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				$	72,000
Direct labor				$	36,500
Variable manufacturing overhead	$	16,200
Fixed manufacturing overhead		28,900
Total manufacturing overhead				$	45,100
Variable selling expense	$	12,600
Fixed selling expense		19,200
Total selling expense				$	31,800
Variable administrative expense	$	4,300
Fixed administrative expense		25,600
Total administrative expense				$	29,900

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

Answer to Requirement 1:

Part a.
Total Product Cost = Direct Materials + Direct Labor + Total Manufacturing Overhead
Total Product Cost = $72,000 + $36,500 + $45,100
Total Product Cost = $153,600

Part b.
Total Period Cost = Total Selling Expenses + Total Administrative Expenses
Total Period Cost = $31,800 + $29,900
Total Period Cost = $61,700

Answer to Requirement 2:

Part a.
Total Direct Manufacturing Cost = Direct Material + Direct Labor
Total Direct Manufacturing Cost = $72,000 + $36,500
Total Direct Manufacturing Cost = $108,500

Part b.
Total Indirect Manufacturing Cost = Variable Manufacturing Overhead + Fixed Manufacturing Overhead
Total Indirect Manufacturing Cost = $16,200 + $28,900
Total Indirect Manufacturing Cost = $45,100

Answer to Requirement 3:

Part a.
Total Manufacturing Cost = Direct Materials + Direct Labor + Total Manufacturing Overhead
Total Manufacturing Cost = $72,000 + $36,500 + $45,100
Total Manufacturing Cost = $153,600

Part b.
Total Non-Manufacturing Cost = Total Selling Expenses + Total Administrative Expenses
Total Non-Manufacturing Cost = $31,800 + $29,900
Total Non-Manufacturing Cost = $61,700

Part c.
Total Conversion Cost = Direct Labor + Manufacturing Overhead
Total Conversion Cost = $36,500 + $45,100
Total Conversion Cost = $81,600

Total Prime Cost = Direct Materials + Direct Labor
Total Prime Cost = $72,000 + $36,500
Total Prime Cost = $108,500

Answer to Requirement 4:

Part a.
Total Variable Manufacturing Cost = Direct Materials + Direct Labor + Variable Manufacturing Overhead
Total Variable Manufacturing Cost = $72,000 + $36,500 + $16,200
Total Variable Manufacturing Cost = $124,700

Part b.
Total Fixed Cost = Fixed Manufacturing Overhead + Fixed Selling Expense + Fixed Asministrative Expense
Total Fixed Cost = $28,900 + $19,200 + $25,600
Total Fixed Cost = $73,700

Part c.
Variable Cost per Unit = Total Variable Cost / No. of Units produced
Total Variable Cost = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Variable Selling Expenses + Variable Administrative Expenses
Total Variable Cost = $72,000 + $36,500 + $16,200 + $12,600 + $4,300
Total Variable Cost = $141,600

Variable Cost per Unit = 141,600 / 1,000
Variable Cost per Unit = $141.60