Problem 1-24 Different Cost Classifications for Different Purposes [LO1-1, LO1-2
ID: 2334966 • Letter: P
Question
Problem 1-24 Different Cost Classifications for Different Purposes [LO1-1, LO1-2, LO1-3, LO1-4, LO1-5]
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month:
Required:
1. With respect to cost classifications for preparing financial statements:
a. What is the total product cost?
b. What is the total period cost?
2. With respect to cost classifications for assigning costs to cost objects:
a. What is total direct manufacturing cost?
b. What is the total indirect manufacturing cost?
3. With respect to cost classifications for manufacturers:
a. What is the total manufacturing cost?
b. What is the total nonmanufacturing cost?
c. What is the total conversion cost and prime cost?
4. With respect to cost classifications for predicting cost behavior:
a. What is the total variable manufacturing cost?
b. What is the total fixed cost for the company as a whole?
c. What is the variable cost per unit produced and sold?
5. With respect to cost classifications for decision making:
a. If Dozier had produced 1,001 units instead of 1,000 units, how much incremental manufacturing cost would it have incurred to make the additional unit?
Direct materials $ 87,000 Direct labor $ 44,000 Variable manufacturing overhead $ 22,200 Fixed manufacturing overhead 33,400 Total manufacturing overhead $ 55,600 Variable selling expense $ 15,600 Fixed selling expense 25,200 Total selling expense $ 40,800 Variable administrative expense $ 5,800 Fixed administrative expense 28,600 Total administrative expense $ 34,400Explanation / Answer
Dozier Company
1a. determination of total product cost:
Total product cost –
Direct material$87,000
Direct labor$44,000
Total manufacturing overhead$55,600
Total product cost$186,600
1b. Determination of total period cost –
Total period cost –
Total selling expense$40,800
Total administrative expense$34,400
Total period cost$75,200
2a. Determination of Total direct manufacturing cost:
Total direct manufacturing costs –
Direct materials $87,000
Direct labor$44,000
Total manufacturing cost$131,000
2b. Determination of total indirect manufacturing cost:
Variable manufacturing overhead$22,200
Fixed manufacturing overhead$33,400
Total indirect manufacturing overhead$55,600
3a. determination of total manufacturing cost:
Direct material$87,000
Direct labor$44,000
Total Manufacturing overhead$55,600
Total manufacturing cost$186,600
3b. total non-manufacturing cost:
Total selling expense$40,800
Total administrative expense $34,400
Total non-manufacturing cost $75,200
3c. Total conversion cost and prime cost:
Total conversion cost –
Direct labor$44,000
Total manufacturing overhead$55,600
Total conversion cost$99,600
Prime cost –
Direct materials$87,000
Direct labor$44,000
Prime cost$131,000
4a. Total variable manufacturing cost:
Direct materials$87,000
Direct labor$44,000
Variable manufacturing OH$22,200
Total variable manufacturing cost = $153,200
4b. Total fixed cost for the company as a whole:
Fixed manufacturing overhead$33,400
Fixed selling expense$25,200
Fixed administrative expense$28,600
Total fixed cost for the company as a whole = $87,200
4c. determination of variable cost per unit produced and sold:
Direct materials $87,000
Direct labor$44,000
Variable MOH$22,200
Variable selling expense$15,600
Variable Admin expense$5,800
Total variable cost to produce and sell 1,000 units = $174,600
Total variable cost per unit produced and sold = 174,600/1,000 = $174.60
5a. Determination of the incremental manufacturing cost needed to make the additional unit:
Direct materials $87,000
Direct labor$44,000
Variable MOH$22,200
Total $153,200
Number of units1,000
Incremental cost per unit = $153,200/1,000 = $153.20
Hence, the company would incur an incremental cost $153.20 per unit to produce the additional unit.
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