Disco Dance Electronics Corporation manufactures a portable music player designed for middle age customers. The following list represents some of the different types of costs incurred in the manufacture of these music players:

The plant manager\'s salary.

The cost of heating the plant.

The cost of heating executive offices.

The cost of printed circuit boards used in the music plyers.

Depreciation on office equipment used in the executive offices.

Depreciation on production equipment used in the plant.

Wages of janitorial personnel who clean the plant.

The cost of insurance on the plant building.

The cost of electricity to light the plant.

The cost of electricity to power plant equipment.

The cost of maintaining and repairing equipment in the plant.

The cost of printing promotional materials for trade shows.

The cost of solder used in assembling the music players.

The cost of telephone service for the executive offices.

Required:

Classify each of the items above as product inventoriable cost or period noninventoriable costs for the purpose of preparing external financial statements.

Question Total: marks

Mr Gadget has developed a new device that is so exciting he is considering quitting his job to produce and market it on a largescale basis. Mr Gadget will rent a garage for $ per month for production purposes. Utilities will cost $ per month. Mr Gadget has already taken an industrial design course at the local community college to help prepare for this venture. The course cost $ Mr Gadget will rent production equipment at a monthly cost of $ He estimates the material cost will be $ per unit, and the labour cost will be $ per unit. He will hire workers and spend his time promoting the product. To do this, he will quit his job, which pays $ per month. Advertising and promotion will cost $ per month.

Required:

Complete the chart below by placing an X under each heading that helps to identify the cost involved. You can place an X under more than one heading for a single cost: for example, a cost may be a sunk cost, an overhead cost, and a product cost; you would place an X under each of these headings opposite the cost.

Between the alternatives of going into business to make the device or not going into business to make the device and continue with his job. See column heading \"Differential Cost\".

Opportunity Cost Sunk Cost Variable Cost Fixed Cost Mfg Overhead Product Cost Selling Cost Differential Cost

Garage rent

Utilities

Cost of the industrial design course

Equipment rented

Material cost

Labour cost

Present salary

Advertising

Question Total: marks

Lake Company recorded the following data for the month of January :

Inventories January January

Direct Material $ $

Work in Process

Finished Goods

Additional Data:

Net Sales Revenue $

Direct Labour Costs

Indirect Labour Costs

Sales Commissions

Administrative Expenses

Direct Materials Purchased during January

Depreciation, factory

Factory Maintenance and Supplies

Utilities, factory, office

General Office Salaries

Required:

Compute the amount of direct materials used in January.

List and total the Manufacturing Overhead costs for the month of January.

Compute the Cost of Goods Manufactured.

Hint: It may be helpful to prepare a Cost of Goods Manufactured statement in rough form but it is not required. You may use short forms in your answers for DM DL etc.

Question Total: marks

The accounts for a manufacturing company for an accounting period are listed below.

Sales $

Cost of goods sold

Cost of goods manufactured

Purchases of direct materials $

Direct labour $

Finished goods inventory, beginning $

Work in process, beginning $

Work in process, ending $

Gross margin $

Finished goods inventory, ending

Accounts payable, beginning $

Accounts payable, ending $

Direct materials inventory, beginning $

Direct materials inventory, ending $

Direct materials used

Indirect labour $

Indirect materials used $

Utilities expense, factory $

Depreciation on factory equipment $

Required:

Find the unknown amounts indicated by question marks.