Question

Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month:

Direct materials				$	82,000
Direct labor				$	41,500
Variable manufacturing overhead	$	20,200
Fixed manufacturing overhead		31,900
Total manufacturing overhead				$	52,100
Variable selling expense	$	14,600
Fixed selling expense		23,200
Total selling expense				$	37,800
Variable administrative expense	$	5,300
Fixed administrative expense		27,600
Total administrative expense				$	32,900

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?

Answer 1

1

a. Total product cost =Direct materials + Direct labor + Total manufacturing overhead =$82000+$41500+$52100 =$175600

b.Total Period cost = Selling expense + Administrative expense =$37800+$32900 =$70700

2.

a. Total direct manufacturing cost = Direct materials + Direct labor =82000+41500 =$123500

b. Total indirect manufacturing cost =Variable manufacturing overhead + fixed manufacturing overhead =20200+31900 =$52100

3.

a. Total Manufacturing cost =Direct materials + Direct labor + Total manufacturing overhead =$82000+$41500+$52100 =$175600

b. Total non manufacturing cost = Selling expense + Administrative expense =$37800+$32900 =$70700

c. Total conversion cost = Direct labor + Total manufacturing overhead =$41500+$52100 =$93600

Total Prime cost =Direct materials + Direct labor =82000+41500 =$123500

4.

a. Total variable manufacturing cost =Direct materials + Direct labor + Variable manufacturing overhead =$82000+$41500+$20200 =$143700

b. Total fixed cost =Fixed manufacturing overhead+Fixed selling expense +Fixed administrative expense =$31900+$23200+$27600 =$82700

c. Variable cost per unit produced and sold:

Direct material	$82000
Direct labor	$41500
Variable manufacturing overhead	$20200
Variable selling expense	$14600
Variable administrative expense	$5300
Total variable cost(A)	$163600
No.of units produced and sold (B)	1000 units
Variable cost per unit produced and sold(A/B)	$163.60

5.

a. Calculation of incremental cost

Direct material	$82000
Direct labor	$41500
Variable manufacturing overhead	$20200
Total Incremental cost (A)	$143700
No. of units produced and sold (B)	1000 units
Incremental cost per unit produced (A/B)	$143.70