5) Mr. Foxhound works at a manufacturing plant that makes balloons for holiday parades. He earns $30 per hour for straight-time and $50 per hour for overtime. One week he worked 46 hours, which included 6 hours of overtime, and 4 hours of idle time caused by a shortage of materials to make the balloons.
Required:
Compute Mr. Foxhound's total compensation for the week; the amount of compensation reported as direct manufacturing labor; and the amount of compensation that would be reported as manufacturing overhead.
A) $1,200; $1,100; $220
B) $1,250; $1,200; $160
C) $1,500; $1,260; $240
D) $1,600; $1,280; $260
E) $1,750; $1,300; $280
6) For the purpose of calculating inventory, product costs include only:
A) direct costs.
B) indirect costs.
C) variable costs.
D) inventoriable (manufacturing) costs.
E) mixed costs.
7) Pricing and product-mix decisions include:
A) manufacturing costs only.
B) design costs plus manufacturing costs.
C) all costs incurred along the value chain.
D) distribution costs only.
E) production costs only.
8) In government contracts, product costs include:
A) manufacturing costs only.
B) design costs plus manufacturing costs.
C) all costs incurred along the value chain.
D) distribution costs only.
E) production costs only.
9) The sum of the costs assigned to a product for a specific purpose are:
A) manufacturing costs.
B) design costs.
C) product costs.
D) service-sector costs.
E) technology costs.
10) Under Generally Accepted Accounting Principles (GAAP), only ________ costs can be assigned to inventories in the financial statements.
A) period
B) direct
C) indirect
D) variable
E) manufacturing
11) Which of the following is
not
true about payroll fringe costs?
A) Managers do not need to classify payroll fringe costs.
B) Contracts and laws should be as specific as possible regarding definitions and measurements.
C) Disputes arise about whether they should be included as part of direct labor costs when calculating percentage of direct labor.
D) Managers classify them as part of direct labor costs to make direct labor costs a higher percentage of total costs.
E) Tax authorities argue that the costs are part of overhead.
12) ________ ________ is the wage rate paid to workers for both direct labor and indirect labor in excess of their straight-time wage rates.
A) Overtime payout
B) One payment
C) Overtime premium
D) Premier pay
E) Objection pay
13) Depending on the purpose, a manager can assign different costs to the same cost object.
14) The idle time associated with direct labor and indirect labor is a subclassification of indirect labor.
15) Although labor cost classifications vary among companies, many companies use multiple labor cost categories.
16) Managers achieve clarity about direct labor costs because it may prevent disputes regarding cost reimbursement contracts, income tax payments, and labor union matters.
17) Write a brief summary and discuss the concepts of how managers assign costs to the same cost objects.