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

Question 1a : Total Product Cost

Direct Materials		$82,000
Direct Labor		$41,500
Variable manufacturing overhead	$20,200
Fixed manufacturing overhead	$31,900
Total manufacturing overhead		$52,100
Total product cost		$175,600

Question 1b : Total Period Cost

Variable selling expense	$14,600
Fixed selling expense	$23,200
Total Selling Expenses		$37,800
Variable administrative expense	$5,300
Fixed administrative expense	$27,600
Total administrative expense		$32,900
Total Period Cost		$70,700

Question 2a:

 

Total Direct Manufacturing Costs = Direct Materials + Direct Labor

= $ 82,000 + $ 41,500 = $ 123,500

 

Question 2b:

 

Total Indirect Manufacturing Costs = Variable Manufacturing Overhead + Fixed Manufacturing Overhead = $ 20,200 + $ 31,900 = $ 52,100

 

Question 3a:

 

Total Manufacturing Cost = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead

= 82000 + 41500 + 20200 + 31900

= $ 175,600

 

Question 3b:

 

Non-manufacturing Cost = Variable Selling Expense + Fixed Selling Expense + Variable Administrative Expense + Fixed Administrative Expense

= 14600 + 23200 + 5300 +27600

= $ 70,700

 

Question 3c:

 

Conversion Cost = Direct Labor + Total Manufacturing Overhead

= $ 41,500 + $ 52,100

= $ 93,600

 

Prime Cost = Direct Materials + Direct Labor

= $ 82,000 + $ 41,500

= $ 123,500

 

Question 4a:

 

Total Variable Manufacturing Cost = Direct Materials + Direct Labor + Variable Manufacturing Overhead

= $ 82000 + $ 41500 + $ 20200

= $ 143,700

 

Question 4b:

 

Total Fixed Cost for the company as a whole =

Fixed Manufacturing Overhead + Fixed Selling Expense + Fixed Administrative Expense

= 31900 + 23200 + 27600

= $ 82,700

 

Question 4c:

 

Variable Cost = Direct materials + Direct labor + Variable manufacturing overhead + Variable selling expense + Variable administrative expense

= 82000 + 41500 + 20200 + 14600 + 5300

= $ 163,600

 

Variable cost per unit= Total variable cost/Number of units produced and sold

= $163,600 / 1000= $163.6 per unit

 

Question 5a:

 

Incremental cost per unit = ( Direct Materials + Direct Labor + Variable Overhead) / 1000

=($ 82000 + 41500+ 20200) / 1000units

$143700 /1000 units

= $143.7

 

Incremental cost per unit produced = $ 143.7

1a: $175,600
1b: $70,700

2a: $123,500
2b: $52,100

3a: $175,600
3b: $70,700
3c: $123,500

4a: $143,700
4b: $82,700
4c: $163,600

5a: $143.70