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QUESTION

Prepare a schedule of cost of goods manufactured in good form. The following costs relate to one month's activity in Nutcracker Company:

Prepare a schedule of cost of goods manufactured in good form.

The following costs relate to one month's activity in Nutcracker Company:

Indirect materials

$300

Rent on factory building

500

Maintenance of equipment

50

Direct material used

1,200

Utilities on factory

250

Direct labour

1,500

Selling expense

500

Administrative expense

300

Work-in-process inventory, beginning

600

Work-in-process inventory, ending

800

Finished goods inventory, beginning

500

Finished goods inventory, ending

250

Question 3

Suppose that you have been given a summer job as an intern at Electronic Waves, a company that manufactures portable two-way radio transceivers for radio enthusiasts. The privately owned company has approached a bank for a loan to help finance its tremendous growth. The bank requires financial statements before approving such a loan. You have been asked to help prepare the financial statements and were given the following list of costs.

Classify the following lists of costs as either product (inventoriable) costs or period (non-inventoriable) costs for purposes of preparing the financial statements for the bank.

Product 

Cost

(Inventoriable)

Period Cost

Depreciation on salespersons' cars.

Salaries of personnel who work in the finished goods warehouse.

Rent on equipment used in the factory.

Lubricants used for machine maintenance.

Soap and paper towels used by factory workers at the end of a shift.

Factory supervisors' salaries.

Heat, water, and power consumed in the factory.

Materials used for boxing company products for shipment overseas. (Units are not normally boxed.)

Advertising costs.

Workers' Compensation Insurance for factory employees.

Depreciation on chairs and tables in the factory lunchroom.

The cost of packaging the company's product.

The wages of the receptionist in the administrative offices.

Cost of leasing the corporate jet used by the company's executives.

The cost of renting rooms at a British Columbia resort for the annual sales conference.

Question 4

Last month Mont Tremblant Biking, a mountain sporting goods retailer, had total sales of $3,200,000, selling expenses of $110,000, and administrative expenses of $470,000. The company had beginning merchandise inventory of $140,000, purchased additional merchandise inventory for $2,550,000, and had ending merchandise inventory of $180,000.

Prepare an income statement for the company for the month.

Question 5

The Trump International Hotel & Tower is a five-star hotel located in downtown Toronto. The hotel's operations vice president would like to replace the hotel's legacy computer terminals at the registration desk with attractive state-of-the-art flat-panel displays. The new displays would take less space, consume less power than the old computer terminals, and provide additional security since they can be viewed only from a restrictive angle. The new computer displays would not require any new wiring. However, the hotel's chef believes the funds would be better spent on a new bulk freezer for the kitchen.

Classify each item as a differential cost, an opportunity cost, or a sunk cost in the decision to replace the old computer terminals with new flat-panel displays. If none of the categories apply for a particular item, select "None."

Item

Differential Cost

Opportunity Cost

Sunk Cost

None

Cost of the old computer terminals

Cost of existing registration desk wiring

Rent on the space occupied by the registration desk

Wages of registration desk personnel

Benefits from a new freezer

Costs of maintaining the old computer terminals

Cost of removing the old computer terminals

Cost of the new flat-panel displays

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