1. Austin Co. manufactures a product called Aster in a three-process series. All materials are introduced at the beginning of the first process. Austin uses the first-in, first-out method of inventory costing. Unit and cost data for the first process (Department A) for the month of December follow:
   

   	Units	Completion	Cost
   Work in process inventory:
   December 1	12,000	60%	$140,400
   December 31	5,000	40%	?
   Started in December:	14,000
   Direct materials cost			106,400
   Conversion cost			70,310
   Completed in December	21,000		?

   Prepare Austin's Department A cost of production report for December.

   Round your cost per equivalent unit amounts to two decimal places. Round all other amounts to the nearest dollar. If an amount value is zero enter "0" as answer.

   Austin Company
   Cost of Production Report—Department A
   For the Month Ended December 31
   Unit Information
   Units charged to production:
   Inventory in process, December 1
   Received from materials storeroom
   Total units accounted for by Department A
   Units to be assigned cost:
   		Equivalent Units
   	Whole Units	Direct Materials	Conversion
   Inventory in process, December 1 (60% completed)
   Started and completed in December
   Transferred to Dept. B in December
   Inventory in process, December 31 (40% complete)
   Total units to be assigned costs
   Cost Information
   COSTS:
   		Direct Materials Costs	Conversion Costs
   Costs per equivalent unit:
   Total costs for December in Department A		$	$
   Total equivalent units
   Cost per equivalent unit		$	$
   Costs charged to production:
   	Direct Materials Costs	Conversion Costs	Total Costs
   Inventory in process, December 1			$
   Costs incurred in December
   Total costs accounted for by Department A			$
   Costs allocated to completed and partially completed units:
   Inventory in process, December 1, balance			$
   To complete inventory in process, December 1	$	$
   Started and completed in December
   Transferred to finished goods in December			$
   Inventory in process, December 31
   Total costs assigned by Department A			$

2-

Normal profits are

are part of the firm’s opportunity costs.

are the same as economic profits.

are part of the firm’s explicit costs.

All of the above answers are correct.

3-

Normal profits

are part of the firm’s opportunity costs.

are the same as economic profits.

are part of the firm’s explicit costs.

All of the above answers are correct.

4-

The marginal product of labor

equals the total product divided by quantity of labor.

equals the increase in cost when another worker is hired.

always decreases as more workers are hired.

equals the change in total product divided by the increase in the quantity of labor.

5-

Because the amount of labor a firm employs can be changed, the cost of labor is known as

minimum cost.

variable cost.

maximum cost.

fixed cost.

6-

As a typical firm increases its output, its marginal cost

is constant.

decreases at first and then increases.

increases at first and then decreases.

decreases.

7-

The vertical distance between average total cost curve and average variable cost curve is equal to

average fixed cost.

total fixed cost.

average variable cost.

average total cost.

8- As we observe the cost curves’ graph, we see that the

MC curve intersects the ATC curve at its maximum.

MC curve can not be U-shaped.

ATC curve always has a negative slope.

MC curve intersects the AVC curve and ATC curve at their minimums.

9-

Economies of scale occur when, as output increases, the

long-run average cost increases.

long-run average cost decreases.

short-run average total cost decreases.

long-run average cost stays constant.

10-

Diseconomies of scale is a result of

mismanagement.

difficulties of coordinating and controlling a large enterprise.

specialization of labor, capital, and management.

technological progress.

11-

One requirement for an industry to be perfectly competitive is that in the industry there are

few firms with very large market shares.

many firms with very large market shares.

many firms with very small market shares.

many firms selling different products.

12-

For the perfectly competitive broccoli producers in California, the INDUSTRY demand curve for broccoli is

a horizontal line.

downward sloping.

nonexistent.

upward sloping.

FIFO Perpetual Inventory

The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

2. Determine the total sales and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account.

3. Determine the gross profit from sales for the period.
$

4. Determine the ending inventory cost as of June 30.
$

5. Based upon the preceding data, would you expect the inventory using the last-in, first-out methodto be higher or lower?
Lower

FIFO Perpetual Inventory

The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

2. Determine the total sales and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account.

3. Determine the gross profit from sales for the period.
$

4. Determine the ending inventory cost on June 30.
$

5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
Lower

The beginning inventory was 320 units at a cost of $10 per unit. Goods available for sale during the year were 1,360 units at a total cost of $15,060. In May, 620 units were purchased at a total cost of $6,820. The only other purchase transaction occurred during October. Ending inventory was 580 units.

Required:

a. Calculate the number of units purchased in October and the cost per unit purchased in October.

b-1. Assume the periodic inventory system is used. Calculate cost of goods sold and ending inventory using FIFO method. (Enter all values as a positive value.)

b-2. Assume the periodic inventory system is used. Calculate cost of goods sold and ending inventory using LIFO method. (Enter all values as a positive value.)

Adom Limited manufactures one product for which the following cost information has been collected:

                                                                                    GH¢’000

Direct materials                                                           10

Direct labor                                                                 29

Direct expenses                                                           3

Factory expenses

• Variable                                                           7
• Fixed                                                               5

Non-manufacturing costs

• Variable                                                          2
• Fixed                                                               4

Profit is 33% of total cost

Calculate:

1. The total cost of a unit
2. The prime cost of a unit
3. The selling price of a unit
4. The variable cost of a unit
5. The inventory valuation figure

In the short run it is impossible for an expansion of output to increase

Multiple Choice

• average total cost.

• average fixed cost.

• marginal cost.

• average variable cost.

Cost of Quality Report

Meagher Solutions Inc. manufactures memory chips for personal computers. An activity analysis was conducted, and the following activity costs were identified with the manufacture and sale of memory chips:

a. Identify the cost of quality classification for each activity.

b. Prepare a cost of quality report. Assume that the sales for the period were $4,000,000. If required, round percents to one decimal place.

c. The category with the fewest number of quality activities is . Nearly fifty percent of the quality activity costs are . The highest single cost is warranty claims, which is a(n) . Disposing of scrap, emergency equipment maintenance, and scrap reporting are all .

2. Calculate Presidio’s contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for $620.(Round your Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $620. (Round your answers to the nearest whole dollar amount.)

You operate your own small building company and have decided to bid on a government contract to build a pedestrian walkway in a national park during the coming winter. The walkway is to be of standard government design and should involve no unexpected costs. Your present capacity utilization rate is moderate and allows sufficient scope to understand this contract, if you win it. You calculate your incremental costs to be $268,000 and your fully allocated costs to be $440,000. Your usual practice is to add between 60% and 80% to your incremental costs, depending on capacity utilization rate and other factors. You expect three other firms to also bid on this contract, and you have assembled the following competitor intelligence about those companies.

Show all of your calculations and processes. Describe your answers in three- to five-complete sentences.

C.) Defend your answers with discussion, making any assumptions you feel are reasonable and/or are supported by the information provided.