Which of the following would be classified as a prime cost

Q: What are the two prime costs?

Prime costs comprise a companys direct material and direct labor costs. Businesses calculate prime costs when analyzing manufacturing expenses, efficiency, and profitability. Accountants break down product costs into three categories: direct material, direct labor, and manufacturing overhead.

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What are prime costs quizlet?
What are the two prime costs?
What are the three components of prime cost?

QuestionAnswer The corporate controller's salary would be considered a(n): Administrative cost The cost of fire insurance for a manufacturing plant is generally considered to be a: Product cost The cost of rent for a manufacturing plant is generally considered to be a: Choice a. - Prime cost - No. Product Cost - Yes Each of the following would be a period cost except: depreciation of a machine used in manufacturing For a manufacturing company, which of the following is an example of a period rather than a product cost? Wages of a salespersons Which of the following would be considered a product cost for external financial reporting purposes? cost of sand spread on the factory floor to absorb oil from manufacturing machines Which of the following would NOT be treated as a product cost for external financial reporting purposes? Advertising expenses Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following? Period cost Transportation costs incurred by a manufacturing company to ship its raw material from its suppliers would be classified as which of the following? Product cost The salary of the president of a manufacturing company would be classified as which of the following? Period cost Micro Computer Company has set up a web page for customer inquiries regarding computer hardware produced by the company. The cost of this web page would be classified as which of the following? Period cost The wages of factory maintenance personnel would usually be: Choice c. Indirect Labour - Yes. Manufacturing Overhead - Yes. Direct materials are a part of: Choice c. Conversion Cost - No. Manufacturing Cost - Yes. Prime cost - Yes. Manufacturing overhead consists of: all manufacturing costs, except direct materials and direct labour Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture? Sheet steel in a file cabinet made by the company Which of the following should be included as part of manufacturing overhead at a company that makes office furniture? Manufacturing equipment depreciation Rossiter Company failed to record a credit sale at the end of the year, although the reduction in finished goods inventories was correctly recorded when the goods were shipped to the customer. Which one of the following statements is correct? Accounts receivable was understated, inventory was not affected, sales were understated, and cost of goods sold was not affected If the cost of goods sold is greater than the cost of goods manufactured, then: Finished goods inventory has decreased during the period Frosting Corp. has provided the following relating to the most recent month (August 31, 2020) of operations, for their main product, cupcakes. What was the cost of goods sold for the period? $118,000 Frosting Corp. has provided the following relating to the most recent month (August 31, 2020) of operations, for their main product, cupcakes. What was the operating income for the period? $50,000 Freeman Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000 and direct labour hours would be 10,000. The actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct labour hours. The cost records for the year will show: UNDER APPLIED OVERHEAD OF $6,000 Which of the following companies would be most likely to use a process costing system rather than a job costing system? Crude oil refining Carlo Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. The company estimated manufacturing overhead at $255,000 for the year and direct labour-hours at 100,000 hours. Actual manufacturing overhead costs incurred during the year totaled $270,000. Actual direct labour hours were 105,000. What was the overapplied or underapplied overhead for the year? : $2,250 UNDERAPPLIED For the current year, Paxman Company incurred $150,000 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was overapplied in the amount of $6,000 for the year. If the predetermined overhead rate was $8.00 per direct labour hour, how many hours were worked during the year?: 19,500 hours Which of the following companies would be most likely to use a job-order costing system rather than a process costing system? Shipbuilding Brown Manufacturing Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. Last year, the company worked 55,000 actual direct labour hours and incurred $335,000 of actual manufacturing overhead cost. The Company had estimated that it would work 57,000 direct labour hours during the year and incur $342,000 of manufacturing overhead cost. The company's manufacturing overhead cost applied for the year was: Answer to above question: $330,000 The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of $400 and $200 for direct materials, and charges of $300 and $500 for direct labour. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labour costs, of: 125% The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labour cost in Dept. A and on machine hours in Dept. B. At the beginning of the year, the company made the following estimates: What predetermined overhead rates would be used in Dept A and Dept B, respectively? Answer to above question (Question 28) 200% and $500 In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include: a credit to the Manufacturing Overhead Account In job-order costing, all the following statements are correct with respect to labour time and cost except: a machine operator performing routine annual maintenance work on a piece of equipment would charge the maintenance time to a specific job. Sawyer Manufacturing Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. Last year, the company worked 57,000 actual direct labour hours and incurred $345,000 of actual manufacturing overhead cost. The Company had estimated that it would work 55,000 direct labour hours during the year and incur $330,000 of manufacturing overhead cost. The company's manufacturing overhead cost for the year was: Answer to above question: Underapplied by $3000 In a job-order costing system, direct labour costs are usually recorded initially with a debit to: Work in progress In a job-order costing system, the use of indirect materials would usually be recorded as a debit to: Manufacturing Overhead Brown Manufacturing Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. Last year, the company worked 55,000 actual direct labour hours and incurred $335,000 of actual manufacturing overhead cost.The Company had estimated that it would work 57,000 direct labour hours during the year and incur $342,000 of manufacturing overhead cost. The company's manufacturing overhead for the year was: Answer to above question: underapplied by $5,000 If a company applies overhead to jobs based on a predetermined overhead rate, a credit balance in the Manufacturing Overhead account at the end of any period means that: more overhead cost has been charged to jobs than has been incurred during the period. Harrell Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated its total manufacturing overhead cost at $400,000 and its direct labour-hours at 100,000 hours.The actual overhead cost incurred during the year was $350,000 and the actual direct labour hours incurred on jobs during the year was 90,000 hours. The manufacturing overhead for the year would be? Answer to above question: $10,000 overapplied Work in Process is a control account supported by detailed cost data contained in: job cost sheets The costing approach that meets the requirements of financial accounting and tax reporting requirements is: absorption costing In a job-order costing system, the use of direct materials previously purchased usually is recorded as a debit to: work in process inventory In a job-order costing system, the amount of overhead cost that has been applied to a job that remains incomplete at the end of a period is: part of the ending balance of the Work in Process inventory account. Marple Company's budgeted production in units and budgeted raw materials purchases over the next three months are given below: Two kilograms of raw materials are required to produce one unit of product. Company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. The company is expected to have 36,000 kilograms of raw materials on hand on January 1. Budgeted production in units for February will be? (Question 41) 75,000 airmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs. Ex. if the sales manager accepts a rush order that will result in higher than normal manufacturing costs , these addit costs r charged to the sales mang bc the authority to accept or decline the rush order was given to the sales manager. This type of accounting system is known as: RESPONSIBILITY ACCOUNTING Friden Company has budgeted sales and production over the next quarter as follows: Question 43 The company has 20,000 units of product on hand at April 1. 20% of the next month's sales needs in units must be on hand at the end of each month. July sales are expected to be 140,000 units. Budgeted sales for June will be (in units): ANSWER 160,000 Which of the following is not a benefit of budgeting? It ensures that accounting records comply with generally accepted accounting principles. The Tobler Company has budgeted production for next year as follows: Four kilograms of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000 kilograms. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs. Budgeted purchases of raw materials in kilograms in the third quarter will be?: ANSWER 63,200 The Willsey Merchandise Company has budgeted $40,000 in sales for the month of December. The company's cost of goods sold is 30% of sales. If the company has budgeted to purchase $18,000 in merchandise during December, then the budgeted change in inventory levels over the month of December is: ANSWER $6,000 increase Orion Corporation is preparing a cash budget for the six months beginning January 1. Shown below are the company's expected collection pattern and the budgeted sales for the period. QUESTION 47 The estimated total cash collections during April from sales and accounts receivables will be: ANSWER $173,400 Parlee Company's sales are 30% in cash and 70% on credit. Sixty percent of the credit sales are collected in the month of sale, 25% in the month following sale, and 12% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data: Total cash receipts in April would be budgeted to be: ANSWER $36,230 The cash budget must be prepared before you can complete the: Budgeted Balance Sheet There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget? It is calculated based on the sales budget, the desired beginning inventory and the desired ending inventory. The Waverly Company has budgeted sales for next year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units The finished goods inventory at the start of the year is 3,000 units. Scheduled production in units for the third quarter should be: ANSWER 17500 Modesto Company produces and sells Product AlphaB. To guard against stockouts, the company requires that 20% of the next month's sales be on hand at the end of each month. Budgeted sales of Product AlphaB over the next four months are: Budgeted production units for August will be: ANSWER: 58,000 QUESTION 52 Superior Industries' sales budget shows quarterly sales for the next year as follows: policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales. Budgeted production in units for the second quarter should be: ANSWER 8,800 The master budget process usually begins with the: Sales Budget Pardee Company plans to sell 12,000 units during the month of August. If the company has 2,500 units on hand at the start of the month, and plans to have 2,000 units on hand at the end of the month, how many units must be produced during the month? 11,500 units The PDQ Company makes collections on credit sales according to the following schedule: The budget for cash collections in June will be: 25% in month of sale 70% in month following sale 4% in second month following sale 1% uncollectible The budget for cash collections in June will be: ANSWER: $115,500 Budgeted sales in Allen Company over the next four months are given below: Twenty-five percent of the company's sales are for cash and 75% are on credit. Collections for sales on credit follow a stable pattern as follows: 50% of a month's sales are collected in the month of sale, 30% are collected in the month following sale, and 15% are collected in the second month following sale. The remainder are uncollectible. Given these data, cash collections in December should be? Answer to above question (QUESTION 57) $133,500 The budget or schedule that provides necessary input data for the direct labour budget is the: production budget The direct materials budget: must provide for desired ending inventory as well as for production. Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 units in May and 70,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales Due to excessive production during March, on March 31 there were 25,000 units of Product W in the ending inventory. Given this information, Walsh Company's production of Product W for the month of April should be how many units: ANSWER 65,000 The net present value method considers: Choice D. Cash Flow over life of project - Yes. Time Value of Money - Yes. How are the following used in the calculation of the net present value of a proposed project? Choice C. Depreciation Expense - Exclude. Salvage Value - Include The capital budgeting method that divides a project's annual incremental net income by the initial investment is the: the simple (or accounting) rate of return method. The payback method measures: how quickly investment dollars may be recovered. The payback method of making capital budgeting decisions considers the time value of money. (T/F) False Projects with shorter payback periods are always more profitable than projects with longer payback periods. (T/F) False Projects with shorter payback periods are less risky than projects with longer payback periods. (T/F) True The payback period is the length of time it takes for an investment to recoup its own initial cost out of the cash receipts it generates. (T/F) True When the net present value method is used, the internal rate of return is the discount rate used to compute the net present value of a project. (T/F) False Which statement below is true about the evaluation of an investment having uneven cash flows using the payback method? It can be done only by matching cash inflows and investment outflows on a year-by-year basis Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following? Period cost For a manufacturing company, which of the following is an example of a period rather than a product cost? Wages of salespersons Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $9,000 and will have a 6-year useful life and a $3,000 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $5,000 per year. The cost of these prescriptions to the pharmacy will be about $2,000 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is: ANSWER 3.0Yr Shields Company has gathered the following data on a proposed investment project The net present value on this investment is closest to: $91,600 Oriental Company has gathered the following data on a proposed investment project: The company uses straight-line depreciation on all equipment. The payback period for the investment would be: 4 years Jarvey Company is studying a project that would have a ten-year life and would require a $450,000 investment in equipment that has no salvage value. The project would provide net income each year as follows for the life of the project: The company's required rate of return is 12%. What is the payback period for this project? 3 years Apex Corp. is planning to buy production machinery costing $100,000. This machinery's expected useful life is five years, with no residual value. Apex uses a discount rate of 10% and has calculated the following data pertaining to the purchase and operation of this machinery: 2.50 yrs Stratford Company purchased a machine with an estimated useful life of seven years. The machine will generate cash inflows of $90,000 each year over the next seven years. I f the machine has no salvage value at the end of seven years, and assuming the company's discount rate is 10%, what is the purchase price of the machine if the net present value of the investment is $170,000? $268,120 The Higgins Company has just purchased a piece of equipment at a cost of $120,000. This equipment will reduce operating costs by $40,000 each year for the next eight years. This equipment replaces old equipment that was sold for $8,000 cash. The new equipment has a payback period of: 2.8 years The Keego Company is planning a $200,000 equipment investment that has an estimated five-year life with no estimated salvage value. The company has projected the following annual cash flows for the investment. If the cash inflows occur evenly over each year, the payback period for the investment is: 2.50 years Dowan Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. Last year Dowan Company incurred $156,600 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was underapplied by $12,600 for the year. If the predetermined overhead rate is $6.00 per direct labour hour, how many hours did the company work during the year? 24,000 hrs Freeman Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000 a nd direct labour hours would be 10,000. The actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct labour hours. The cost records for the year will show: Underapplied of $6,000 The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labour cost in Dept. A and on machine hours in Dept. B. At the beginning of the year, the company made the following estimates: What predetermined overhead rates would be used in Dept A and Dept B, respectively? 200% and $5.00 In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include: a credit to the Manufacturing Overhead account. The costing approach that meets the requirements of financial accounting and tax reporting requirements is: absorption costing In a job-order costing system, direct labour costs are usually recorded initially with a debit to: Work in process The Samuelson Company uses a job-order costing system. The following data were recorded for June: Overhead is charged to production at 70% of the direct materials cost. Jobs 475, 477, and 478 have been delivered to the customer. Samuelson's Work in Process inventory balance on June 30 was: $2,720 Harrell Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated its total manufacturing overhead cost at $400,000 and its direct labour-hours at 100,000 hours. The actual overhead cost incurred during the year was $350,000 and the actual direct labour hours incurred on jobs during the year was 90,000 hours. The manufacturing overhead for the year would be? Answer to above question $10,000 overapplied (QUESTION 23 LAB 7) Work in Process is a control account supported by detailed cost data contained in: job cost sheets If a company applies overhead to jobs based on a predetermined overhead rate, a credit balance in the Manufacturing Overhead account at the end of any period means that: more overhead cost has been charged to jobs than has been incurred during the period The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation. Variable factory overhead is paid in the month incurred. If the budgeted production for July is 6,000 units, then the total budgeted factory overhead for July is: ANSWER $93,000 Noel Enterprises has budgeted sales in units for the next five months as follows: Experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year. The total number of units to be produced in February is: ANSWER 5,580 The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation. Variable factory overhead is paid in the month incurred. ANSWER: $18 Pardise Company plans the following beginning and ending inventory levels (in units) for July: Two units of raw material are needed to produce each unit of finished product. If Pardise Company plans to sell 480,000 units during July, the number of units it would have to manufacture during July would be: ANSWER: 450,000 The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation. Variable factory overhead is paid in the month incurred. If the budgeted cash disbursements for factory overhead for September are $80,000, then the budgeted production in units for September must be? ANSWER: 7,000 Each of the following would be a period cost except: depreciation of a machine used in manufacturing. Which of the following is not one of the positive attributes of responsibility accounting? Senior management can more easily identify employees to blame. Which one of the following tasks should be done first, when developing a comprehensive budget for a manufacturing company? Development of a sales budget. The LaPann Company has obtained the following sales forecast data:The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts.The budgeted cash receipts for October are: ANSWER: $248000 Variable cost: remains constant on a per unit basis as the number of units produced increases. Which of the following would you not expect to find when the Beyond Budgeting Model is used? All corporate resources are managed by senior head office personnel. An investment project that requires a present investment of $210,000 will have cash inflows of "R" dollars each year for the next five years. The project will terminate in five years. Consider the following statements (ignore income tax considerations): I) If "R" is less than $42,000, the payback period exceeds the life of the project. II) If "R" is greater than $42,000, the payback period exceeds the life of the project. III) If "R" equals $42,000, the payback period equals the life of the project. Which statement(s) is (are) true? (ANSWER TO ABOVE QUESTION) Only I and III. The payback period is the length of time it takes for an investment to recoup its own initial cost out of the cash receipts it generates. True Suppose an investment has cash inflows of R dollars at the end of each year for two years. The present value of these cash inflows using a 12% discount rate will be: less than under a 10% discount rate Projects with shorter payback periods are less risky than projects with longer payback periods. True

What are prime costs quizlet?

Prime costs=direct materials+direct labor. Conversion costs. Made of direct labor costs and overhead costs they are expenditures incurred in the process of converting wrong materials to finished goods. Conversion costs=direct labor+factory overhead.

What are the two prime costs?

Prime costs comprise a company's direct material and direct labor costs. Businesses calculate prime costs when analyzing manufacturing expenses, efficiency, and profitability. Accountants break down product costs into three categories: direct material, direct labor, and manufacturing overhead.

What are the three components of prime cost?

Prime cost is the aggregate of direct material cost, direct labor cost, and direct expenses. It is also known as 'flat cost,' 'first cost,' or 'direct cost. ' Once the cost of raw materials has been ascertained, the cost of direct labor and direct expenses is known.