Discussion: Insurance coverages
Discussion: Insurance coverages
A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $3,600 and is paid at the beginning of the first year. Eighty percent of the premium applies to manufacturing operations and twenty percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?
Product
Period
A$3,600
$0
B$2,880
$720
C$1,920
$480
D$960
$240
2. At an activity level of 8,600 machine-hours in a month, Nooner Corporation’s total variable production engineering cost is $734,440 and its total fixed production engineering cost is $154,000. What would be the total production engineering cost per unit, both fixed and variable, at an activity level of 8,800 machine-hours in a month? Assume that this level of activity is within the relevant range. (Do not round intermediate calculations.)
A$102.90
B$102.01
C$102.55
D$103.08
3.Buckeye Company has provided the following data for maintenance cost:
Prior Year
Current Year
Machine hours
18,500
21,100
Maintenance cost
$30,500
$34,140
Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to:
A.$30,500 per year plus $1.40 per machine hour
B$29,540 per year plus $.714 per machine hour
C$4,600 per year plus $.714 per machine hour
D$4,600 per year plus $1.40 per machine hour
4.A soft drink bottler incurred the following factory utility cost: $3,436 for 1,050 cases bottled and $3,548 for 1,700 cases bottled. Factory utility cost is a mixed cost containing both fixed and variable components. The variable factory utility cost per case bottled is closest to:
A$3.27
B$0.17
C$2.09
D$2.02
5. Supply costs at Lattea Corporation’s chain of gyms are listed below:
Client-Visits
Supply Cost
March
11,662
$28,576
April
11,458
$28,410
May
11,990
$28,834
June
13,500
$28,922
July
11,722
$28,637
August
11,208
$28,236
September
12,002
$28,835
October
11,693
$28,593
November
11,841
$28,718
Management believes that supply cost is a mixed cost that depends on client-visits. Use the high-low method to estimate the variable and fixed components of this cost, Compute the variable component first, rounding off to the nearest whole cent. Then compute the fixed component, rounding off to the nearest whole dollar. Those estimates would be closest to: (Round your Variable cost per unit to 2 decimal places.) Discussion: Insurance coverages
A$1.99 per client-visit; $28,638 per month
B$.88 per client-visit; $17,814 per month
C$0.34 per client-visit; $24,367 per month
D$0.30 per client-visit; $24,872 per month
6.Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.
Production volume
10,500
units
12,000
units
Direct materials
$647,850
$740,400
