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Concepts 5661fabb558e8

The document discusses various cost concepts, classifications, and calculations using data from multiple companies. It includes: 1) Calculating variable and fixed maintenance costs for Lamesa Corp using machine hours data. 2) Using least squares regression to calculate variable glazing costs and fixed costs for product units at La Union Corp. 3) Classifying costs as product and period costs for Abtina Manufacturing. 4) Calculating prime cost, conversion cost, total manufacturing cost, cost of goods sold, and overhead variance for Maritz Co. using production and inventory data.

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Allen Carl
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395 views

Concepts 5661fabb558e8

The document discusses various cost concepts, classifications, and calculations using data from multiple companies. It includes: 1) Calculating variable and fixed maintenance costs for Lamesa Corp using machine hours data. 2) Using least squares regression to calculate variable glazing costs and fixed costs for product units at La Union Corp. 3) Classifying costs as product and period costs for Abtina Manufacturing. 4) Calculating prime cost, conversion cost, total manufacturing cost, cost of goods sold, and overhead variance for Maritz Co. using production and inventory data.

Uploaded by

Allen Carl
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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TOPIC : Costs Concepts, Classification and segregation

1. The Lamesa Corporation builds tabletop replicas of some of the most famous resorts in the
Philippines. The company is highly automated, and thus maintenance cost is a significant
organizational expense. The company’s owner has decided to use machine hours as a basis of
predicting maintenance costs and has gathered the following data from the prior 8 weeks of
operations:

Numbe Maintenance Numbe Maintenance


r of MH Costs r of MH Costs

3,000 9,800 9,000 24,800

4,500 12,900 3,500 10,400

8,000 18,100 5,500 13,000

6,000 13,500 7,000 16,000

Required:
a. Variable cost rate
b. Total fixed costs
c. If the company expects to use 8,200 machines hours next month, how much us the estimated
maintenance costs.

2. One of the products of La Union Corporation goes through a glazing process. For the last six
quarters, the cost of the glazing process was observed in relation with the number of units
produced as tabulated below:

Units
Quarter Units Total Total
Quarters Produce
s Produced Cost Cost
d
8 27,0 40 19,0
01 04
00 00 0 00
5 20,0 60 24,0
02 00 00 05 0 00
1,0 31,0 90 29,0
03 00 00 06 0 00

Required:
a. Using the least-squares method, calculate the variable cost rate and the total fixed costs
elements of the glazing process
b. Express the cost data in “a” above in the form Y=a + bx
c. Assume the company processes 1,120 units in the next quarter, how much is the expected
glazing cost?

3. Following are costs incurred by Abtina Manufacturing Corporation during the previous month:
Direct Materials 5,000
Indirect Materials 2,000
Direct Labor 6,000
Indirect Labor 1,000
Factory utilities 4,000
Advertising costs 8,000
Sales Commissions 12,000
Depreciation on administration building 3,000
Salaries of administrative personnel 20,000
Depreciation - delivery equipment 2,000
Overtime pay - factory workers 1,500
Rework cost on defective products discovered 2,500
quality inspection
Required:
a. Total product costs
b. Total period costs

4. Data about Maritz Company’s production and inventories for the month of June are as follows:

Purchases – direct materials 143,440


Freight-in 5,000
Purchase return and allowances 2,440
Direct labor 175,000
Actual factory overhead 120,000
Inventories: June 1 June 30
Finished goods 68,000 56,000
Work-in-process 110,000 135,000
Direct Materials 52,000 444,000

Maritz Company applies factory overhead to production at 80% of direct labor cost. Over or
underapplied overhead is closed to cost of goods sold at year end. The company’s accounting
period is on the calendar year basis.

Required:
a. Prime cost
b. Conversion cost
c. Total Manufacturing cost
d. Cost of goods sold
e. Overhead factory over/under applies

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