# Cost Calculations – Managerial Accounting

### Cost Calculations – Managerial Accounting

Problem 1 Page 40 a- Cost of goods manufactured = Direct cost + Indirect cost = [Direct Cost of Material + Direct Cost of Labor] + [Indirect Cost of Material + Indirect Cost of Labor + Utilities Overhead] = Total Cost of Material + Total Cost of Labor + Utilities Overhead = 120,000 + 90,000 + 40,000 = \$ 250,000 b- Total Cost of Operation = Cost of goods manufactured + Selling, General admin. and expenses. = 250,000 + 60,000 = \$ 310,000 c- Prime Cost =Direct Material Cost + Direct Labor Cost 80,000 + 65,000 = \$ 145,000 d- Conversion Cost = Direct Labor + Factory Overhead = Direct labor + [Indirect Material + Indirect Labor + Utilities Overhead] = 65,000 + 40,000 +25,000 + 40,000 = \$ 170,000 e- Product Cost = Cost of goods manufactured = \$ 250,000 f- Period Cost = Selling, general admin. and expenses = \$ 60,000 g- Unit Cost = Total Cost of goods manufactured/Number of unit product = \$ 250,000/10,000 = \$ 25 per unit Problem 2 Page 40 a- Cost of goods manufactured Total Cost of goods put into production + [Difference between Beginning & Ending work-in-process] = [Total Direct Cost + Factory Overhead Cost] + [25,000-10,000] = [Direct Material Cost + Direct Labor Cost + Factory Overhead Cost] + 15,000 = [95,000+110,000+70,000]+15,000 = \$ 290,000 b- Cost of goods sold = Cost of goods manufactured + [Difference between Beginning & Ending finished goods inventory] = 290,000 + [(30,000)] = \$ 260,000 c- Net Income or Loss = Sales – Cost of goods manufactured – Selling , general admin. and expenses = 300,000 – 260,000 – 75,000 = (\$ 35,000) ; Net Loss

Exercise # 1 Page 43 Direct Material Cost = \$ 8,000 Indirect Material Cost = \$ 2,000 Direct Labor Cost = \$ 3,500 Indirect Labor Cost = \$ 1,500 Factory Overhead = \$ 5,000 Selling Expenses = \$ 7,500 General admin. Expenses = \$ 8,500 a- Cost of goods manufactured = Total Direct Cost + Total Factory Overhead = Total Direct Cost + [Total Indirect Cost + Factory Overhead for heat, light and power] = 8,000 + 3,500 + 2,000 + 1,500 + 5,000 = \$ 20,000 b- Total Cost of Operation = Cost of goods manufactured + Selling, general and admin. expenses = 20,000 + 7,500 + 8,500 = \$ 36,000

Exercise # 2 Page 43 Direct Material Cost = \$ 25,000 Indirect Material Cost = \$ 5,000 Direct Labor Cost = \$ 30,000 Indirect Labor Cost = \$ 4,500 Overhead [excluding indirect material & labor Costs] = \$ 15,000 a- Prime Cost = Direct Cost = Direct Material Cost + Direct Labor Cost = 25,000 + 30,000 = \$ 55,000 b- Conversion Cost = Direct Labor Cost + Total Overhead Cost = Direct Labor Cost + Indirect Material Cost + indirect Labor Cost + Overhead Cost [excluding indirect material & labor Costs] = 30,000 + 5,000 + 4,500 + 15,000 = \$ 54,500 c- Product Cost = Cost of goods manufactured Total Direct Cost + Total Indirect Cost + Overhead Cost[excluding indirect material & labor Costs] = 55,000 + 9,500 + 15,000 = \$ 79,500 Exercise # 5 Page 44 75,000 unit/year Beginning work –in- process = 0 Ending work –in- process = 0 Total Cost of goods manufactured = \$ 300,000 Number of sold units = 59,000 Number of non sold units = 14,000 Number of loss = 2,000 Beginning finished goods inventory = 0 a- Expenses was for the year; Cost of each unit = \$ 300,000/75,000= \$ 4 per unit Expenses (Not sold units) = 14,000 * 4 = \$ 56,000 b- Loss was incurred for the year; = 2,000 * 4 = \$ 8,000 – Assets to be recorded as finished goods inventory was for the year; = 59,000 * 4 = \$ 236,000 Problem # 2 Page 47 Beginning work-in-process \$ 5,000 Ending work-in-process \$ 6,200 Direct material cost \$ 8,900 Direct Labor cost \$ 10,000 Factory overhead \$ 15,000 Beginning finished goods inventory \$ 12,000 Ending finished goods inventory \$ 22,000 Sales \$ 37,500 Selling and general expenses \$ 17,000 a- Cost of goods manufactured = Cost of production + [Difference between Beginning & Ending work-in-process] = [Direct Material Cost + Direct Labor Cost + Factory Overhead Cost]+ [(1,200)] = 8,900 + 10,000 + 15,000 + [(1,200)] \$ 22,700 b- Cost of goods sold = Cost of goods manufactured + [Difference between Beginning & Ending finished goods inventory] = 22,700 + 10,000 = \$ 32,700 Problem # 4 Page 48 Sales \$ 945,000 Beginning work-in-process \$ 75,000 Ending work-in-process \$ 60,000 Beginning finished goods inventory \$ 35,000 Ending finished goods inventory \$ 54,000 Direct material cost \$ 176,000 Direct Labor cost \$ 250,000 Factory overhead \$ 237,500 Selling Expenses \$ 55,000 General and admin. expenses \$ 117,000 a- Cost of goods manufactured Cost of production + [Difference between Beginning & Ending work-in-process] = [Direct Material Cost + Direct Labor Cost + Factory Overhead Cost]+ [15,000] = 176,000 + 250,000 + 237,500 + [15,000] = \$ 678,500 b- Cost of goods sold = Cost of goods manufactured + [Difference between Beginning & Ending finished goods inventory] = 678,500 + [(19,000)] = \$ 659,500 c- Net Income or Loss = Sales – Cost of goods sold – Selling expenses – General and admin. expenses = 945,000 – 659,500 – 55,000 – 117,000 = \$ 113,500 Net Income