AC505 Final Exam Review Answers

Chapter 2 COG Mfg & COGS – Traditional Costing – TCO A

East of the Border Garage incurred the following costs during January:

Raw materials $45,100 Direct labor 48,300 Manufacturing overhead 34,600 Selling expenses 29,800 Administrative expenses 36,700 Interest expense 8,500

During the month, 6,400 units of product were manufactured and 5,900 units of product were sold at $ 35 each. On January 1, East of the Border carried no inventories.

a. Cost of goods manufactured: Current period manufacturing costs - Raw materials $ 45,100 Direct labor 48,300 Manufacturing overhead 34,600 Total $128,000

Cost per unit = $128,000 / 6,400 = $20

b. Cost of goods sold = $20 * 5,900 = $118,000

c. The difference between cost of goods manufactured and cost of goods sold is in the finished goods inventory account on the balance sheet. In this case, since more units were produced (6,400) than sold (5,900), the finished goods account will increase by $10,000 ($20 per unit * 500 units).

Ch 5 High Low Method – TCO E

| |Week 1 Chapter 5 Exercise 6 Data | | | | |
| | | | | | | | |
|1.) | | |Units Shipped | |Costs | | |
| |High Activity Level | |8 | | 2,700 | | |
| |Low Activity Level | |2 | | 1,200 | |