Page1of4UNIVERSITY OF MARYLAND UNIVERSITY COLLEGECOST ACCOUNTINGACCT321WEEK ONE HOMEWORK ASSIGNMENTI.Questions1.Providethreeexamplesofacostpool,itscostdriverandthecostobject.Answer:Acostisincurredwhenaresourceisusedbyfirmforsomepurpose.•Costsareassembledintomeaningfulgroupswhichcalledcostpools(e.g.,bytypeofcostorsource,washingmachinemanufacturermotor,assemblyandpackingarecostpools.)•Anyfactorthathastheeffectorchangestheleveloftotalcostiscalledacostdriver.E.g.laborhours,machinehoursandsetup.•Acostobjectisanyproduct,service,customer,activity,ororganizationalunittowhichcostsareassignedforexamplewashingmachine,car,computeretc.2.Whatarethecostsincludedinwork-in-process?Answer:Thefollowingcostsareincludedinworkinprocess;•DirectMaterial•DirectLabor•Overheads3.Whatistheformulaforcomputing;1)grossmargin,2)contributionmarginandoperatingincome.Answer:GrossMargin=SalesRevenue–CostofGoodsSoldContributionMargin=SalesRevenue–VariableCostOperatingIncome=ContributionMargin–FixedCosts4.Ifcurrentsalesincreased,wouldthemarginofsafetyincreaseordecrease.Answer:Withtheincreaseincurrentsalesvolume,marginofsafetywillincrease.5.Ifvariablecostsincreasedwithallotherfactors(amounts)notchanging;wouldthebreakevenpointinunitsincreaseordecrease.Answer:IfthereisincreaseinvariablecostthenBreakEvenPointinunitsisboundtoincreaseasBEPinunits=FixedCost/CMperunitandCMperunit=SPperunit–VCperunit.II.Exercises1.ThefollowinginformationisprovidedforInternationalPaperManufacturingInc.for2015:(Amountsareinthousands)Beginningfinishedgoods,1/1/15$125,000Netincome$65,000Grossmargin$245,000Preview Mode
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