Pederson company reported the following:

HOMEWORK SET CHAPTER 2

DUE 9/16/14 MIDNIGHT

The East Company manufactures several different products. Unit costs associated with Product ORD210 are as follows:

Direct materials $54

Direct manufacturing labor 8

Variable manufacturing overhead 11

Fixed manufacturing overhead 25

Sales commissions (2% of sales) 5

Administrative salaries 12

Total $115

1) What is the percentage of the total variable costs per unit associated with Product ORD105 with respect to total cost?

A) 72%

B) 68%

C) 75%

D) 70%

2) Ridez Manufacturing currently produces 1,000 bicycles per month. The following per unit data apply for sales to regular customers:

Direct materials $50

Direct manufacturing labor 8

Variable manufacturing overhead 12

Fixed manufacturing overhead 15

Total manufacturing costs $85

The plant has capacity for 3,000 bicycles and is considering expanding production to 2,000 bicycles. What is the per unit cost of producing 2,000 bicycles?

A) $78.50 per unit

B) $170 per unit

C) $72.50 per unit

D) $77.50 per unit

Answer the following questions using the information below:

The following information pertains to Razor's Corp:

Manufacturing costs $135,000

Units manufactured 15,000

Units sold 12,000 units sold for $15 per unit

Beginning inventory $3,500

3) What is the average manufacturing cost per unit?

A) $11.00

B) $9.00

C) $11.25

D) $11

4) Pederson Company reported the following:

Manufacturing costs $2,000,000

Units manufactured 50,000

Units sold 47,000 units sold for $75 per unit

Beginning inventory 0 units

What is the amount of gross profit margin?

A) $1,750,000

B) $3,525,000

C) $5,405,000

D) $1,645,000

5) For a manufacturing company, direct labor costs may be included in ________.

A) direct materials inventory only

B) merchandise inventory only

C) both work-in-process inventory and finished goods inventory

D) direct materials inventory, work-in-process inventory, and finished goods inventory accounts

6) Which of the following is a period cost?

A) sales promotion expenses

B) direct material cost

C) direct labor cost

D) indirect manufacturing costs like plant insurance

7) Costs that are initially recorded as assets and expensed when goods sold are called ________.

A) period costs

B) inventoriable costs

C) irrelevant costs

D) research and development costs

8) Maize Plastics manufactures and sells 50 bottles per day. Fixed costs are $30,000 and the variable costs for manufacturing 50 bottles are $10,000. Each bottle is sold for $1,000. How would the daily profit be affected if the daily volume of sales drop by 10%?

A) profits are reduced by $4,000

B) profits are reduced by $1,000

C) profits are reduced by $5,000

D) profits are reduced by $6,000

Zephyr Apparels is a clothing retailer. Unit costs associated with one of its products, Product DCT121, are as follows:

Direct materials $ 70

Direct manufacturing labor 20

Variable manufacturing overhead 15

Fixed manufacturing overhead 32

Sales commissions (2% of sales) 5

Administrative salaries 16

Total $158

9) What are the direct variable manufacturing costs per unit associated with Product DCT121?

A) $142

B) $90

C) $105

D) $110

Answer: C

10) ________ sector companies purchase materials and components and convert them into finished goods.

A) Merchandising

B) Service

C) Manufacturing

D) Professional