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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). Factory Supervision Aluminum Tubing Rims Emblem Gearbox Straight-line depreciation on painting machine Fenders Raw Material Inventory Clerks Wages Quality Control Inspector’s Salary Handlebars Metal Worker’s Wages Roller Chain Spokes Paint 2-21 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 -Expense Account Depreciation Expense -Costs of Goods Sold -Inventory 2-34 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?

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).

Factory Supervision
Aluminum Tubing
Rims
Emblem
Gearbox
Straight-line depreciation on painting machine
Fenders
Raw Material Inventory Clerks Wages
Quality Control Inspector’s Salary
Handlebars
Metal Worker’s Wages
Roller Chain
Spokes
Paint

2-21

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

-Expense Account

Depreciation Expense

-Costs of Goods Sold

-Inventory

 

2-34

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?

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