140

B. Production (units) 20,000 Sales (units) 17,000 Ending finished-goods inventory (units) 3,000

3,000 units x $140 = $420,000


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C. Finished goods, Jan. 1 $ ----Add: Cost of goods manufactured (20,000 units x $140) 2,800,000

Cost of goods available for sale $ 2,800,000 Deduct: Finished goods, Dec. 31 420,000 Cost of goods sold $ 2,380,000

D. 1. No change. Direct labor is a variable cost, and the cost per unit will remainconstant.

2. No change. Despite the increase in the number of units produced, this is afixed cost, which remains the same in total.

PROBLEM 71. Prime cost = P185,000 + P245,000 =

P430,0002. Conversion costs = P245,000 + P125,000 + P155,000 =

P525,0003. Inventoriable costs = P430,000 + P125,000 + P155,000 =

P710,0004. Period costs = P160,000 + P145,000 =

P305,000

PROBLEM 8Product costs are costs that relate to the manufacturing process andconsist of direct materials, direct labor, and manufacturing overhead.Simply stated, these are costs incurred to make a product.

Product costs are attached to the units produced (i.e., work in process)and, thus, inventoried on the balance sheet. These costs are later chargedto finished goods when the goods are completed. Another transfer occurswhen the finished units are sold, with the costs now transferred to cost of

goods sold on the income statement.

PROBLEM 9The doctor's observations are incorrect, as gasoline is a variable cost andinsurance is a fixed cost. Gasoline cost will increase with the number ofmiles driven, whereas insurance outlays will remain the same. The doctorseems to have confused the "total" perspective, as defined byaccountants, with the notion of per-unit cost behavior.


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PROBLEM 10

1. Direct materials used P 30.00 Direct labor 20.00 Variable manufacturing overhead 15.00 Variable marketing 3.00 Total variable cost per unit 68.00 X No. of units produced and sold 20,000 Total variable costs per month P 1,360,000

2. Fixed manufacturing overhead P 10.00 Fixed marketing costs 4.00 Total fixed cost per unit 14.00 X No. of units produced and sold 20,000 Total fixed costs per month P 280,000

PROBLEM 11A. Marginal costB. Sunk costC. Average costD. Opportunity costE. Differential costF. Out-of-pocket cost

PROBLEM 121. Direct 6. Direct2. Indirect 7. Direct

3. Direct 8. Indirect4. Direct 9. Direct5. Direct 10.Direct

PROBLEM 131. Manufacturing 6. Manufacturing2. Selling 7. Administrative3. Manufacturing 8. Selling4. Selling 9. Administrative5. Administrative 10.Selling


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PROBLEM 17

A. No. Although the variances appear on the production manager'sperformance report and are often under his or her control, anadjustment is needed in this case. The problem appears to be the faultof the purchasing clerk who misplaced the paperwork. Anotherexplanation may be that the fault lies with the marketing departmentfor accepting a rush order and possibly putting a strain on the entiremanufacturing system.

B. Yes. These variances should be discussed to determine who's to blameand then cross-charged against that individual's department.

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rca solutions mod1

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