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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
Prime costs.
Conversion costs.
Period costs.
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Opportunity costs.
co
eH w
Advertising is a selling costs and considered a period cost since it's influence cannot be tied to changes in volume.
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References
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ou urc
Multiple Choice Difficulty: 1 Easy Learning Objective: 02-02 Explain how costs are presented in
financial statements.
236. Award: 1.00 point
o
aC s
vi y re
Under full absorption costing, which of the following are included in product costs?
References
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Multiple Choice Difficulty: 1 Easy Learning Objective: 02-06 Identify the components of a product’s
costs.
sh
https://www.coursehero.com/file/29416032/ACCT3032Sol46pdf/
237. Award: 1.00 point
What cost per unit would be used for product costing under full absorption costing?
$29
$42
$52
$60
m
References
er as
Multiple Choice Difficulty: 2 Medium Learning Objective: 02-06 Identify the components of a product’s
co
costs.
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o.
238. Award: 1.00 point rs e
ou urc
Ramos Company has the following unit costs:
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Variable manufacturing overhead $ 13
aC s
What cost per unit would be used for product costing under variable costing?
ed d
$29
ar stu
$42
$52
$60
is
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 02-06 Identify the components of a product’s
costs.
sh
https://www.coursehero.com/file/29416032/ACCT3032Sol46pdf/