HW Ch 1 - HW Ch 1 PDF

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Cynthia Sarkis Professor Shekhtman ACBU 2223 22 January 2018

Ch 1 Ex 1-8 1) Product costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead

$7 4 1.50 5

Total product costs = 20,000 x (7 + 4 + 1.50 + 5) = $350, 000 2) Period costs: Fixed selling expenses Fixed administrative expense Sales commissions Variable administrative expense

$3.50 2.50 1.00 0.50

Total period costs = 20,000 x (3.50 + 2.50 + 1.00 + 0.50) = $150,000 3) Product costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead

$7 4 1.50 5

Total product costs = 22,000 x (7 + 4 + 1.50 + 5) = $385,000 4) Period costs: Fixed selling expenses Fixed administrative expense Sales commissions Variable administrative expense

$3.50 2.50 1.00 0.50

Total period costs = 18,000 x (3.50 + 2.50 + 1.00 + 0.50) = $135,000

Ex 1-21

1) Marwick’s Pianos Inc. Traditional Income Statement Sales (40 x 3,125) Cost of Goods Sold (40 x 2,450) Gross Margin (125,000 - 98,000) Selling and Administrative Expenses Selling Expenses Advertising Sales, salaries, and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative Expensive Executive salaries Insurance Clerical Depreciation of office equipment Total selling and administrative expenses Net Operating Income

$125,000 98,000 27,000

$700 950 + (8% x 125,000) = 10,950 30 x 40 = 1,200 350 800 2,500 400 1,000 + (20 x 40) = 1,800 300 19,000 8,000

2) Marwick’s Pianos Inc. Contribution Format Income Statement Total Sales 125,000 Variable Expenses Cost of goods sold 98,000 Selling Expenses Sales salaries and commissions (8% x 125,000) > 10,000 Delivery of pianos Administrative Expenses Clerical

Per Piano 3,125 2,450 (10,000/40)

>

250

>

30

(30 x 40) >

1,200

(1,200/40)

(20 x 40) >

800

(800/40)

>

20

Total variable expenses Contribution Margin Fixed expenses Selling Expenses Advertising Sales, salaries and commissions Utilities Depreciation of sales facilities Administrative Expenses Executive salaries Insurance Clerical Depreciation of office equipment Total fixed expenses Net operating income

110,000 15,000

2,750 375

700 950 350 800 2,500 400 1,000 300 7,000 8,000...