Question 1 - Listed here are the total costs associated with the 2011 production of 1,000 drum sets manufactured by NeatBeat. The drum sets sell for $564 each. (Assume there is no ending inventory in the year 2011.)
Costs
1. Plastic for casing-$21,000
2. Wages of assembly workers-$80,000.
3. Property taxes on factory-$7,000
4. Accounting staff salaries-$41,000
5. Drum stands (1,000 stands outsourced)-$39,000
6. Rent cost of equipment for sales staff-$48,000
7. Upper management salaries-$205,000
8. Annual flat fee for maintenance service-$17,000
9. Sales commissions-$22 per unit
10. Machinery depreciation-$37,000
Required:
1. Classify each cost and its amount as (a) either fixed or variable and (b) either product or period.
2. Compute the manufacturing cost per drum set.
Question 2 - Shepler Boot Company makes specialty boots for the rodeo circuit. On December 31, 2010, the company had (a) 500 pairs of boots in finished goods inventory and (b) 1,900 heels at a cost of $18 each in raw materials inventory. During 2011, the company purchased 44,000 additional heels at $18 each and manufactured 16,400 pairs of boots.
Required: Determine the unit and dollar amounts of raw materials inventory in heels at December 31, 2011.