Factory rent $5,000 Direct labor 8,000 Indirect materials 1,000 Direct materials used 3,500 Sales commissions 2,500 Factory manager’s salary 4,000 Advertising 1,500 1. What is Garcia’s total...

Direct labor 8,000

Indirect materials 1,000

Direct materials used 3,500

Sales commissions 2,500

Factory manager’s salary 4,000

Advertising 1,500

1. What is Garcia’s total manufacturing cost?

a. $25,500.                  c. $21,500.

b. $24,000.                  d. $10,000.

2. What is Garcia’s prime cost?

a. $11,500.                  c. $15,500.

b. $12,500.                  d. $21,000.

3. What is Garcia’s manufacturing overhead?

a. $24,000.                  c. $14,000.

b. $12,500.                  d. $10,000.

4. Suppose you are trying to decide whether to sell your accounting book at the end of the semester or keep it for a reference book in future courses. If you decide to keep the book, the money you would have received from selling it is a(n)

a. Sunk cost.

b. Opportunity cost.

c. Out-of-pocket cost.

d. Indirect cost.

5. Which of the following would not be treated as a product cost under GAAP?

a. Direct materials.

b. Manufacturing supervisor’s salary.

c. Sales commissions.

d. All of the above are product costs.