1-When you combine costs and cash expenses, you have four possible combinations.
Cash expenses No cash expenses
Costs 1 2
No costs 3 4
Give an example of each combination.
2-An industrial company is dealing with five groups of variable costs:
Production Volume Group A Group B Group C Group D Group E
1,000 400 400 400 400 400
2,000 700 800 500 1,200 600
4,000 1,000 1,600 600 3,600 900
8,000 1,300 3,200 700 10,800 1,300
16,000 1,600 6,400 800 32,400 1,800
What kind of variable costs are applicable to groups A,B,C,D and E? It may help to plot the costs on a graph.
3-The following data are for Marvin Department Store. The account balances (in thousands) are for 2014.
Marketing, distribution, and customer-service costs $ 37,000
Merchandise inventory, January 1, 2014 27,000
Utilities 17,000
General administrative costs 43,000
Merchandise inventory, December 31, 2014 34,000
Purchases 155,000
Miscellaneous costs 4,000
Transportation-in 7,000
Purchase returns and allowances 4,000
Purchases discounts 6,000
Revenues 280,000
a) Compute: 1-the cost of goods purchased 2-the cost of good sold
b) Prepare the income statement for 2014