Assignment Material

Questions

1. 2-1. Define cost object and give three examples. 
2. 2-2. Define direct costs and indirect costs. 
3. 2-3. Why do managers consider direct costs to be more accurate than indirect costs? 
4. 2-4. Name three factors that will affect the classification of a cost as direct or indirect. 
5. 2-5. Define variable cost and fixed cost. Give an example of each. 
6. 2-6. Give an example for each of the following: A cost that is variable and direct, a cost that is variable and indirect, a cost that is fixed and direct, and a cost that is fixed and indirect. 
7. 2-7. What is a cost driver? Give one example. 
8. 2-8. What is the relevant range? What role does the relevant-range concept play in explaining how costs behave? 
9. 2-9. Explain why unit costs must often be interpreted with caution. 
10. 2-10. Describe how manufacturing-, merchandising-, and service-sector companies differ from one another. 
11. 2-11. What are three different types of inventory that manufacturing companies hold? 
12. 2-12. Distinguish between inventoriable costs and period costs. 
13. 2-13. Define the following: direct material costs, direct manufacturing-labor costs, manufacturing overhead costs, prime costs, and conversion costs. 
14. 2-14. Define product cost. Describe three different purposes for computing product costs. 
15. 2-15. What are three features of cost accounting and cost management that can be used for a wide range of applications?

Multiple-Choice Questions

1. 2-16. Applewhite Corporation, a manufacturing company, is analyzing its cost structure in a project to achieve some cost savings. Which of the following statements is/are correct? 
   1. I. The cost of the direct materials in Applewhite’s products is considered a variable cost. 
   2. II. The cost of the depreciation of Applewhite’s plant machinery is considered a variable cost because Applewhite uses an accelerated depreciation method for both book and income tax purposes.ses.
   3. III. The cost of electricity for Applewhite’s manufacturing facility is considered a fixed cost, even if the cost of the electricity has both variable and fixed components. 
   4. 1. I, II, and III are correct. 
   5. 2. I only is correct.
   6. 3. II and III only are correct. 
   7. 4. None of the listed choices is correct. 
2. 2-17. Comprehensive Care Nursing Home is required by statute and regulation to maintain a minimum 3:1 ratio of direct service staff to residents to maintain the licensure associated with nursing home beds. The salary expense associated with direct service staff for Comprehensive Care Nursing Home would most likely be classified as 
   1. 1. Variable cost. 
   2. 2. Fixed cost. 
   3. 3. Overhead costs. 
   4. 4. Inventoriable costs. 
3. 2-18. Frisco Corporation is analyzing its fixed and variable costs within its current relevant range. As its cost driver activity changes within the relevant range, which of the following statements is/are correct? 
   1. I. As the cost driver level increases, total fixed cost remains unchanged. 
   2. II. As the cost driver level increases, unit fixed cost increases. 
   3. III. As the cost driver level decreases, unit variable cost decreases. 
   4. 1. I, II, and III are correct. 
   5. 2. I and II only are correct. 
   6. 3. I only is correct. 
   7. 4. II and III only are correct. 
4. 2-19. Year 1 financial data for the ABC Company is as follows:

1. Under the absorption method, Year 1 cost of goods sold will be 
   1. a. $2,550,000 
   2. b. $2,950,000 
   3. c. $3,100,000 
   4. d. $3,700,000 
2. 2-20. The following information was extracted from the accounting records of Roosevelt Manufacturing Company:

1. What was the cost of goods manufactured? 
   1. 1. $124,000 
   2. 2. $120,000 
   3. 3. $154,000 
   4. 4. $170,000

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Exercises

1. 2-21. COMPUTING AND INTERPRETING MANUFACTURING UNIT COSTS. Minnesota Office Products produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at the plant. It currently uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labor, and manufacturing overhead costs. Total manufacturing overhead costs of the plant in July 2020 are $150 million ($15 million of which are fixed). This total amount is allocated to each product line on the basis of the direct manufacturing labor costs of each line. Summary data (in millions) for July 2020 are as follows:

1. 1. Required
   2. 1. Compute the manufacturing cost per unit for each product produced in July 2020.
   3. 2. Suppose that, in August 2020, production was 150 million units of Supreme, 190 million units of Deluxe, and 220 million units of Regular. Why might the July 2020 information on manufacturing cost per unit be misleading when predicting total manufacturing costs in August 2020?

1. 2-22. DIRECT, INDIRECT, FIXED, AND VARIABLE COSTS. Florida Growers Association produces both orange and grapefruit juice that it sells as wholesale products to various grocery suppliers. Each type of juice requires a three-step process. The first step is the preparation department, which cleans the fruit. The second step is the squeezing department, which combines some of the necessary sugars and added flavoring to create the juice. This step also includes quality control using both automated and manual processes. The final step is packaging, which is an entirely automated process. 
   1. Required
   2. 1. Costs involved in the process are listed next. For each cost, indicate whether it is a direct variable, direct fixed, indirect variable, or indirect fixed cost with respect to the cost object “one gallon of grapefruit juice”.

2. If the cost object were the “squeezing department” rather than a gallon of grapefruit juice, which of the preceding costs would now be considered direct rather than indirect?

1. 2-23. CLASSIFICATION OF COSTS, SERVICE SECTOR. Market Focus is a marketing research firm that organizes focus groups for consumer-product companies. Each focus group has eight individuals who are paid $60 per session to provide comments on new products. These focus groups meet in hotels and are led by a trained, independent marketing specialist hired by Market Focus. Each specialist is paid a fixed retainer to conduct a minimum number of sessions and a per session fee of $2,200. A Market Focus staff member attends each session to ensure that all the logistical aspects run smoothly. 
2. Required
3. Classify each cost item (A–I) as follows: 
   1. a. Direct or indirect (D or I) costs of each individual focus group. 
   2. b. Variable or fixed (V or F) costs of how the total costs of Market Focus change as the number of focus groups conducted changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the number of groups conducted.) 
4. You will have two answers (D or I; V or F) for each of the following items:

1. 2-24. CLASSIFICATION OF COSTS, MERCHANDISING SECTOR. Essential College Supplies (ECS) is a store on the campus on a large Midwestern university. The store has both an apparel section (t-shirts with the school logo) and a convenience section. ECS reports revenues for the apparel section separately from the convenience section. 
2. Required
3. Classify each cost item (A–H) as follows: 
   1. a. Direct or indirect (D or I) costs of the total number of t-shirts sold. 
   2. b. Variable or fixed (V or F) costs of how the total costs of the apparel section change as the total number of t-shirts sold changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the total number of t-shirts sold.) 
4. You will have two answers (D or I; V or F) for each of the following items:

1. 2-25. CLASSIFICATION OF COSTS, MANUFACTURING SECTOR. The Cooper Furniture Company of Potomac, Maryland, assembles two types of chairs (recliners and rockers). Separate assembly lines are used for each type of chair.
2. Required
3. Classify each cost item (A–I) as follows:  
   1. a. Direct or indirect (D or I) cost for the total number of recliners assembled. 
   2. b. Variable or fixed (V or F) cost depending on how total costs change as the total number of recliners assembled changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the total number of recliners assembled.) 
4. You will have two answers (D or I; V or F) for each of the following items:

1. 2-26. VARIABLE COSTS, FIXED COSTS, TOTAL COSTS. Bridget Ashton is getting ready to open a small restaurant. She is on a tight budget and must choose between the following long-distance phone plans: 
2. PLAN A: Pay $0.10 per minute of long-distance calling. 
3. PLAN B: Pay a fixed monthly fee of $15 for up to 240 long-distance minutes and $0.08 per minute thereafter (if she uses fewer than 240 minutes in any month, she still pays $15 for the month). 
4. PLAN C: Pay a fixed monthly fee of $22 for up to 510 long-distance minutes and $0.05 per minute thereafter (if she uses fewer than 510 minutes, she still pays $22 for the month). 
   1. Required
   2. 1. Draw a graph of the total monthly costs of the three plans for different levels of monthly long-distance calling. 
   3. 2. Which plan should Ashton choose if she expects to make 100 minutes of long-distance calls? 240 minutes? 540 minutes? 
5. 2-27. VARIABLE AND FIXED COSTS. Consolidated Motors specializes in producing one specialty vehicle. It is called Surfer and is styled to easily fit multiple surfboards in its back area and top-mounted storage racks. Consolidated has the following manufacturing costs: 
6. Plant management costs, $1,992,000 per year 
7. Cost of leasing equipment, $1,932,000 per year 
8. Workers’ wages, $800 per Surfer vehicle produced 
9. Direct materials costs: Steel, $1,400 per Surfer; Tires, $150 per tire, each Surfer takes 5 tires (one spare). 
10. City license, which is charged monthly based on the number of tires used in production:

1. Consolidated currently produces 170 vehicles per month. 
   1. Required
   2. 1. What is the variable manufacturing cost per vehicle? What is the fixed manufacturing cost per month? 
   3. 2. Plot a graph for the variable manufacturing costs and a second for the fixed manufacturing costs per month. How does the concept of relevant range relate to your graphs? Explain. 
   4. 3. What is the total manufacturing cost of each vehicle if 80 vehicles are produced each month? 205 vehicles? How do you explain the difference in the manufacturing cost per unit? 
2. 2-28. COST BEHAVIOR. Required. Compute the missing amounts.

1. 2-29.  VARIABLE COSTS, FIXED COSTS, RELEVANT RANGE. Gummy Land Candies manufactures jawbreaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 5,000 jawbreakers per month. The machine cost $6,500 and is depreciated using straight-line depreciation over 10 years assuming zero residual value. Rent for the factory space and warehouse and other fixed manufacturing overhead costs total $1,200 per month. 
2. Gummy Land currently makes and sells 3,900 jawbreakers per month. Gummy Land buys just enough materials each month to make the jawbreakers it needs to sell. Materials cost $0.40 per jawbreaker. 
3. Next year Gummy Land expects demand to increase by 100%. At this volume of materials purchased, it will get a 10% discount on price. Rent and other fixed manufacturing overhead costs will remain the same. 
   1. Required
   2. 1. What is Gummy Land’s current annual relevant range of output? 
   3. 2. What is Gummy Land’s current annual fixed manufacturing cost within the relevant range? What is the annual variable manufacturing cost? 
   4. 3. What will Gummy Land’s relevant range of output be next year? How, if at all, will total annual fixed and variable manufacturing costs change next year? Assume that if it needs to, Gummy Land could buy an identical machine at the same cost as the one it already has. 
4. 2-30.  COST DRIVERS AND VALUE CHAIN. American Technology Company (ATC) is developing a new camera/security home system to compete with other security systems in the industry. The company will sell the cameras to wholesalers that will, in turn, sell them in retail stores to the final customer. ATC has undertaken the following activities in its value chain to bring its product to market: 
   1. A. Perform market research on competing brands 
   2. B. Design a prototype of the phone app and the security camera 
   3. C. Test the compatibility of the phone app and the security camera 
   4. D. Make necessary design changes to the prototype based on testing performed in C above. 
   5. E. Manufacture the security cameras 
   6. F. Attend trade shows to make wholesalers aware of the camera 
   7. G. Process orders from the trade show orders and wholesalers
   8. H. Deliver the security cameras to the wholesalers
   9. I. Provide online assistance to the security camera users
   10. J. Make additional design changes to the security camera based on customer feedback 
5. During the process of product development, production, marketing, distribution, and customer service, ATC has kept track of the following cost drivers: 
6. Number of security cameras shipped by ATC 
7. Number of design changes 
8. Number of deliveries made to wholesalers 
9. Engineering hours spent on initial product design 
10. Hours spent researching competing market brands 
11. Customer-service hours 
12. Number of security camera orders processed 
13. Machine-hours required to run the production equipment 
14. Number of product tests conducted
15. FTEs spent on attending trade shows 
    1. Required
    2. 1. Identify each value-chain activity listed at the beginning of the exercise with one of the following value-chain categories:  
       1. a. Design of products and processes
       2. b. Production
       3. c. Marketing
       4. d. Distribution
       5. e. Customer service
    3. 2. Use the list of preceding cost drivers to find one or more reasonable cost drivers for each of the activities in ATC’s value chain. 
16. 2-31. COST DRIVERS AND FUNCTIONS. The representative cost drivers in the right column of this table are randomized so they do not match the list of functions in the left column.

1. 1. Required
   2. 1. Match each function with its representative cost driver.
   3. 2. Give a second example of a cost driver for each function.

1. 2-32. TOTAL COSTS AND UNIT COSTS, SERVICE SETTING. National Training recently started a business providing training events for corporations. In order to better understand the profitability of the business, the owners asked you for an analysis of costs—what costs are fixed, what costs are variable, and so on, for each training session. You have the following cost information: 
2. Trainer: $11,000 per session 
3. Materials: $2,500 per session and $35 per attendee 
4. Catering Costs (subcontracted): 
   1. Food: $75 per attendee 
   2. Setup/cleanup: $25 per attendee 
   3. Fixed fee: $5,000 per training session 
5. National Training is pleased with the service they use for the catering and have allowed them to place brochures on each dinner table as a form of advertising. In exchange, the caterer gives National Training a $1,000 discount per session. 
   1. Required
   2. 1. Draw a graph depicting fixed costs, variable costs, and total costs for each training session versus the number of guests. 
   3. 2. Suppose 100 persons attend the next event. What is National Training’s total net cost and the cost per attendee? 
   4. 3. Suppose instead that 175 persons attend. What is National Training’s total net cost and the cost per attendee? 
   5. 4. How should National Training charge customers for their services? Explain briefly. 
6. 2-33.  TOTAL AND UNIT COST, DECISION MAKING. Gayle’s Glassworks makes glass flanges for scientific use. Materials cost $1 per flange, and the glass blowers are paid a wage rate of $28 per hour. A glass blower blows 10 flanges per hour. Fixed manufacturing costs for flanges are $28,000 per period. Period (nonmanufacturing) costs associated with flanges are $10,000 per period and are fixed. 
   1. Required
   2. 1. Graph the fixed, variable, and total manufacturing cost for flanges, using units (number of flanges) on the x-axis. 
   3. 2. Assume Gayle’s Glassworks manufactures and sells 5,000 flanges this period. Its competitor, Flora’s Flasks, sells flanges for $10 each. Can Gayle sell below Flora’s price and still make a profit on the flanges? 
   4. 3. How would your answer to requirement 2 differ if Gayle’s Glassworks made and sold 10,000 flanges this period? Why? What does this indicate about the use of unit cost in decision making? 
7. 2-34.  INVENTORIABLE COSTS VERSUS PERIOD COSTS. Each of the following cost items pertains to one of these companies: Home Depot (a merchandising-sector company), Apple (a manufacturing-sector company), and Rent a Nanny (a service-sector company): 
   1. A. Cost of lumber and plumbing supplies available for sale at Home Depot 
   2. B. Electricity used to provide lighting for assembly-line workers at an Apple manufacturing plant
   3. C. Depreciation on store shelving in Home Depot
   4. D. Mileage paid to nannies traveling to clients for Rent a Nanny
   5. E. Wages for personnel responsible for quality testing of the Apple products during the assembly process
   6. F. Salaries of Rent a Nanny marketing personnel planning local-newspaper advertising campaigns
   7. G. Lunches provided to the nannies for Rent a Nanny
   8. H. Salaries of employees at Apple retail stores
   9. I. Shipping costs for Apple to transport products to retail stores
   10. Required
   11. 1. Distinguish between manufacturing-, merchandising-, and service-sector companies.
   12. 2. Distinguish between inventoriable costs and period costs.
   13. 3. Classify each of the cost items (A–I) as an inventoriable cost or a period cost. Explain your answers.

Problems

1. 2-35. COMPUTING COST OF GOODS PURCHASED AND COST OF GOODS SOLD. The following data are for Murray Department Store. The account balances (in thousands) are for 2020.

1. 1. Required
   2. 1. Compute (a) the cost of goods purchased and (b) the cost of goods sold.
   3. 2. Prepare the income statement for 2020.

1. 2-36.  COST OF GOODS PURCHASED, COST OF GOODS SOLD, AND INCOME STATEMENT. The following data are for Mama Retail Outlet Stores. The account balances (in thousands) are for 2020.

1. 1. Required
   2. 1. Compute (a) the cost of goods purchased and (b) the cost of goods sold.
   3. 2. Prepare the income statement for 2020.

1. 2-37.  FLOW OF INVENTORIABLE COSTS. Stewart Tables’ selected data for March 2020 are presented here (in millions):

1. Required
2. Calculate the following costs: 
   1. 1. Direct materials inventory, March 31, 2020 
   2. 2. Fixed manufacturing overhead costs for March 2020
   3. 3. Direct manufacturing labor costs for March 2020
   4. 4. Work-in-process inventory, March 31, 2020
   5. 5. Cost of finished goods available for sale in March 2020
   6. 6. Finished goods inventory, March 31, 2020 
3. 2-38. COST OF GOODS MANUFACTURED, INCOME STATEMENT, MANUFACTURING COMPANY. Consider the following account balances (in thousands) for the Peterson Company:

1. 1. Required
   2. 1. Prepare a schedule for the cost of goods manufactured for 2020.
   3. 2. Revenues for 2020 were $310 million. Prepare the income statement for 2020.

1. 2-39. COST OF GOODS MANUFACTURED, INCOME STATEMENT, MANUFACTURING COMPANY. The following information is available for the McCain Manufacturing Company for 2020.

1. Required
2. Assume that all raw materials are purchased on credit and all sales are credit sales. Compute the missing amounts above. 
3. 2-40. INCOME STATEMENT AND SCHEDULE OF COST OF GOODS MANUFACTURED. The Howell Corporation has the following account balances (in millions):

1. Required
2. Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31, 2020. (For additional questions regarding these facts, see the next problem.) 
3. 2-41. INTERPRETATION OF STATEMENTS (CONTINUATION OF 2-40). 
   1. Required
   2. 1. How would the answer to Problem 2-40 be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? Be specific. 
   3. 2. Would the sales manager’s salary (included in marketing, distribution, and customer-service costs) be accounted for any differently if the Howell Corporation were a merchandising-sector company instead of a manufacturing-sector company? 
   4. 3. Using the flow of manufacturing costs outlined in Exhibit 2-9, describe how the wages of an assembler in the plant would be accounted for in this manufacturing company. 
   5. 4. Plant supervisory salaries are usually regarded as manufacturing overhead costs. When might some of these costs be regarded as direct manufacturing costs? Give an example. 
   6. 5. Suppose that both the direct materials used and the plant and equipment depreciation are related to the manufacture of 1 million units of product. What is the unit cost for the direct materials assigned to those units? What is the unit cost for plant and equipment depreciation? Assume that yearly plant and equipment depreciation is computed on a straight-line basis. 
   7. 6. Assume that the implied cost-behavior patterns in requirement 5 persist. That is, direct material costs behave as a variable cost and plant and equipment depreciation behaves as a fixed cost. Repeat the computations in requirement 5, assuming that the costs are being predicted for the manufacture of 1.2 million units of product. How would the total costs be affected? 
   8. 7. As a management accountant, explain concisely to the president why the unit costs differed in requirements 5 and 6. 
4. 2-42. INCOME STATEMENT AND SCHEDULE OF COST OF GOODS MANUFACTURED. Chan’s manufacturing costing system uses a three-part classification of direct materials, direct manufacturing labor, and manufacturing overhead costs. The following items (in millions) pertain to Chan Corporation:

1. 2-43. TERMINOLOGY, INTERPRETATION OF STATEMENTS (CONTINUATION OF 2-42). 
   1. Required
   2. 1. Calculate total prime costs and total conversion costs. 
   3. 2. Calculate total inventoriable costs and period costs. 
   4. 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? Give an example.
   5. 4. Suppose that both the direct materials used and the depreciation on plant and equipment are related to the manufacture of 1 million units of product. 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 depreciation is computed on a straight-line basis. 
   6. 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 2 million units of product. Determine the effect on total costs. 
   7. 6. Assume that depreciation on the equipment (but not the plant) is computed based on the number of units produced because the equipment deteriorates with units produced. The depreciation rate on equipment is $6.00 per unit. Calculate the depreciation on equipment assuming (a) 1 million units of product are produced and (b) 2 million units of product are produced. 
2. 2-44. DIFFERENT MEANINGS OF PRODUCT COSTS. There are at least three different purposes for which we measure product costs. They are (1) product mix decisions, (2) determining the appropriate charge for a government contract, and (3) preparing financial statements for external reporting following GAAP. In the following table, indicate whether the respective type of cost would be included or excluded for the particular purpose. If your answer is not definitive (include or exclude), provide a short explanation of why.
3. Required

1. 2-45. MISSING RECORDS, COMPUTING INVENTORY COSTS. Sam Wright recently took over as the controller of Osborn Brothers Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray. Sam needs the ending inventory balances to report first-quarter numbers. 
2. For the previous month (March 2020), Sam was able to piece together the following information:

1.  Required
   1. Calculate the cost of 
   2. 1. Finished-goods inventory, March 31, 2020 
   3. 2. Work-in-process inventory, March 31, 2020 
   4. 3. Direct materials inventory, March 31, 2020 
2. 2-46. COMPREHENSIVE PROBLEM ON UNIT COSTS, PRODUCT COSTS. Atlanta Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2020. Costs incurred for 2020 are as follows (V stands for variable; F stands for fixed):

1. Variable manufacturing costs are variable with respect to units produced. Variable marketing, distribution, and customer-service costs are variable with respect to units sold. 
2. Inventory data are as follows:

1. Production in 2020 was 100,000 units. Two pounds of direct materials are used to make one unit of finished product. 
2. Revenues in 2020 were $473,200. The selling price per unit and the purchase price per pound of direct materials were stable throughout the year. The company’s ending inventory of finished goods is carried at the average unit manufacturing cost for 2020. Finished-goods inventory on December 31, 2020, was $20,970. 
   1. Required
   2. 1. Calculate direct materials inventory, total cost, December 31, 2020. 
   3. 2. Calculate finished-goods inventory, total units, December 31, 2020. 
   4. 3. Calculate selling price in 2020. 
   5. 4. Calculate operating income for 2020. 
3. 2-47. COST CLASSIFICATION; ETHICS. Paul Howard, the new plant manager of Garden Scapes Manufacturing Plant Number 7, has just reviewed a draft of his year-end financial statements. Howard receives a year-end bonus of 11.5% of the plant’s operating income before tax. The year-end income statement provided by the plant’s controller was disappointing to say the least. After reviewing the numbers, Howard demanded that his controller go back and “work the numbers” again. Howard insisted that if he didn’t see a better operating income number the next time around, he would be forced to look for a new controller. 
4. Garden Scapes Manufacturing classifies all costs directly related to the manufacturing of its product as product costs. These costs are inventoried and later expensed as costs of goods sold when the product is sold. All other expenses, including finished-goods warehousing costs of $3,640,000, are classified as period expenses. Howard had suggested that warehousing costs be included as product costs because they are “definitely related to our product.” The company produced 260,000 units during the period and sold 240,000 units. 
5. As the controller reworked the numbers, he discovered that if he included warehousing costs as product costs, he could improve operating income by $280,000. He was also sure these new numbers would make Howard happy. 
   1. Required
   2. 1. Show numerically how operating income would improve by $280,000 just by classifying the preceding costs as product costs instead of as period expenses. 
   3. 2. Is Howard correct in his justification that these costs are “definitely related to our product”? 
   4. 3. By how much will Howard profit personally if the controller makes the adjustments in requirement 1? 
   5. 4. What should the plant controller do? 
6. 2-48. FINDING UNKNOWN AMOUNTS. Required. An auditor for the Internal Revenue Service is trying to reconstruct some partially destroyed records of two taxpayers. For each of the cases in the accompanying list, find the unknowns designated by the letters A and B for Case 1 and C and D for Case 2.