1. Calculate total prime costs and total conversion costs.
2. Calculate total inventoriable costs and period costs
3. Design costs and R&D costs are not considered product costs for financial statement purposes. When might some of these costs be regarded as product
costs?
4. Suppose that both the direct materials used and the depreciation on plant and equipment are related to the manufacture of 2 million units. Determine the unit
cost for the direct materials assigned to those units and the unit cost for depreciation on plant and equipment. assume that yearly deprecitaion is computed on a
staight line basis.
5. Assume that the implied cost behavior patterns in requirement 4 persist. That is direct material costs behave as a variable cost and depreciation on plant and
equipment behaves as a fixed cost. Repeat the computations in requirement 4 assuming that the costs are being predicted for the manufacture of 3 million units.
Determine the effects on total costs.
6. Assume that deprecitaion on equipment not plant is computed based on number of units produced. The depreciation rate on equipment is $1 per unit. Calculate
depreciation assuming 2 million produced and 3 million produced.