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Finance

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Subject

Finance

School

EU Business School Geneva

Type

Homework

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oelnar7200

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QUESTION 1

1.1. Property tax on the factory building = MO

1.2. The chief financial officer's salary = PC

1.3. Plastic used to manufacture pens = DM

1.4. Janitors at the factory = MO

1.5. Manufactured pens waiting to be sold to customers = FG

1.6. Advertising logos = PC

1.7. Partially completed pens = WP

QUESTION 2

Product costs are expenses incurred that directly contribute to the manufacturing process of goods,

while period costs are indirect expenses or nonmanufacturing costs incurred during production

(Weygandt et al., 2012, p. 773). Costs should be clearly classified into a product or period cost as the

recording entries for each type differ. Product costs are categorized under inventory and become an

expense only when the specific goods that were produced are sold. Period Costs, on the other hand,

are classified as immediate expenses and are lessened from the revenues of the same period.

QUESTION 3

3.1. Electricity for lighting a factory building = Product Cost

3.2. Costs of delivering finished bicycles to dealers = Period Cost

3.4. Cost of a store detective in a retail establishment = Period Cost

3.5. Cost of eggs in a bakery = Product Cost

3.6. Cost of chocolate to a candy manufacturer = Product Cost

3.7. Salary of injection molding machine operator in a plastics factory = Product Cost

3.8. Salary of a sewing machine operator in a clothing factory = Product Cost

3.9. Depreciation of a freezer in an ice cream plant = Product Cost

QUESTION 4

A job order costing system follows a batching process in which the assigned costs of a specific batch

are calculated, whereas a process costing system accumulates the total costs of a given period of

production. (Weygandt et al., 2012, p. 810) The management of a company may decide to implement a

specific accounting system to monitor production costs depending on the nature and quantity of

products to be manufactured. Job order costing systems are suited for the production of unique items

or made to order products. Each variation may be treated as one job order with an assigned cost. The

process costing system, on the other hand, is suited for the mass production of goods like consumer

items as these are manufactured continuously with no variations between each product.

QUESTION 5

5.1 Fixed costs are constant expenses that are incurred during production. These do not change even if

a company produced more or less of a specific good. Some examples of fixed costs are rental expenses,

regular employee wages, and the depreciation of equipment.

5.2 Variable costs are related to the volume of production as these fluctuate depending on the total

quantity of goods produced. A few examples of variable costs include the costs of raw materials,

packaging expenses, and delivery expenses.

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QUESTION 1 1.1. Property tax on the factory building = MO 1.2. The chief financial officer's salary = PC 1.3. Plastic used to manufacture pens = DM 1.4. Janitors at the factory = MO 1.5. Manufactured pens waiting to be sold to customers = FG 1.6. Advertising logos = PC 1.7. Partially completed pens = WP QUESTION 2 Product costs are expenses incurred that directly contribute to the manufacturing process of goods, while period costs are indirect expenses or nonmanufacturing costs incurred during production (Weygandt et al., 2012, p. 773). Costs should be clearly classified into a product or peri ...
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Tags: Types of Budgeting and Control Property tax on the factory building Plastic used to manufacture pens Partially completed pens Costs of delivering finished bicycles