COST ACCOUNTING
NOTE: Be sure to show all your detailed calculations. This has the
possibility of partial credit for the exercises. There isn’t any partial
credit for the questions.

I. Questions

1. What are the three types of management decisions?
2. Which type of management decision involves the cost volume profit
analysis?

3. What type(s) of cost are included under conversion cost and prime cost?
4. Provide two examples of committed fixed cost and two examples of
discretionary fixed cost.

5. Define segment reporting and provide two examples of segments.

II. Exercises
1. Leslie Manufacturing reported the following:
Revenue
Beginning inventory of direct materials,
January 1, 2015
Purchases of direct materials
Ending inventory of direct materials, December
31, 2015
Direct manufacturing labor
Indirect manufacturing costs (factory overhead)
Beginning work-in-process January 1, 2015
Ending work-in-process December 31, 2015
Beginning inventory of finished goods, January
1, 2015
Ending inventory of finished goods, December
31, 2015
Operating costs

$450,000
20,000
156,000
18,000
21,000
42,000
38,000
62,000
40,000
45,000
150,000

Required:
1) What is Leslie’s cost of goods cost of goods manufactured?
2) What is Leslie’s cost of goods sold?
3) What is Leslie’s gross profit (or gross margin)?
2. The following information is provided for Samsonite Manufacturing Company
for 2015:

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Ending finished goods, 12/31/15
Raw material purchases during 2015
Accounts payable 1/31/15
Beginning raw materials inventory 1/1/15
Cost of goods manufactured
Cost of goods sold
Ending raw materials inventory 1/31/15

$5,500,000
$ 650,000
$1,810,000
$ 725,000
$3,250,000
$2,750,000
500,000

Required:
Determine the beginning finished good at 1/1/15?

3. The Holiday Card Company, a producer of specialty cards, has asked you to
complete their breakeven point (number of cards) based upon the following
information:
Income tax rate
30%
Selling price per unit
$6.60
Variable cost per unit
$5.28
Total fixed costs
$46,200.00
Required:
How many cards must be sold to earn an after-tax net income of $18,480?
4. Given the following information determine the unit variable cost:

Unit selling price
$200
Fixed cost
$100,000
Operating income
$40,000
Number of units required 1,000

5. A company has annual fixed cost of $20,000 which is not affected by
different volumes of units sold. Variable cost per unit is $10. The company
estimates that its product demand under different level of demand amounts in
units is as follows at various unit selling prices:
Choice
1
2
3
4

Demand in units
18,000
15,000
11,000
8,000

Unit Selling Price
$11
$12
$13
$14

Required: What price should be set for the product?
6. Consider the following information:
Units made
Units sold
Variable manufacturing costs per unit
Variable selling costs per unit
Fixed manufacturing costs per unit

1,200
950
$ 45
$ 30
$ 25

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Fixed selling costs
Beginning inventory (in units)
Ending inventory (in units)
Unit selling price

$ 25,000
0
400
$200

Prepare a variable costing and absorption costing income statement.

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