Acct 525 Quiz 1 Solutions Gordon Heslop

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The following costs were incurred in September: Direct materials $42,700 Direct labor $29,400 Manufacturing overhead $27,300 Selling expenses $23,600 Administrative expenses $33,700 Conversion costs during the month totaled: → $56,700 $70,000 $72,100 $156,700 Conversion cost = Direct labor + Manufacturing overhead = $29,400 + $27,300 In September direct labor was 25% of conversion cost. If the manufacturing overhead for the month was $108,750 and the direct materials cost was $25,800, the direct labor cost was: rev: 06_06_2013_QC_31398, 09_24_2013_QC_36205 → $36,250 $5,583 $91,250 $22,250 Givens: Direct labor = 0.25 × Conversion cost Manufacturing overhead = $108,750 Conversion cost = Direct labor + Manufacturing overhead Conversion cost = Direct labor + $108,750 Conversion cost = 0.25 × Conversion cost + $108,750 0.75 × Conversion cost = $108,750 Conversion cost = $108,750 ÷ 0.75 Conversion cost = $145,000 Direct labor = 0.25 × Conversion cost = 0.25 × $145,000 = $36,250 A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $5,040 and is paid at the beginning of the first year. Seventy percent of the premium applies to manufacturing operations and 30% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage? Product Period → $1,176 $504 $3,528 $1,512 $5,040 $0 $2,352 $1,008 Annual insurance expense = $5,040 ÷ 3 = $1,680 Portion applicable to product cost = 0.70 × $1,680 = $1,176 Portion applicable to period cost = 0.30 × $1,680 = $504 Gambarini Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly

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