LO.2 & LO.3 (Cost behavior and classii cation) Classify each of the following costs incurred in manufacturing bicycles as variable (V), ? xed (F), or mixed (M) cost (using number of units produced as the activity measure). Also indicate whether the cost is direct material (DM), direct labor (DL), or overhead (OH).
|Straight-line depreciation on painting machine|
|Raw Material Inventory Clerks Wages|
|Quality Control Inspector’s Salary|
|Metal Worker’s Wages|
LO.3 (Financial statement classification) Wayside Machine Tool Company purchased a $600,000 welding machine to use in production of large machine tools and robots. h e welding machine was expected to have a life of 10 years and a salvage value at time of disposition of $60,000. h e company uses straight-line depreciation. During its ?rst operating year, the machine produced 600 machines of which 480 were sold.
a. What part of the $600,000 machine cost expired?
b. Where would each of the amounts related to this machine appear on the ?nancial statements at the end of the first year of operations?
-Fixed Asset Account
Machinery and Equipment
-Contra Fixed Asset Account
Accumulated Depreciation – Machinery and Equipment
-Costs of Goods Sold
The cost of goods sold in March 2010 for Targé Co. was $2,644,100. March 31 Work in Process Inventory was 25 percent of the March 1 Work in Process Inventory. Overhead was 225 percent of direct labor cost. During March, $1,182,000 of direct material was purchased. Other March information follows:
Inventories March 1 March 31
Direct Material $ 30,000 $ 42,000
Work in Process 90,000 ?
Finished Goods 125,000 18,400
a. Prepare a schedule of the cost of goods sold for March.
b. Prepare the March cost of goods manufactured schedule.
c. What was the amount of prime cost incurred in March?
d. What was the amount of conversion cost incurred in March?