Question

Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month:

Direct materials				$	74,000
Direct labor				$	37,500
Variable manufacturing overhead	$	17,000
Fixed manufacturing overhead		29,500
Total manufacturing overhead				$	46,500
Variable selling expense	$	13,000
Fixed selling expense		20,000
Total selling expense				$	33,000
Variable administrative expense	$	4,500
Fixed administrative expense		26,000
Total administrative expense				$	30,500

1. With respect to cost classifications for preparing financial statements:

a. What is the total product cost?

b. What is the total period cost?

2. With respect to cost classifications for assigning costs to cost objects:

a. What is total direct manufacturing cost?

b. What is the total indirect manufacturing cost?

3. With respect to cost classifications for manufacturers:

a. What is the total manufacturing cost?

b. What is the total nonmanufacturing cost?

c. What is the total conversion cost and prime cost?

4. With respect to cost classifications for predicting cost behavior:

a. What is the total variable manufacturing cost?

b. What is the total fixed cost for the company as a whole?

c. What is the variable cost per unit produced and sold?

5. With respect to cost classifications for decision making:

a. If Dozier had produced 1,001 units instead of 1,000 units, how much incremental manufacturing cost would it have incurred to make the additional unit?

Answer 1

Ques 1 a.
The total product cost is computed as follows:
Direct materials	$	74,000
Direct labor		37,500
Total manufacturing overhead		46,500
Total product cost	$	158,000
1b.
The total period cost is computed as follows:
Total selling expense	$	33,000
Total administrative expense		30,500
Total period cost	$	63,500

The total direct manufacturing cost is computed as follows:
Direct materials	74,000
Direct labor	37,500
Total direct manufacturing cost	111,500
2b.
The total indirect manufacturing cost is computed as follows:
Variable manufacturing overhead	17,000
Fixed manufacturing overhead	29,500
Total indirect manufacturing cost	46,500

3a.
The total manufacturing cost is computed as follows:
Direct materials	$	74,000
Direct labor		37,500
Total manufacturing overhead		46,500
Total manufacturing cost	$	158,000
3b.
The total nonmanufacturing cost is computed as follows:
Total selling expense	$	33,000
Total administrative expense		30,500
Total nonmanufacturing cost	$	63,500
3c.
The total conversion cost is computed as follows:
Direct labor	$	37,500
Total manufacturing overhead		46,500
Total conversion cost	$	84,000
The total prime cost is computed as follows:
Direct materials	$	74,000
Direct labor		37,500
Total prime cost	$	111,500

4a.
The total variable manufacturing cost is computed as follows:
Direct materials	$	74,000
Direct labor		37,500
Variable manufacturing overhead		17,000
Total variable manufacturing cost	$	128,500
4b.
The total amount of fixed cost for the company as a whole is computed as follows:
Fixed manufacturing overhead	$	29,500
Fixed selling expense		20,000
Fixed administrative expense		26,000
Total fixed cost	$	75,500
4c.
The variable cost per unit produced and sold is computed as follows:
Direct materials	$	74,000
Direct labor		37,500
Total variable manufacturing overhead		17,000
Variable selling expense		13,000
Variable administrative expense		4,500
Total variable cost (a)	$	146,000
Number of units produced and sold (b)		1,000
Variable cost per unit produced and sold (a) ÷ (b)	$	146

Ques 5

The incremental manufacturing cost is computed as follows:
Direct materials	$	74,000
Direct labor		37,500
Variable manufacturing overhead		17,000
Total incremental cost (a)	$	128,500
Number of units produced and sold (b)		1,000
Incremental cost per unit produced (a) ÷ (b)	$	129