2I) Randall l Company manufactures chocolate bars. The following were among Rand

Question

2I) Randall l Company manufactures chocolate bars. The following were among Randall's manufacturing costs during the current year Wages s 300,000 S 75,000 Machine operators Selling and administrative personnel Materials used Lubricant for oiling machinery S 25,000 S 225,000 s 190,000 PL ocoa, sugar, and other raw materials Packaging materials Randall's direct materials amounted to: 28) A) S25,000. B) S250,000. C) $475,000. D) S225,000. 22) Which of the following statements is true with regard to product costs versus general, selling, and administrative costs? 29) A) Product costs associated with units sold appear on the income statement as cost of goods sold. B) General, selling, and administrative costs appear on the balance sheet C) Product costs associated with unsold units appear on the income statement as general expenses. D) None of these is true. 23) Select the incorrect statement regarding costs and expenses. 30) A) Non-manufacturing costs should be expensed in the period in which they are incurred. B) Manufacturing-related costs are initially recorded as expenses. C) Expenses are incurred when assets are used to generate revenue. D) Some costs are initially recorded as expenses while others are initially recorded as assets. 24) Costs such as transportation-out, sales commissions, uncollectible accounts receivable, and advertising costs are sometimes called: 31) A) direct costs B upstream costs. C) downstream costs. D) indirect costs. 25) Why do accountants normally calculate cost per unit as an average? 32) A) Some manufacturing-related costs cannot be accurately traced to specific units of product. B) Determining the exact cost of a product is virtually impossible. C) Even when producing multiple units of the same product, normal variations occur in the amount of materials and labor used. ) All of these are justifications for computing average unit costs.

Explanation / Answer

21.) The option is D ie., Direct Material cost is $225,000 as the rest packing materials and lubricants for oiling machinery comes under Indirect Material.

22.) The option is C ie., The product costs associated with unsold units appear on the income statement as general expenses as the units are unsold they should generally recorded as an expense in income statement.

23.) The option is B ie., The manufacturing related costs are initially recorded as an expense.is the incorrect statement regarding cost and expenses . as we all know that manufacturing related costs are charged to the production expense.

24.)The option is C ie., These costs are called downstream costs . The following are included in the downstream costs like transportation costs uncollectibel accounts receivable , advertising costs etc.,

25.) The option is D ie., All of these justifications for computing average unit costs.its is not possible to exactly determine the costs of materials and labour all are based on the estimates or an approximate values hence average cost per unit is the best method to calculate the cost per unit.

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