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1. 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 prime cost per unit?

a.) $100

b.) $280

c.) $300

d.) $480

2.Prime cost consists of direct materials combined with:

a.) direct labor.

b.) manufacturing overhead.

c.) indirect materials.

d.) cost of goods manufactured.

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

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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

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4.Foxburg Company has the following information:

	Work-in-Process				Finished Goods				Materials
Beginning inventory	$	300			$	400			$	500
Ending inventory	$	700			$	900			$	1,500
Purchases of materials (net)	$	7,700
Cost of Goods Sold	$	15,600
Manufacturing overhead	$	4,300

What was the cost of goods available for sale for the period?

a.) $16,800

b.) $16,500

c.) $16,100

d.) $15,100

5.During the year, a manufacturing company had the following operating results:

Beginning work-in-process inventory	$	45,000
Beginning finished goods inventory	$	190,000
Direct materials used in production	$	308,000
Direct labor	$	475,000
Manufacturing overhead incurred	$	250,000
Ending work-in-process inventory	$	67,000
Ending finished goods inventory	$	89,000

What is the cost of goods manufactured for the year?

a.) $1,011,000

b.) $1,134,000

c.) $1,033,000

d.) $1,112,000

6.The estimated unit costs for a company to produce and sell a product at a level of 12,000 units per month are as follows:

Cost Item	Estimated Unit Cost
Direct material	$	32
Direct labor		20
Variable manufacturing overhead		15
Fixed manufacturing overhead		6
Variable selling expenses		3
Fixed selling expenses		4

What are the estimated prime costs per unit?

a.) $73

b.) $32

c.) $67

d.) $52

7.Grover Company has the following data for the production and sale of 2,000 units.

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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

8.Mountainburg Industries has developed two new products but has only enough plant capacity to introduce one product during the current year. The following data will assist management in deciding which product should be selected.

Mountainburg's fixed overhead includes rent and utilities, equipment depreciation, and supervisory salaries. Selling and administrative expenses are not allocated to individual products.

	Product L				Product W
Direct materials	$	44			$	36
Machining labor ($12/hour)		18				15
Assembly labor ($10/hour)		30				10
Variable overhead ($8/hour)		36				18
Fixed overhead (4/hour)		18				9
Total Manufacturing Cost	$	146			$	88
Estimated selling price per unit	$	170			$	100
Actual research and development costs	$	240,000			$	175,000
Estimated advertising costs	$	500,000			$	350,000

The difference between the $100 estimated selling price for Mountainburg's Product W and its total cost of $88 represents

a.) Contribution margin per unit.

b.) Gross margin per unit.

c.) Variable cost per unit.

d.) Operating profit per unit.

9.Ramos Company has the following unit costs:

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Variable manufacturing overhead	$	13
Direct materials		12
Direct labor		17
Fixed manufacturing overhead		10
Fixed marketing and administrative		8

What cost per unit would be used for product costing under variable costing?

a.) $29

b.) $42

c.) $52

d.) $60

10.Vegas Company has the following unit costs:

Variable manufacturing overhead	$	25
Direct materials		20
Direct labor		19
Fixed manufacturing overhead		12
Variable marketing and administrative		7

Vegas produced and sold 10,000 units. If the product sells for $100, what is the contribution margin?

a.) $170,000

b.) $240,000

c.) $290,000

d.) $360,000

11.Vegas Company has the following unit costs:

Variable manufacturing overhead	$	25
Direct materials		20
Direct labor		19
Fixed manufacturing overhead		12
Variable marketing and administrative		7

Vegas produced and sold 10,000 units. If the product sells for $100, what is the operating profit using a contribution margin income statement?

a.) $170,000

b.) $240,000

c.) $290,000

d.) $360,000

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