1.

Calculate the conversion costs from the following information:

Fixed manufacturing overhead $ 2,600
Variable manufacturing overhead 1,600
Direct materials 3,100
Direct labor 2,100

A. $4,200
B. $5,200
C. $6,300
D. $6,800

$2,100 + $1,600 + $2,600 = $6,300

2. The costs of direct materials are classified as:

Conversion
Manufacturing cost
cost Prime cost
A Yes Yes Yes
B No No No
C Yes Yes No
D No Yes Yes

A. Choice A
B. Choice B
C. Choice C
D. Choice D

3. Grover Company has the following data for the production and sale of 1,400 units.
Sales price per unit $ 750 per unit

Fixed costs:

Marketing and
$ 550,000 per period
administrative

Manufacturing overhead $ 238,000 per period

Variable costs:

Marketing and
$ 50 per unit
administrative

Manufacturing overhead $ 80 per unit

Direct labor $ 100 per unit

Direct Materials $ 190 per unit

What is the conversion cost per unit?

A. $100
B. $180
 C. $350
D. $370
$100 + $80 + ($238,000/1,400) = $350
4. Grover Company has the following data for the production and sale of 1,500 units.
Sales price per unit $ 800 per unit

Fixed costs:

Marketing and
$ 560,000 per period
administrative

Manufacturing overhead $ 262,500 per period

Variable costs:

Marketing and
$ 55 per unit
administrative

Manufacturing overhead $ 85 per unit

Direct labor $ 105 per unit

Direct Materials $ 200 per unit

What is the prime cost per unit?

A. $105
B. $285
C. $305
D. $565

$200 + $105 = $305

5. The following cost data for the month of May were taken from the records of the Terrence
Manufacturing Company: (CIA adapted)
Depreciation on factory
$ 1,700
equipment

Depreciation on sales office 850

Advertising 7,700

Wages of production workers 28,000

Raw materials used 42,000

Sales salaries and commissions 10,700

Factory rent 2,700

Factory insurance 850

Materials handling 2,200

Administrative salaries 2,700

Based upon this information, the manufacturing cost incurred during the month was:

A. $75,250.
B. $77,450.
C. $78,300.
D. $79,400.

$1,700 + $28,000 + $42,000 + $2,700 + $850 + $2,200 = $77,450

6. The following cost data for the month of May were taken from the records of the Terrence
Manufacturing Company: (CIA adapted)
Depreciation on factory
$ 1,000
equipment

Depreciation on sales office 500

Advertising 7,000

Wages of production workers 28,000

Raw materials used 47,000

Sales salaries and commissions 10,000

Factory rent 2,000

Factory insurance 500

Materials handling 1,500

Administrative salaries 2,000

Based upon this information, the manufacturing cost incurred during the month was:

A. $78,500.
B. $80,000.
C. $80,500.
D. $83,000.

$1,000 + $28,000 + $47,000 + $2,000 + $500 + $1,500 = $80,000

7. Tulsa Company, (a merchandising company) has the following data pertaining to the year ended
December 31, 2022: (CPA adapted)
Purchases $ 490,000

Beginning inventory 178,000

Ending inventory 214,000

Freight-in 54,000

Freight-out 77,000

What is the cost of goods sold for the year?

A. $431,000
B. $508,000
 C. $531,000
D. $585,000

$178,000 + $490,000 + $54,000 − $214,000 = $508,000

8. Tulsa Company, (a merchandising company) has the following data pertaining to the year ended
December 31, 2022: (CPA adapted)
Purchases $ 450,000

Beginning inventory 170,000

Ending inventory 210,000

Freight-in 50,000

Freight-out 75,000

What is the cost of goods sold for the year?

A. $385,000
B. $460,000
C. $485,000
D. $536,000

$170,000 + $450,000 + $50,000 − $210,000 = $460,000

9. The Shoal Company's manufacturing costs for the third quarter of 2022 were as follows: (CPA
adapted)
Direct materials and direct labor $ 600,000

Other variable manufacturing costs 155,000

Depreciation of factory building and manufacturing

70,000
equipment

Other fixed manufacturing costs 12,000

What amount should be considered product costs for external reporting purposes?

A. $600,000
B. $755,000
C. $825,000
D. $837,000

$600,000 + $155,000 + $70,000 + $12,000 = $837,000

10. The Shoal Company's manufacturing costs for the third quarter of 2022 were as follows: (CPA
adapted)
Direct materials and direct labor $ 700,000

Other variable manufacturing costs 100,000

Depreciation of factory building and manufacturing

80,000
equipment

Other fixed manufacturing costs 18,000

What amount should be considered product costs for external reporting purposes?

A. $700,000
B. $800,000
C. $880,000
D. $898,000

$700,000 + $100,000 + $80,000 + $18,000 = $898,000

11. Given the following information for a retail company, what is the total cost of goods purchased for
the period?

Purchases discounts $ 3,000

Transportation-in 6,000

Ending inventory 30,000

Gross merchandise cost 306,000

Purchases returns 8,000

Beginning inventory 27,500

Sales discounts 10,000

A. $301,000
B. $298,500
C. $285,000
D. $306,000

All costs associated with the acquisition of the goods constitutes the cost of goods purchased
($306,000 + $6,000 − $3,000 − $8,000) = $301,000
12. Given the following information for a retail company, what is the total cost of goods purchased
for the period?
Purchases discounts $ 3,500
Transportation-in 6,700
Ending inventory 35,000
Gross merchandise cost 304,000
Purchases returns 8,400
Beginning inventory 27,000
Sales discounts 10,300

A. $298,800
B. $290,800
C. $282,100
D. $304,000

All costs associated with the acquisition of the goods constitute the cost of goods purchased
($304,000 + $6,700 − $3,500 − $8,400) = $298,800

13. A company had beginning inventories as follows: Direct Materials, $450; Work-in-Process, $650;
Finished Goods, $850. It had ending inventories as follows: Direct Materials, $550; Work-in-
Process, $750; Finished Goods, $950. Material Purchases, net were $2,200, Direct Labor
$2,300, and Manufacturing Overhead $2,400. What is the Cost of Goods Sold for the period?

A. $6,500.
B. $6,600.
C. $6,700.
D. $6,800.

$450 + $2,200 − $550 = $2,100 (Direct materials used in production)

$650 + $2,100 + $2,300 + $2,400 − $750 = $6,700 (COGM)
$850 + $6,700 − $950 = $6,600 (COGS)

14. A company had beginning inventories as follows: Direct Materials, $300; Work-in-Process, $500;
Finished Goods, $700. It had ending inventories as follows: Direct Materials, $400; Work-in-
Process, $600; Finished Goods, $800. Material Purchases net were $1,400, Direct Labor
$1,500, and Manufacturing Overhead $1,600. What is the Cost of Goods Sold for the period?

A. $4,100.
B. $4,200.
C. $4,300.
D. $4,400.

$300 + $1,400 − $400 = $1,300 (Direct materials used in production)

$500 + $1,300 + $1,500 + $1,600 − $600 = $4,300 (COGM)
$700 + $4,300 − $800 = $4,200 (COGS)

15. Compute the Cost of Goods Sold for 2022 using the following information:
Direct Materials, January 1, 2022 $ 45,500
Work-in-Process, December 31, 2022 70,000
Direct Labor 54,000
Finished Goods, December 31, 2022 116,000
Finished Goods, January 1, 2022 144,500
Manufacturing Overhead 75,000
Direct Materials, December 31, 2022 54,000
Work-in Process, January 1, 2022 98,000
Purchases of Direct Material 86,000

A. $265,000
B. $263,000
C. $234,500
D. $215,000

$45,500 + $86,000 − $54,000 = $77,500 (Direct materials used in production)

$98,000 + $77,500 + $54,000 + $75,000 − $70,000 = $234,500 (COGM)
$144,500 + $234,500 − $116,000 = $263,000 (COGS)

16. Compute the Cost of Goods Sold for 2022 using the following information:

Direct Materials, January 1, 2022 $ 40,000

Work-in-Process, December 31, 2022 69,000
Direct Labor 48,500
Finished Goods, December 31, 2022 105,000
Finished Goods, January 1, 2022 128,000
Manufacturing Overhead 72,500
Direct Materials, December 31, 2022 43,000
Work-in Process, January 1, 2022 87,000
Purchases of Direct Material 75,000

A. $244,000
B. $234,000
C. $211,000
D. $198,000

$40,000 + $75,000 − $43,000 = $72,000 (Direct materials used in production)

$87,000 + $72,000 + $48,500 + $72,500 − $69,000 = $211,000 (COGM)
$128,000 + $211,000 − $105,000 = $234,000 (COGS)
17. Grover Company has the following data for the production and sale of 1,100 units.
Sales price per unit $ 955 per unit

Fixed costs:

Marketing and administrative $ 154,000 per period

Manufacturing overhead $ 170,500 per period

Variable costs:

Marketing and administrative $ 60 per unit

Manufacturing overhead $ 90 per unit

Direct labor $ 110 per unit

Direct Materials $ 160 per unit

What is the full cost per unit of making and selling the product?

A. $420
B. $515
C. $575
D. $715

$160 + $110 + $90 + ($170,500/1,100) + $60 + ($154,000/1,100) = $715

18. Grover Company has the following data for the production and sale of 2,000 units.
Sales price per unit $ 800 per unit

Fixed costs:

Marketing and administrative $ 400,000 per period

Manufacturing overhead $ 200,000 per period

Variable costs:

Marketing and administrative $ 50 per unit

Manufacturing overhead $ 80 per unit

Direct labor $ 100 per unit

Direct Materials $ 200 per unit

What is the full cost per unit of making and selling the product?

A. $430
B. $480
C. $530
D. $730

$200 + $100 + $80 + ($200,000/2,000) + $50 + ($400,000/2,000) = $730

19. Grover Company has the following data for the production and sale of 2,000 units.
Sales price per unit $ 800 per unit

Fixed costs:

Marketing and administrative $ 400,000 per period

Manufacturing overhead $ 200,000 per period

Variable costs:

Marketing and administrative $ 50 per unit

Manufacturing overhead $ 80 per unit

Direct labor $ 100 per unit

Direct Materials $ 200 per unit

What is the contribution margin per unit?

A. $70
B. $320
C. $370
D. $430

$800 − $200 − $100 − $80 − $50 = $370

20. Vegas Company has the following unit costs:

Variable manufacturing overhead $ 35

Direct materials 30

Direct labor 29

Fixed manufacturing overhead 22

Variable marketing and administrative 6

Vegas produced and sold 14,500 units. If the product sells for $130, what is the contribution margin?

A. $116,000
B. $203,000
C. $435,000
D. $522,000
$130 − ($35 + $30 + $29 + $6) = $30; $30 × 14,500 = $435,000