Managerial Accounting 1 – Flashcards
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Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA): 1. Helps Creditors make lending decisions 2. Helps in planning and controlling operations 3. Is not required to follow GAAP 4. Has a focus on the future 5. Summary reports prepared quarterly or annually
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1. Helps Creditors make lending decisions (FA) 2. Helps in planning and controlling operations (MA) 3. Is not required to follow GAAP (MA) 4. Has a focus on the future (MA) 5. Summary reports prepared quarterly or annually (FA)
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Which is not a characteristic of management accounting information? A) Focuses on the future B) Emphasizes relevance C) Provides detailed information about individual parts of the company D) Emphasizes the external financial statements
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D) Emphasizes the external financial statements
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World-class businesses use which of these systems to integrate all of a company's worldwide functions, departments, and data into a single system? A. Just-in-time management B. Cost standards C. Enterprise resource planning D. Items a, b, and c are correct.
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C. Enterprise resource planning
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Today's business environment is characterized by A. time-based competition. B. a shift towards a service economy. C. global competition. D. Items a, b, and c are correct.
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D. Items a, b, and c are correct.
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A management accountant who avoids conflicts of interest meets the ethical standard of A. integrity. B. confidentiality. C. competence. D. credibility.
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A. integrity.
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Match the accounting terminology to the examples. 6. Service company 7. Merchandising company 8. Manufacturing company 9. Period cost 10. Product cost a. Salaries paid to lawyers b. Company that makes cast iron pans c. Tires used in the manufacture of automobiles d. Department store e. Dentist office
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6. Service company - e. Dentist Office 7. Merchandising company - d. Department store 8. Manufacturing company - b. Company that makes cast iron pans 9. Period cost - a. Salaries paid to lawyers 10. Product cost - c. Tires used in the manufacture of automobiles
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Which of the following accounts does a manufacturing company have that a service company does not have? A. Cost of Goods Sold B. Retained Earnings C. Advertising Expense D. Salaries Payable
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A. Cost of Goods Sold
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Use the following information for The Auto Glass Medic, a retail merchandiser of auto windshields, to compute the cost of goods sold: Web Site Maintenance: $7,400 Delivery Expense: $300 Freight In: $2,200 Purchases: $47,000 Ending Merchandise Inventory: $4,500 Revenues: $60,000 Marketing Expenses: $10,900 Beginning Merchandise Inventory: $8,000
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Beginning Merchandise Inventory + Purchases + Freight In= Cost of Goods Available for Sale. Cost of Goods Available for Sale - Ending Merchandise Inventory = Cost of Goods Sold Beginning Merchandise Inventory ($8000) + Purchases ($47,000) + Freight In ($2,200) = Cost of Goods Available for Sale ($57,200) - Ending Merchandise Inventory ($4,500) = Cost of Goods Sold ($52,700)
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Consider the following partially completed income statements for merchandising companies and compute the missing amounts: Rustic Gear Find: A. Beginning Merchandise Inventory, B. Cost of Goods Available for Sale, and C. Selling and Admin Expenses Find: A. Sales, B. Purchases and Freight In, C. Cost of Goods Sold, D. Operating Income
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Rustic Gear: A. Beginning Merchandise Inventory = Cost of Goods Available for Sale - Purchases and Freight In B. Cost of Goods Available for Sale = Cost of Goods Sold + Ending Merchandise Inventory C. Selling and Admin Costs = Gross Profit - Operating Income Corrigan Inc.: A. Sales = Gross Profit + Cost of Goods Sold B. Purchases and Freight In = Cost of Goods Sold - Beginning Inventory C. Cost of Goods Sold = Cost of Goods Available for Sale - Ending Merchandise Inventory D. Operating Income = Gross Profit - Selling and Admin Costs
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Selected data for three companies are given below. All inventory amounts are ending balances and all amounts are in millions.
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Company A: Sales Revenue = $48 Cost of Goods Sold = $25 Gross Profit = $23 Operating Expenses: Administrative Expenses = $7 Selling Expenses = $4 Total Operating Expenses = $11 Operating Income = $12 Company B: Service Revenue = $41 Expenses: Wages Expense = $20 Rent Expense = $18 Total Expenses = $38 Operating Income = $3 Company C: Sales Revenue = $58 Cost of Goods Sold = $27 Gross Profit = $31 Operating Expenses: Admin Expenses = $3 Selling Expenses = $4 Total Expenses = $7 Operating Income = $24
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Selected data for three companies are given below. All inventory amounts are ending balances and all amounts are in millions. Requirement: Using the above data, calculate total current assets for each company.
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Company A: Cash = $7 Accounts Receivable = $12 Raw Material Inventory = $8 Work-in-Process Inventory = $5 Finished Goods Inventory = $9 Total Current Assets = $41 Company B: Cash = $16 Accounts Receivable = $5 Total current assets = $21 Company C: Cash = $28 Accounts Receivable = $11 Merchandise Inventory = $5 Total current Assets = $44
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Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then, determine if the product cost is a prime cost and/or a conversion cost. 11. Wages of Assembly line workers 12. Wages of the office receptionist 13. Property taxes on the factory 14. Sugar and flour used to make cookies 15. Salary of the factory maintenance supervisor 16. Salary of the sales manager
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11. Wages of Assembly line workers: Product cost / direct labor / prime and conversion cost 12. Wages of the office receptionist: period cost / n/a / n/a 13. Property taxes on the factory: product cost / manufacturing overhead / conversion cost 14. Sugar and flour used to make cookies: product cost / direct materials / prime cost 15. Salary of the factory maintenance supervisor: product cost / manufacturing overhead / conversion cost 16. Salary of the sales manager: period cost / n/a / n/a
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Ramirez Company reports the following costs for the year: Direct Materials Used: $130,000 Direct Labor Incurred: 200,000 Manufacturing Overhead Incurred: 85,000 Selling and Administrative Expenses: 205,000 How much are Ramirez's period costs?
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Production costs = Selling and Admin Expenses For Ramirez = $205,000
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Which of the following is a direct cost of manufacturing a sport boat? A. Salary of an engineer who rearranges plant layout B. Cost of customer service hotline C. Cost of boat engine D. Depreciation on plant and equipment
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C. cost of boat engine
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Which of the following is not part of manufacturing overhead for producing a computer? A. Manufacturing plant utilities B. Manufacturing plant property taxes C. Insurance on plant and equipment D. Depreciation on delivery trucks
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D. Depreciation on delivery trucks
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Year Round Company manufactures sunglasses. Following is a list of costs the company incurred during April. Use the list to calculate the total manufacturing overhead costs for the month.
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Manufacturing Overhead: Plant Depreciation $8000 Plant foreman's salary $4000 Plant janitor's wages $1200 Glue for frames $250 Oil for equipment $150 Total Manufacturing Overhead: $13,600
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DEF Manufacturing Company has the following data for 2017 (amounts in millions): Raw Materials Inventory, January 1: $10 Raw Materials Inventory, December 31: $12 Work-in-Process Inventory, January 1: $16 Work-in-Process Inventory, December 31: $20 Finished Goods Inventory, January 1: $14 Finished Goods Inventory, December 31: $16 Raw Materials Purchased, including Freight In: $34 Direct Labor: $45 Manufacturing Overhead: $23 Prepare the schedule of cost of goods manufactured and the cost of goods sold section of the income statement for the year ended December 31, 2017.
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Beginning work in process inventory: $13 Direct Materials Used: Purchases of raw materials (incl. freight): $33 Beginning raw materials inventory: $12 Raw materials available for use: $45 Ending raw materials inventory: ($10) Direct materials used: $35 Manufacturing overhead: $18 Direct labor: $45 Total Manufacturing costs incurred during the year: $98 Total manufacturing costs to account for: $111 Ending work in process inventory: ($21) Cost of Goods manufactured: $90
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Now prepare the schedule of cost of goods sold. (for question above)
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Beginning finished goods inventory: $9 cost of goods manufactured: $90 cost of goods available for sale: $99 Ending finished goods inventory: $(6) cost of goods sold: $93
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Which of the following characteristics are primarily related to managerial accounting? (check all that apply) A. A main concern is providing adequate disclosures to external users B. The primary users of accounting information are investors, creditors, and government authorities C. Detailed accounting reports on parts of the company prepared on a daily or weekly basis Your answer is correct. D. The focus is on planning and controlling operations
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C & D
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Management must weigh the benefit of obtaining information from their accounting system with the costs of providing that information. True or False?
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True
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A stakeholder is an individual or group that has an interest in the business. True or False?
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True
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Management is accountable for (check all that apply): A. Ensuring employees obey laws and pay taxes B. Providing a return on investment to investors C. Managerial Accounting D. Making timely payments to suppliers
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B, C, & D
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In today's business environment there is a shift towards a manufacturing economy where manufacturers account for four out of five U.S. jobs. True or false?
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false
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Which of these software systems is used by world-class businesses to integrate all of a company's functions, departments, and date into a single system? A. Just-in-Time Management B. Total Quality Management (TQM) C. Enterprise Resource Planning D. Value Chain
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C. Enterprise Resource Planning
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A philosophy of continuous improvement of products and processes in order to deliver high-quality goods and services to customers is called: A. Financial Accounting B. Total Quality Management (TQM) C. Just-in-Time Management D. Managerial Accounting
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B. Total Quality Management (TQM)
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The ethical standards the Institute of Management Accountants (IMA) has developed require managerial accountants to (check all that apply): A. Act with integrity and credibility B. Renew their CMA license every two years C. Preserve the confidentiality of information D. Maintain their professional competence
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A, C, & D
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A service company A. Only has operating costs that are expensed in the accounting period in which they are incurred B. Usually has Cost of Goods Sold as their biggest expense on its income statement C. Purchases inventory at one price and then sells that inventory to customers at a higher price in order to generate a profit D. Only has product costs and does not have any period costs
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A. Only has operating costs that are expensed in the accounting period in which they are incurred
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Which of the following accounts does a manufacturing company have that a service company does not? A. Wages Payable B. Finished Goods Inventory C. Retained Earnings D. Supplies Expense
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B. Finished Goods Inventory
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A product cost is recorded as a(n) A. Asset and then expensed when the product is sold B. Expense in the period in which the product was purchased or manufactured C. Liability and then expensed when the product is sold D. None of the above
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A. Asset and then expensed when the product is sold
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A manufacturing company lists three different types of inventory accounts on its balance sheet. The names of these accounts are A. Merchandise Inventory, Work-in-Process Inventory, Manufacturing Inventory B. Finished Goods Inventory, Supplies Inventory, Merchandise Inventory C. Manufacturing Inventory, Supplies Inventory, and Equipment Inventory D. Raw Materials Inventory, Work-in-Process Inventory, and Finished Goods Inventory
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D. Raw Materials Inventory, Work-in-Process Inventory, and Finished Goods Inventory
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Cost of goods sold is usually a manufacturers largest expense. True or False?
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True
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Beginning and ending Finished Goods Inventory is used to help calculate the Cost of Goods sold for A. Merchandising Companies B. Manufacturing Companies C. Service Companies D. All of the above
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B. Manufacturing Companies
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Which of the following is a direct cost of manufacturing an automobile? A. The cost of the engine B. The cost of the TV commercial to market the product C. Depreciation on equipment D. The salary of the janitor who cleans the factory floor
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A. The cost of the engine
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Which of the following would be considered an indirect material for making a bicycle? A. The pedals B. The tires C. The wrench used to tighten the bicycle parts D. The bicycle seat
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C. The wrench used to tighten the bicycle parts
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Which of the following is not part of manufacturing overhead for producing a cell phone? A. Depreciation on factory equipment B. The wages of the assembly workers C. Factory utilities D. The salary of the factory supervisor
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B. The wages of the assembly workers
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Advertising expense would be considered a period cost while property taxes on the factory building would be considered a product cost. True or false?
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true
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Which of the following would be considered a prime cost? A. The wages of the assembly workers B. The salary of the production manager C. Factory rent D. None of the above
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A. The wages of the assembly workers
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Conversion costs are the primary costs in a machine-intensive manufacturing process while prime costs are the primary costs in a labor-intensive manufacturing process. True or false?
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True
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Assume the following for Smart Touch Learning for the year ended December 31, 2018: Ending Finished Goods Inventory = $ 345,000; Sales Revenue = $ 575,000; Cost of Goods Manufactured = $ 300,000; Beginning Finished Goods Inventory = $ 375,000. Calculate Cost of Goods Sold for the period. A. $ 330,000 B. $ 605,000 C. $ 245,000 D. None of the above
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A. $ 330,000
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Cost of Goods Sold is a period cost while Insurance Expense is a product cost for a manufacturer on its income statement. True or false?
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False
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The Cost of Goods Manufactured is based on the manufacturing costs of goods that have started the production process in a given accounting period. True or false?
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False
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When a sale of merchandise occurs A. Finished Goods Inventory on the balance sheet becomes a product cost on the income statement B. Finished Goods Inventory on the balance sheet becomes a period cost on the income statement C. Cost of Goods Sold on the balance sheet becomes a product cost on the income statement D. Work-in-Process Inventory on the balance sheet becomes a period cost on the income statement
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A. Finished Goods Inventory on the balance sheet becomes a product cost on the income statement
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Assume the following for Smart Touch Learning for the year ended December 31, 2018: Ending WIP Inventory = $300,000; Direct Materials Used = $190,000; Manufacturing Overhead = $60,000; Beginning WIP Inventory = $325,000; Direct Labor = $90,000. Calculate Cost of Goods Manufactured for the period.
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A. $365,000
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Which of the following is true regarding the flow of costs through a manufacturer's inventory accounts? A. Purchases and Freight-In increase the Finished Goods Inventory account B. Direct materials used increases the Work-In-Process Inventory account C. Cost of Goods Sold increases the Finished Goods Inventory account D. Cost of goods manufactured increases the Raw Materials Inventory account
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B. Direct materials used increases the Work-In-Process Inventory account
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Assume the following for Smart Touch Learning for the year ended December 31, 2018: Total units produced = 6,000; Sales Revenue = $1,100,000; Cost of goods manufactured = $600,000; Finished Goods Inventory = $140,000. Calculate the unit product cost for the period. (Round your answers to the nearest whole dollar.)
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$100 a unit (cost of goods manufactured/total units produced)
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Assume the following for Smart Touch Learning for the year ended December 31, 2018: Total units produced= 3,000; Sales Revenue = $850,000; Cost of goods manufactured = $525,000; Finished Goods Inventory = $140,000. Calculate the unit product cost for the period. (Round your answers to the nearest whole dollar.)
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$ 175 per unit (cost of goods manufactured/total units produced)
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Service companies are unable to calculate its cost per service because service companies do not sell products to customers.
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false
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Assume the following for Smart Touch Learning when it was a service company during the year ended December 31, 2016: Sales Revenue = $ 42,000; Total costs = $ 21,000; Total liabilities = $12,500; Total Assets = $70,000 Number of services provided = 600 Calculate the unit cost per service for the period. (Round your answers to the nearest whole dollar.)
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$35 per service (total costs / number of services)
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How is the cost per item determined for a merchandiser? A. Total number of items sold / Ending merchandise inventory B. Ending merchandise inventory / Total number of items sold C. Total cost of goods sold / Total number of items sold D. Total cost of goods manufactured / Total number of items sold
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C. Total cost of goods sold / Total number of items sold
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QRS Manufacturing Company has the following data for 2017 (amounts in millions): Raw Materials Inventory, January 1: $4 Raw Materials Inventory, December 31: $12 Work-in-Process Inventory, January 1: $9 Work-in-Process Inventory, December 31: $19 Finished Goods Inventory, January 1: $14 Finished Goods Inventory, December 31: $11 Raw Materials Purchased, including Freight In: $32 Direct Labor: $46 Manufacturing Overhead: $21 Prepare the schedule of cost of goods manufactured and the cost of goods sold section of the income statement for the year ended December 31, 2017. Begin by preparing the schedule of cost of goods manufactured.
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Pg 842 Beginning Work-in-Process Inventory: $9 Direct Materials Used: Beginning Raw Materials Inventory: $4 Purchases of Raw Materials (incl. Freight In): $32 Raw Materials Available for Use: $36 Ending Raw Materials Inventory: $(12) Direct Materials Used: $24 Direct Labor: $46 Manufacturing Overhead: $21 Total Manufacturing Costs Incurred during the Year: $91 Total Manufacturing Costs to Account For: $100 Ending Work-in-Process Inventory: $(19) Cost of Goods Manufactured: $81
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Now prepare the schedule of cost of goods sold. (for question above) Raw Materials Inventory, January 1: $4 Raw Materials Inventory, December 31: $12 Work-in-Process Inventory, January 1: $9 Work-in-Process Inventory, December 31: $19 Finished Goods Inventory, January 1: $14 Finished Goods Inventory, December 31: $11 Raw Materials Purchased, including Freight In: $32 Direct Labor: $46 Manufacturing Overhead: $21
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Beginning Finished Goods Inventory: $14 Cost of Goods Manufactured: $81 Cost of Goods Available for Sale: $95 Ending Finished Goods Inventory: $(11) Cost of Goods Sold: $84
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Suppose a bakery reports this information: Beginning Raw Materials Inventory: $8,000 Ending Raw Materials Inventory: $7,000 Beginning Work-in-Process Inventory: $2,000 Ending Work-in-Process Inventory: $1,000 Beginning Finished Goods Inventory: $5,000 Ending Finished Goods Inventory: $7,000 Direct Labor: $32,000 Purchases of Raw Materials: $99,000 Manufacturing Overhead: $22,000 What is the cost of direct materials used?
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B. $100,000 Beginning raw materials inventory + Purchase of raw materials incl. freight - ending raw materials inventory (use chart on pg. 842)
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Suppose a bakery reports this information: Beginning Raw Materials Inventory: $8,000 Ending Raw Materials Inventory: $7,000 Beginning Work-in-Process Inventory: $2,000 Ending Work-in-Process Inventory: $1,000 Beginning Finished Goods Inventory: $5,000 Ending Finished Goods Inventory: $7,000 Direct Labor: $30,000 Purchases of Raw Materials: $96,000 Manufacturing Overhead: $18,000 What is the cost of goods manufactured?
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(96,000+30,000+18,000) + 2,000 - 1,000 =$146,000 total manufacturing costs incurred from the year + beginning work in process inventory - ending work in process inventory (total manufacturing costs incurred from the year = direct materials + direct labor + total manufacturing overhead) (use chart on pg. 842)
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Umbria Inc. has compiled the following data: Purchases of Raw Materials: $6,400 Freight In: 300 Property Taxes: $1,200 Ending Inventory of Raw Materials: $1,700 Beginning Inventory of Raw Materials: $4,200 Assume all materials used are direct materials (none are indirect). Compute the amount of direct materials used.
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Umbria, Inc. Computation of Direct Materials Used: Beginning Inventory of Raw Materials: $4,200 +Purchases of Raw Materials: $6,400 +Freight In: $300 =Direct Materials Available for Use: $10,900 -Ending Inventory of Raw Materials: $(1,700) =Direct Materials Used: $9,200
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Use the following inventory data for Caddy Golf Company to compute the cost of goods manufactured for the year: Direct Materials Used: $10,000 Manufacturing Overhead: $20,000 Work-in-Process Inventory: Beginning: 2,000 Ending: 3,000 Direct Labor: 13,000 Finished Goods Inventory: Beginning: 16,000 Ending: 7,000
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Caddy Golf Company Schedule of Cost of Goods Manufactured Beginning Work-in-Process Inventory: $2,000 Direct Materials Used: $10,000 Direct Labor: 13,000 Manufacturing Overhead: 20,000 Total Manufacturing Costs Incurred during the Year: 43,000 Total Manufacturing Costs to Account For: 45,000 Ending Work-in-Process Inventory : (3,000) Cost of Goods Manufactured: $42,000
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Use the following information to calculate the cost of goods sold for The Etmon Company for the month of June: Finished Goods Inventory: Beginning Balance: $28,000 Ending Balance: $13,000 Cost of Goods Manufactured: $173,000
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Beginning Finished Goods Inventory: $28,000 +Cost of Goods Manufactured: $173,000 =Cost of Goods Available for Sale: $201,000 -Ending Finished Goods Inventory: $(13,000) =Cost of Goods Sold: $188,000
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Consider the following partially completed schedules of cost of goods manufactured. Compute the missing amounts.
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White Corp. Beginning Work-in-Process Inventory: $10,300 Direct Materials Used: 14,700 Direct Labor: 10,000 Manufacturing Overhead: 20,500 Total Manufacturing Costs Incurred during the Year: 45,200 Total Manufacturing Costs to Account For: 55,500 Ending Work-in-Process Inventory: (4,800) Cost of Goods Manufactured: $50,700 Fit Apparel $40,700 35,800 20,100 10,100 66,000 $106,700 (25,700) $81,000 Lee Supply $2,400 3,500 1,400 900 5,800 8,200 (2,400) $5,800
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Clark Corp., a lamp manufacturer, provided the following information for the year ended December 31, 2016: Inventories: Beginning Ending Raw Materials: $57,000 $28,000 Work-in-Process: 105,000 67,000 Finished Goods: 48,000 54,000 Other information: Depreciation, plant building and equipment: $12,000 Raw materials purchases: 160,000 Insurance on plant: 20,000 Sales salaries: 41,000 Repairs and maintenance - plant: 9,000 Indirect labor: 31,000 Direct labor: 123,000 Administrative expenses: 54,000 Requirements 1. Use the information to prepare a schedule of cost of goods manufactured. 2. What is the unit product cost if Clark manufactured 3,376 lamps for the year?
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Direct Materials Used: $189,000 Direct Labor: 123,000 Manufacturing Overhead: Indirect Labor: 31,000 Depreciation, Plant Building and Equipment: 12,000 Repairs and Maintenance - Plant: 9,000 Insurance on Plant: 20,000 Total Manufacturing Overhead: 72,000 Total Manufacturing Costs Incurred during the Year: 384,000 Total Manufacturing Costs to Account For: 489,000 Ending Work-in-Process Inventory: (67,000) Cost of Goods Manufactured: $422,000 (use pg. 842 + answer below for help) Cost per lamp: $125 (cost of goods manufactured/number of goods = cost per unit)
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same question as above, different numbers
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Beginning Work-in-Process Inventory: $105,000 Direct Materials Used: Beginning Raw Materials Inventory: $59,000 Purchases of Raw Materials: $155,000 Raw Materials Available for Use: $214,000 Ending Raw Materials Inventory: $(24,000) Direct Materials Used: $190,000 Direct Labor: 122,000 Manufacturing Overhead: Indirect Labor: 40,000 Depreciation, Plant Building and Equipment: 15,000 Repairs and Maintenance - Plant: 12,000 Insurance on Plant: 22,000 Total Manufacturing Overhead: 89,000 Total Manufacturing Costs Incurred during the Year: 401,000 Total Manufacturing Costs to Account For: 506,000 Ending Work-in-Process Inventory: (62,000) Cost of Goods Manufactured: $444,000 cost of goods manufactured/number of goods = cost of unit
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Use the following information for a manufacturer to compute cost of goods manufactured and cost of goods sold: Inventories: Beginning Ending Raw Materials $23,000 $26,000 Work-in-Process 38,000 31,000 Finished Goods 22,000 29,000 Other information: Purchases of materials $76,000 Direct labor 86,000 Manufacturing overhead 43,000
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Beginning Work-in-Process Inventory: $38,000 Direct Materials Used: Beginning Raw Materials Inventory: $23,000 Purchases of Raw Materials: 76,000 Raw Materials Available for Use: 99,000 Ending Raw Materials Inventory: (26,000) Direct Materials Used: $73,000 Direct Labor: 86,000 Manufacturing Overhead: 43,000 Total Manufacturing Costs Incurred during the Year: 202,000 Total Manufacturing Costs to Account For: 240,000 Ending Work-in-Process Inventory: (31,000) Cost of Goods Manufactured: 209,000 Beginning Finished Goods Inventory: 22,000 Cost of Goods Available for Sale: 231,000 Ending Finished Goods Inventory: (29,000) Cost of Goods Sold: $202,000
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Chewy Bones manufactures its own brand of pet chew bones. At the end of December 2016, the accounting records showed the following: Inventories: Beginning Ending Raw Materials $13,000 $7,000 Work-in-Process 0 1,250 Finished goods 0 5,200 Other information: Raw materials purchases: $38,000 Plant janitorial services: 600 Sales salaries: 5,400 Delivery costs: 1,400 Sales revenue: 111,000 Utilities for plant: 1,200 Rent on plant: 18,000 Customer service hotline costs: 2,000 Direct labor: 20,000
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Chewy Bones Schedule of Cost of Goods Manufactured Beginning Work-in-Process Inventory: $0 Direct Materials Used: Beginning Raw Materials Inventory: $13,000 Purchases of Raw Materials: $38,000 Raw Materials Available for Use: 51,000 Ending Raw Materials Inventory: (7,000) Direct Materials Used: $44,000 Direct Labor: 20,000 Manufacturing Overhead: Rent on Plant: 18,000 Utilities for Plant: 1,200 Plant Janitorial Services: 600 Total Manufacturing Overhead: 19,800 Total Manufacturing Costs Incurred during the Year: 83,800 Total Manufacturing Costs to Account For: 83,800 Ending Work-in-Process Inventory: (1,250) Cost of Goods Manufactured: $82,550
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Requirement 2. Prepare an income statement for Chewy Bones for the year ended December 31, 2016. (For accounts with a $0 balance, make sure to enter "0" in the appropriate column.)
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Income Statement Year Ended December 31, 2016 Revenue: Sales Revenue: $111,000 Cost of Goods Sold: Beginning Finished Goods Inventory: $0 Cost of Goods Manufactured: 82,550 Cost of Goods Available for Sale: 82,550 Ending Finished Goods Inventory: (5,200) Cost of Goods Sold: 77,350 Gross Profit: 33,650 Selling and Administrative Expenses: Customer Service Hotline Expense: 2,000 Delivery Expense: 1,400 Sales Salaries Expense: 5,400 Total Selling and Administrative Expenses: 8,800 Operating Income: $24,850
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Requirement 3. How does the format of the income statement for Chewy Bones differ from the income statement of a merchandiser?
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cost of goods manufactured/merchandise purchases. A manufacturer's cost of goods sold is based on its cost of goods manufactured. In contrast, a merchandiser's cost of goods sold is based on its merchandise purchases.
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Requirement 4. Chewy Bones manufactured 17,100 units of its product in 2016. Compute the company's unit product cost for the year, rounded to the nearest cent.
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$4.83
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Certain item descriptions and amounts are missing from the monthly schedule of cost of goods manufactured and income statement of Tioga Manufacturing Company. First we will fill in the missing information on the schedule of cost of goods manufactured. Select the heading, then complete the schedule
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Tioga Manufacturing Company Schedule of Cost of Goods Manufactured Month Ended June 30, 2016 Beginning Work-in-Process Inventory: $27,000 Direct Materials Used: Beginning Raw Materials Inventory: $21,000 Purchases of Raw Materials: 59,000 Raw Materials Available for Use: 80,000 Ending Raw Materials Inventory (27,000) Direct Materials Used $53,000 Direct Labor: 73,000 Manufacturing Overhead: 43,000 Total Manufacturing Costs Incurred During the Month: 169,000 Total Manufacturing Costs to Account For: 196,000 Ending Work-in-Process Inventory (28,000) Cost of Goods Manufactured: $168,000
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Now we will fill in the missing information on the income statement. Select the heading, then complete the statement.
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Tioga Manufacturing Company Income Statement Month Ended June 30, 2016 Sales Revenue: $463,000 Cost of Goods Sold: Beginning Finished Goods Inventory: $111,000 Cost of Goods Manufactured: 168,000 Cost of Goods Available for Sale: 279,000 Ending Finished Goods Inventory: (67,000) Cost of Goods Sold: 212,000 Gross Profit: 251,000 Selling and Administrative Expenses: Selling Expenses: 96,000 Administrative Expenses: 62,000 Total Selling and Administrative Expenses: 158,000 Operating Income: $93,000
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Happy Feet Shoe Company makes loafers. During the most recent year, Happy Feet incurred total manufacturing costs of $ 21 comma 800,000. Of this amount, $ 2,100,000 was direct materials used and $ 14,800,000 was direct labor. Beginning balances for the year were Raw Materials Inventory, $ 900,000; Work-in-Process Inventory, $ 1,200,000; and Finished Goods Inventory, $ 1,000,000. At the end of the year, balances were Raw Materials Inventory, $ 800,000; Work-in-Process Inventory, $ 1,800,000; and Finished Goods Inventory, $ 690,000. Requirements Analyze the inventory accounts to determine: 1. Cost of raw materials purchased during the year. 2. Cost of goods manufactured for the year. 3. Cost of goods sold for the year.
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1. Cost of raw materials purchased during the year. Direct Materials: Direct Materials Used $2,100,000 Beginning Raw Materials Inventory: (900,000) Ending Raw Materials Inventory: 800,000 Purchases: $2,000,000 2. Cost of goods manufactured for the year. Work-in-Process Beginning Work-in-Process Inventory: $1,200,000 Direct Materials Used: $2,100,000 Direct Labor: 14,800,000 Manufacturing Overhead: 4,900,000 Total Manufacturing Costs Incurred during the Year: 21,800,000 Total Manufacturing Costs to Account For: 23,000,000 Ending Work-in-Process Inventory: (1,800,000) Cost of Goods Manufactured: $21,200,000 3. Cost of goods sold for the year. Finished Goods Beginning Finished Goods Inventory: $1,000,000 Cost of Goods Manufactured: 21,200,000 Cost of Goods Available for Sale: 22,200,000 Ending Finished Goods Inventory: (690,000) Cost of Goods Sold: $21,510,000
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XYZ Cleaning Company cleaned 41 offices and incurred costs of $ 2,788. What was the cost to clean each office?
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Total Costs / Total number of services provided = unit cost per service 2788 / 41 = $68 per service
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Requirements: 1. For a manufacturing company, identify the following as either a product cost or a period cost: 2. Show how to compute cost of goods manufactured. Use the following amounts: direct materials used, $ 19,000; direct labor, $ 14,000; manufacturing overhead, $ 22,000; beginning Work-in-Process Inventory, $ 33,000; and ending Work-in-Process Inventory, $ 7,000. 3. Using the results from Requirement 2, calculate the cost per unit for goods manufactured assuming 1,500 units were manufactured. 4. Beginning Finished Goods Inventory had 225 units that had a unit cost of $48 each. Ending Finished Goods Inventory has 250 units left. Using the results from Requirement 3, calculate cost of goods sold assuming FIFO inventory costing is used.
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Requirement 1. For a manufacturing company, identify the following as either a product cost or a period cost: a. Depreciation on plant equipment / product cost b. Depreciation on salespersons' automobiles / period cost c. Insurance on plant building / product cost d. Marketing manager's salary / period cost e. Raw materials / product cost f. Manufacturing overhead / product cost g. Electricity bill for home office / period cost h. Production employee wages / product cost Requirement 2. Cost of Goods Manufactured Beginning Work-in-Process Inventory: $33,000 Direct Materials Used: $19,000 Direct Labor: 14,000 Manufacturing Overhead: 22,000 Total Manufacturing Costs Incurred during the Year: 55,000 Total Manufacturing Costs to Account For: 88,000 Ending Work-in-Process Inventory: (7,000) Cost of Goods Manufactured: $81,000 Requirement 3: Cost of goods manufactured / total units produced = unit product cost 81,000 / 1,500 = $54 Requirement 4: Beginning Finished Goods Inventory: $10,800 + Cost of Goods Manufactured: 81,000 = Cost of Goods Available for Sale: 91,800 - Ending Finished Goods Inventory: (13,500) = Cost of Goods Sold: $78,300
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Duncan and Harrison provides hair-cutting services in the local community. In February, the business cut the hair of 200 clients, earned $ 5,400 in revenues, and incurred the following operating costs: Hair Supplies Expense: $ 400 Building Rent Expense: 1,000 Utilities Expense: 200 Depreciation Expense—Equipment: 60
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Select the formula labels, then enter the amounts and compute the cost of service of providing one haircut. Total operating costs / total number of haircuts = cost per haircut $1,660 / 200 = $8.30
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Doggie Grooming provides grooming services for pets. In April, the company earned $ 16,000 in revenues and incurred the following operating costs to groom 610 dogs: Wages $4,583 Grooming Supplies Expense: 1,675 Building Rent Expense: 600 Utilities Expense: 285 Depreciation Expense—Equipment: 55 Requirements 1. What is Doggie's net income for April? 2. What is the cost of service to groom one dog?
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Doggie's Income Statement Month Ended April 30 Revenues: Service Revenue $16,000 Expenses: Wages Expense $4,583 Grooming Supplies Expense 1,675 Building Rent Expense 600 Utilities Expense 285 Depreciation Expense—Equipment 55 Total Expenses 7,198 Net Income (Loss) $8,802 Requirement 2. What is the cost of service to groom one dog? $11.80 (total operating costs / number of dogs groomed)
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Root Brush Company sells standard hair brushes. The following information summarizes Root's operating activities for 2016: Selling and Administrative Expenses $44,880 Purchases 62,700 Sales Revenue 132,000 Merchandise Inventory, January 1, 2016 9,900 Merchandise Inventory, December 31, 2016 5,280
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Requirement 1. Calculate the operating income for 2016. Root Brush Company Income Statement Year Ended December 31, 2016 Revenue: Sales Revenue $132,000 Cost of Goods Sold: Beginning Merchandise Inventory $9,900 Purchases 62,700 Cost of Goods Available for Sale 72,600 Ending Merchandise Inventory(5,280) Cost of Goods Sold 67,320 Gross Profit 64,680 Selling and Administrative Expenses 44,880 Operating Income $19,800 Requirement 2. Root sold 6,600 brushes in 2016. Compute the unit cost for one brush. (Round your answer to the nearest cent.) $10.20
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Below are data for two companies: Company A Company B Beginning balances: Merchandise Inventory $9,600 Finished Goods Inventory $14,800 Ending balances: Merchandise Inventory 13,900 Finished Goods Inventory 12,900 Net Purchases 156,500 Cost of Goods Manufactured 211,000
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Requirement 1. Define the three business types: service, merchandising, and manufacturing. Service - Does not sell products. They sell time, skills, and knowledge. Merchandising - Resells products previously bought from suppliers. Manufacturing - Uses labor, equipment, supplies, and facilities to convert raw materials into new finished products. Requirement 2. Based on the data given for the two companies, determine the business type of each one. Company A is a merchandising company and Company B is a manufacturing company. Requirement 3. Calculate the cost of goods sold for each company. Begin by calculating the cost of goods sold for Company A. Beginning Merchandise Inventory $9,600 Purchases 153,500 Cost of Goods Available for Sale 163,100 Ending Merchandise Inventory (12,700) Cost of Goods Sold $150,400 Company B Beginning Finished Goods Inventory $15,000 Cost of Goods Manufactured 211,000 Cost of Goods Available for Sale 226,000 Ending Finished Goods Inventory (11,900) Cost of Goods Sold $214,100
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Glass Time repairs chips in car windshields. The company incurred the following operating costs for the month of February 2016: Salaries and wages $9,000 Windshield repair materials 5,000 Depreciation on truck 150 Depreciation on building and equipment 1,100 Supplies used 600 Utilities 1,950 Glass Time earned $ 20,000 in revenues for the month of February by repairing 500 windshields. All costs shown are considered to be directly related to the repair service.
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Glass Time Income Statement Month Ended February 28, 2016 Revenues: Sales Revenue $20,000 Expenses: Salaries and Wages Expense $9,000 Materials Expense 5,000 Utilities Expense 1,950 Depreciation Expense—Building and Equipment 1,100 Supplies Expense 600 Depreciation Expense—Truck 150 Total Expenses 17,800 Net Income (Loss) $2,200 Requirement 2. Compute the cost per unit of repairing one windshield. (Round your answer to the nearest cent.) Cost per windshield = $35.60 Requirement 3. The manager of Glass Time must keep unit operating cost below $ 50 per windshield in order to get his bonus. Did he meet the goal? Did the manager meet the goal? Yes
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Schneider owns Chris' Pets, a small retail shop selling pet supplies. On December 31, 2016 the accounting records of Chris' Pets showed the following: Inventory on December 31, 2016 $10,700 Inventory on January 1, 2016 15,800 Sales Revenue 54,000 Utilities Expense for the shop 3,100 Rent for the shop 4,600 Sales Commissions 3,050 Purchases of Merchandise Inventory 30,000 Requirements 1. Prepare an income statement for Chris' Pets for the year ended December 31, 2016. 2. Chris' Pets sold 3,850 units. Determine the unit cost of the merchandise sold, rounded to the nearest cent.
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Chris' Pets Income Statement Year Ended December 31, 2016 Revenue: Sales Revenue $54,000 Cost of Goods Sold: Beginning Merchandise Inventory $15,800 Purchases of Merchandise Inventory 30,000 Cost of Goods Available for Sale 45,800 Ending Merchandise Inventory (10,700) Cost of Goods Sold 35,100 Gross Profit 18,900 Selling and Administrative Expenses: Utilities Expense 3,100 Rent Expense 4,600 Sales Commissions Expense 3,050 Total Selling and Administrative Expenses 10,750 Operating Income (Loss) $8,150 Requirement 2: $9.12
