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 $84,000
Direct labor $42,500
Variable manufacturing overhead $21,000
Fixed manufacturing overhead 32,500
Total manufacturing overhead $53,500
Variable selling expense $15,000
Fixed selling expense 24,000
Total selling expense $39,000
Variable administrative expense $5,500
Fixed administrative expense 28,000
Total administrative expense $33,500

Required:

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:
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

Answer:

Required 1

Part a

Total Product cost = Variable manufacturing costs + Fixed manufacturing costs

where,

Variable manufacturing costs = ($84,000 + $42,500 + $21,000) ÷ 1,000 units = $147.50

Fixed manufacturing costs = $32,500 ÷ 1,000 units = $32.50

therefore,

Total Product cost = $147.50 + $32.50 = $180.00

Part b

Total period cost = variable non- manufacturing costs + fixed non-manufacturing costs

where,

variable non- manufacturing costs = $15,000 + $5,500 = $20,500

fixed non-manufacturing costs = $24,000 + $28,000 = $52,000

therefore,

Total period cost = $20,500 + $52,000 = $72,500

Required 2

Part a

total direct manufacturing cost = Direct Materials + Direct Labor + Direct (Variable) Manufacturing Overheads

therefore,

total direct manufacturing cost = $84,000 + $42,500 + $21,000 = $147,500

Part b

total indirect manufacturing cost = fixed manufacturing costs

therefore

total indirect manufacturing cost = $32,500

Required 3

Part a

total manufacturing cost = variable manufacturing cost + fixed manufacturing costs

therefore,

total manufacturing cost = $84,000 + $42,500 + $21,000 + $32,500 = $180,000

Part b

total non-manufacturing cost = variable non-manufacturing cost + fixed non-manufacturing cost

therefore,

total non-manufacturing cost = $20,500 + $52,000 = $72,500

Part c

total conversion cost = direct labor cost + manufacturing overheads

therefore,

total conversion cost = $42,500 + $21,000 + $32,500 = $96,000

prime cost = direct material + direct labor

therefore,

prime cost = $84,000 + $42,500 = $126,500

Required 4

Part a

total variable manufacturing cost = direct materials + direct labor + variable manufacturing costs

therefore,

total variable manufacturing cost = $84,000 + $42,500 + $21,000 = $147,500

Part b

total fixed cost = fixed manufacturing costs + fixed non-manufacturing costs

therefore,

total fixed cost = $32,500 + $52,000 = $84,500

Part c

variable cost per unit produced and sold = variable manufacturing cost + variable non-manufacturing

therefore,

variable cost per unit produced and sold = $147.50 + ($20,500 ÷ 1,000) = $168.00

Required 5

incremental manufacturing costs =  variable manufacturing costs

therefore,

incremental manufacturing cost = ($84,000 + $42,500 + $21,000) ÷ 1,000 units = $147.50