B-18.02
Fixed and variable cost calculations
True Flight Golf manufacturers a popular shaft for golf clubs. Its trade secret is a unique process for weaving
high-tension wire into the center of the shaft such that energy is accumulated during the swing and released
at impact. A specialized machine costing $3,000,000 is utilized in the manufacturing process. The machine has
a 3-year life and no salvage value. True Flight uses straight-line depreciation. During the year, 25,000 shafts
were produced, and the company was operating at full capacity. $700,000 of wire was used during the year.
(a)
Is machinery depreciation fixed or variable? Is wire fixed or variable?
(b)
For the two noted cost items, how much was total variable cost and total fixed cost?
(c)
For the two noted cost items, how much was variable cost per unit and how much was fixed cost
per unit?
B-19.01
Review of foundational cost flow concepts
Alaska Launch, a private-sector aerospace company, provided the following aggregated data for satellite
construction jobs during a recent period:
Direct materials
Direct labor
Applied (and actual) factory overhead
$13,442,769
21,889,554
8,223,454
Beginning work in process
Ending work in process
(a)
14,550,098
17,559,000
How much is cost of goods manufactured? Is this necessarily the same as cost of goods sold? Why
or why not?
B-19.04
Determining and evaluating applied overhead
Ekpro Products manufactures containment chambers for environmentally friendly incinerators. Each chamber
is built to customer specifications. Most of the direct labor time is spent on welding activities. Following is
the job cost sheet for an incinerator manufactured for Benzate Corporation:
Ekpro
Job:
Job Cost Sheet
Benzate
Direct Labor
Hours Rate
Total
Direct Material
Qty.
Unit
Cost
Total
Applied Overhead
Qty. Rate
