1. Variable (Direct) and Absorption (Full) Costing

Trap Trappy’s 2005 manufacturing costs for its new plant were as follows: Direct Materials $450,000, Other Variable Manufacturing Cost $100,000, and Depreciation of Factory building and manufacturing equipment $30,000, Other Fixed Manufacturing Overhead cost $15,000. Other Expenses $75,000. During 2005 Trap Trappy manufactured 25,000 units and 10,000 were on hand at year end. The Selling Price is $120.00. What amount should be considered product cost for 

(a) internal reporting purposes? 

(b) external reporting purposes? What is the value of ending inventory under both 

(c) absorption costing 

(d) direct costing?

2. Activity-Based Costing (ABC)

Teen Teeny, entire Telephone bill for the entire company was $400,000. Teen Teeny had the following departments (a) Computer (b) Plant (c) Sales & Marketing and (d) Administration. Twenty percent of the telephone bill was written off subsequently due to improper billing. The following information was generated from Teen Teeny cost sheet:-

Actual                      Minutes

Department             Talk

Computer                 15,000

Plant                         20.000

Sales & Marketing    10,000

Administration          35,000

In using Activity-Based Costing, what is the cost allocated to each department?

Answer rating: 100% (QA)

Answer to part A WN 1 Statement Showing total Cost Cost Per unit amount Amount Amount Direct Materia... View the full answer