Chapter 14

अब Quizwiz के साथ अपने होमवर्क और परीक्षाओं को एस करें!

A company's prime costs total $4,644,000 and its conversion costs total $5,660,000. If direct materials are $2,176,000, calculate the overhead costs:

$3,192,000 Overhead Costs = Conversion Costs - (Prime Costs - Direct Materials Costs) Overhead Costs = $5,660,000 - ($4,644,000 - $2,176,000) = $3,192,000

Which of the following are sections of the Schedule of Cost of Goods Manufactured? (A) Direct Labor (B) Direct Materials (C) Factory Overhead (D) Cost of Goods Manufactured (E) Cost of Goods Sold (F) Net Income

A, B, C, and D.

_____ is when a person commits fraud and feels a low risk of getting caught. (A) Pressure (B) Opportunity (C) Rationalization (D) Incentive

B Opportunity is when a person commits fraud and feels a low risk of getting caught. Pressure, or incentive, is when a person feels pressure or has an incentive to commit fraud. Rationalization is when a person justifies fraud or does not see its criminal nature.

What are prime costs? (A) Direct Material + Direct Labor + Factory Overhead (B) Direct Material + Direct Labor (C) Direct Labor + Factory Overhead (D) Cost of obtaining the merchandise inventory

B Prime costs include the costs of direct materials and direct labor and are costs incurred in the process of converting raw materials to finished goods.

Which is the lean principle where managers and employees seek to uncover waste in business activities including accounting activities such as payroll and disbursements? (A) Value chain (B) Total quality management Correct (C) Continuous improvement (D) Just-in-time manufacturing

B Total quality management is the lean practice where managers and employees seek to uncover waste in business activities including accounting activities such as payroll and disbursements.

From the list below, select the items that are classified as a materials activity. (A) Raw materials used (B) Raw materials beginning inventory (C) Raw materials purchases (D) Work in process beginning inventory (E) Goods manufactured (F) Direct labor used (G) Factor overhead used

B and C Materials activities includes raw materials beginning inventory and raw materials purchases.

The purposes of managerial accounting are to provide useful information to aid in: (A) Reviewing past activities. (B) Determining costs of products and services. (C) Determining costs of employee wages and salaries. (D) Comparing actual planned results.

B and D The three main purposes of managerial accounting are to provide useful information to aid in planning future activities, comparing actual to planned results, and determining costs of products and services.

The purposes of managerial accounting are to provide useful information to aid in: (A) Reviewing past activities. (B) Determining costs of products and services. (C) Determining costs of employee wages and salaries. (D) Comparing actual to planned results.

B and D The three main purposes of managerial accounting are to provide useful information to aid in planning future activities, comparing actual to planned results, and determining costs of products and services.

Use the following information to compute the cost of goods manufactured. Assume that all raw materials used were traceable to specific units of product. *Beginning raw materials $6,600 *Ending raw materials $5,100 *Direct labor $13,350 *Raw materials purchases $8,500 *Depreciation on factory equipment $7,600 *Factory repairs and maintenance $4,400 *Beginning finished goods inventory $11,300 *Ending finished goods inventory $10,000 *Beginning work in process inventory $6,800 *Ending work in process inventory $7,400

$34,750 Beginning raw materials + Raw materials purchases - Ending raw materials + Direct Labor +Depreciation on factory equipment + Factory repairs and maintenance + Beginning work in process inventory - Ending work in process inventory = Cost of goods manufactured. Cost of Goods Manufactured = ($6,600 + $8,500 - $5,100) + $13,350 + ($7,600 + $4,400) + $6,800 - $7,400 = $34,750

Using the information below, calculate gross profit for the period: *Beginning Raw Materials Inventory $20,000 *Ending Raw Materials Inventory $25,000 *Beginning Work in Process Inventory $45,000 *Ending Work in Process Inventory $54,000 *Beginning Finished Goods Inventory $70,000 *Ending Finished Goods Inventory $57,000 *Cost of Goods Sold for the period $490,000 *Sales revenues for the period $1,154,000 *Operating expenses for the period $182,000

$664,000 Gross Profit = Sales - Cost of Goods Sold Gross Profit = $1,154,000 - $490,000 = $664,000

Selected costs related to Apple's iPhone are listed below. Classify each cost as either direct materials, direct labor, factory overhead, selling expenses, or general and administrative expenses. 1. Uniforms provided for each factory worker 2. Wages for retail store salesperson 3. Glue to hold iPhone cases together 4. Wages for employees who maintain assembly equipment 5. Wages for assembly workers 6. Batter component 7. Microphone component 8. Wages for factory equipment operators.

1. Factory overhead 2. Selling expense 3. Factory overhead 4. Factory overhead 5. Direct labor 6. Direct materials 7. Direct materials 8. Direct labor

Listed below are costs of services provided by an airline company. Consider the cost object to be a flight. Flight attendants and pilots are paid based on hours of flight time. Classify each cost as direct, indirect, selling, or general and administrative. 1. Accounting manager salary 2. Depreciation (straight-line) on plane 3. Fuel used for plane flight 4. Flight attendant wages for flight 5. Pilot wages for flight 6. Aircraft maintenance manager salary 7. Snacks served on airplanes 8. Maintenance on airplanes

1. General and Administrative 2. Indirect 3. Direct 4. Direct 5. Direct 6. Indirect 7. Direct 8. Indirect

Topeka Manufacturing reported sales of $750,000 during the current year. The company used $300,000 of raw materials to produce the units that were sold. Its raw materials inventory totaled $10,000 at the beginning of the year and $14,000 at the end of the year. What is the company's raw materials inventory turnover?

25.0 Raw materials inventory turnover = raw materials used of $300,000 ÷ average raw materials inventory of $12,000 (or ($10,000 + $14,000) ÷ 2) = 25.0.

Using the information below, compute the raw materials inventory turnover: *Raw Materials Used $135,600 *Beginning Raw Materials Inventory $18,700 *Ending Raw Materials Inventory $20,900

6.85 Raw materials inventory turnover = Raw materials used/Average raw materials inventory Raw materials inventory turnover = $135,600/[($18,700 + $20,900)/2] Raw materials inventory turnover = $135,600/$19,800 = 6.85

Using the information below, compute the raw materials inventory turnover: *Raw Materials Used $88,500 *Beginning Raw Materials Inventory $8,300 *Ending Raw Materials Inventory $9,600

9.89 Raw materials inventory turnover = Raw materials used/Average raw materials inventory Raw materials inventory turnover = $88,500/[($8,300 + $9,600)/2] Raw materials inventory turnover = $88,500/$8,950 = 9.89

A focus on financial, social, and environmental measures is known as (A) Triple bottom line (B) Total quality management (C) Continuous improvement (D) Corporate social responsibility

A The triple bottom line focuses on financial, social, and environmental measures.

The main difference on the income statement between a manufacturer and a merchandiser includes: (A) items making up cost of goods sold (B) items making up raw materials inventory (C) selling and administrative expenses (D) revenue

A The main difference on the income statement between a manufacturer and a merchandiser includes the items making up cost of goods sold. A merchandiser adds cost of goods purchased to beginning merchandise inventory and subtracts ending merchandise inventory. A manufacturer adds cost of goods manufactured to beginning finished goods inventory and subtracts ending finished goods inventory.

Service companies do not classify costs as product versus period costs because: (A) they do not have any product costs (B) they do not have any period costs (C) their services are not inventoried (D)it is difficult to efficiently classify these costs

C A service company does not classify product versus period costs because their services are not inventoried so this type of classification is not relevant.

Completed products ready for sale are referred to as: (A) work in process inventory (B) raw materials inventory (C) finished goods inventory (D) cost of goods sold inventory

C Completed products which are ready to be sold are known as finished goods inventory.

The following information relates to the manufacturing operation of the Abbra Publishing Company for the year: Raw materials inventory Beginning: $565,000 Ending: $628,000 The raw materials used in manufacturing during the year totaled $1,108,000. Raw materials purchased during the year amount to:

$1,171,000 Beginning Raw Materials + Purchases - Ending Raw Materials = Raw Materials Used $565,000 + Purchases - $628,000 = $1,108,000 Purchases = $1,108,000 + $628,000 - $565,000 = $1,171,000

Use the following data to determine the cost of goods manufactured: *Beginning finished goods inventory $11,600 *Direct labor $31,400 *Beginning work in process inventory $8,000 *General and administrative expenses $14,300 *Direct materials used $41,300 *Ending work in process inventory $9,800 *Indirect labor $7,100 *Ending finished goods inventory $10,300 *Indirect materials $14,300 *Depreciation-Factory equipment $8,300

$100,600 Cost of Goods Manufactured = Direct Materials + Direct Labor + Factory Overhead + Beginning Work in Process - Ending Work in Process Factory Overhead = (Indirect Labor + Indirect Materials + Depreciation Factory Equipment) Cost of Goods Manufactured = $41,300 + $31,400 + ($7,100 + $14,300 + $8,300) + $8,000 - $9,800 = $100,600

Comet Company accumulated the following account information for the year: *Beginning raw materials inventory $6,800 *Indirect materials cost $2,800 *Indirect labor cost $5,800 *Maintenance of factory equipment $3,600 *Direct labor cost $7,800 Using the above information, total factory overhead costs would be:

$12,200 Factory Overhead = Indirect materials + Indirect labor + Maintenance Factory Overhead Factory Overhead = $2,800 + $5,800 + $3,600 = $12,200

Cold Creek Kayaks, a manufacturing company, has beginning finished goods inventory of $25,000; cost of goods manufactured of $320,000; and ending finished goods inventory of $32,000. What is the cost of goods available for sale?

Cost of goods available for sale = $345,000 Beginning finished goods inventory of $25,000 + Cost of goods manufactured of $320,000 = Cost of goods available for sale of $345,000.

*Beginning inventory: -Merchandise (Unimart) $183,000 -Finished goods (B.M.) $366,000 *Cost of merchandise purchased (Unimart) $580,000 *Cost of goods manufactured (B.M.) $780,000 *Ending inventory -Merchandise (Unimart) $83,000 -Finished goods (B.M.) $77,000 Compute cost of goods sold for each of these two companies.

UNIMART COMPUTATION OF COST OF GOODS SOLD: Cost of goods sold *Merchandise inventory, beginning $183,000 *Add: Cost of merchandise purchased $580,000 = Goods available for sale $763,000 *Less: Merchandise inventory, ending $83,000 = Cost of goods sold $680,000 MFG BUSINESS (B.M.) COMPUTATION OF COST OF GOODS SOLD: Computation of Cost of Goods Sold: Cost of goods sold *Finished goods inventory, beginning $366,000 *Add: Cost of goods manufactured $780,000 = Goods available for sale $1,146,000 *Less: Finished goods inventory, ending $77,000 = Cost of goods sold $1,069,000

*Beginning inventory: -Merchandise (Unimart) $275,000 -Finished goods (B.M.) $450,000 *Cost of merchandise purchased (Unimart) $500,000 *Cost of goods manufactured (B.M.) $900,000 *Ending inventory -Merchandise (Unimart) $115,000 -Finished goods (B.M.) $375,000 Compute cost of goods sold for each of these two companies.

UNIMART COMPUTATION OF COST OF GOODS SOLD: Cost of goods sold *Merchandise inventory, beginning $275,000 *Add: Cost of merchandise purchased $500,000 = Goods available for sale $775,000 *Less: Merchandise inventory, ending $115,000 = Cost of goods sold $660,000 MFG BUSINESS (B.M.) COMPUTATION OF COST OF GOODS SOLD: Computation of Cost of Goods Sold: Cost of goods sold *Finished goods inventory, beginning $450,000 *Add: Cost of goods manufactured $900,000 = Goods available for sale $1,350,000 *Less: Finished goods inventory, ending $375,000 = Cost of goods sold $975,000

Match each concept with the correct accounting system. Item #1: Purpose is to assist managers in planning and control decisions. Item #2: Structured and follows GAAP.

Item #1: Managerial Accounting System Managerial accounting information is provided to internal managers and employees who make and implement decisions about a company's business activities. This includes helping them plan and control the company's activities. Item #2:Financial Accounting System Financial accounting follows concepts and rules, called GAAP, which provides consistency and comparability of financial statements across companies.

Use the following data to compute total manufacturing costs for the month: Sales commissions $11,100 Direct Labor $39,900 Indirect materials $15,500 Factory manager salaries $7,500 Factory supplies $9,300 Indirect labor $6,600 Depreciation-office equipment $5,300 Direct materials $40,800 Corporate office salaries $42,800 Depreciation-factory equipment $7,800

$127,400 Direct labor $39,900 + Indirect materials $15,500 + Factory manager salaries $7,500 + Factory supplies $9,300 + Indirect labor $6,600 + Direct materials $40,800 + Depreciation on factory equipment $7,800 = $127,400.

Mustang Corporation has accumulated the following accounting data for the month of April: *Finished goods inventory, April 1 $33,900 *Finished goods inventory, April 30 $27,800 *Total cost of goods manufactured $129,300 The cost of goods sold for the year is:

$135,400 (Beginning Finished Goods + Cost of Goods Manufactured - Ending Finished Goods = Cost of Goods Sold) $33,900 + $129,300 - $27,800 = $135,400

Current information for the Healey Company follows: *Beginning raw materials inventory $16,100 *Raw materials purchases $69,000 *Ending raw materials inventory $17,500 *Beginning work in process inventory $23,300 *Ending work in process inventory $28,900 *Direct labor $47,300 *Total factory overhead $30,900 All raw materials used were traceable to specific units of product. Healey Company's total manufacturing costs for the year are:

$145,800 Total Manufacturing Costs = Raw Materials + Direct Labor + Factory Overhead Raw materials used = Beginning Raw Materials Inventory + Raw Materials Purchases - Ending Raw Materials Inventory = $16,100 + $69,000 - $17,000 = $67,600 $67,600 + $47,300 + $30,900 = $145,800

Using the information below for Singing Dolls, Inc., determine the total manufacturing costs incurred during the year: *Work in Process, January 1 $50,200 *Work in Process, December 31 $37,100 *Direct materials used $12,600 *Total Factory overhead $5,600 *Direct Labor used $26,600

$44,800 Costs Added = Direct Materials Used + Direct Labor + Factory Overhead Cost Added = $12,600 + $26,600 + $5,600 = $44,800

Romeo corporation has accumulated the following accounting data for the year: *Finished goods inventory, January 1 $3,500 *Finished goods inventory, December 31 $4,300 *Total cost of goods sold $4,800 Total cost of goods manufactured for the year is:

$5,600 Total cost of goods sold - Finished goods inventory, January 1 + Finished goods inventory December 31 = Total cost of goods manufactured. $4,800 - $3,500 + $4,300 = $5,600 (Beginning Finished goods + Cost of goods manufactured - Ending Finished goods = Cost of goods sold)

Current information for the Healey Company follows: *Beginning raw materials inventory $16,100 *Raw materials purchases $60,900 *Ending raw materials inventory $17,500 *Beginning work in process inventory $23,300 *Ending work in process inventory $28,900 *Direct labor $43,700 *Total factory overhead $30,900 All raw materials used were traceable to specific units of product. Healey company's direct materials used for the year is:

$59,500 Beginning Raw Materials + Raw Materials Purchased - Ending raw materials = Direct Materials used for the year. $16,100 + $60,900 - $17,500 = $59,500

Assume that Speedboat Company has beginning finished goods inventory of $10,000; ending finished goods inventory of $150,000; goods available for sale of $210,000; and cost of goods manufactured of $200,000. What is its cost of goods sold?

$60,000 Goods available for sale includes beginning finished goods inventory and cost of goods purchased. As such, Cost of goods sold = Goods available for sale of $210,000 − Ending Finished Goods Inventory of $150,000 = $60,000.

The following data is provided for Garcon Company and Pepper Company for the year ended December 31. *Finished goods inventory, beginning Garcon Company $12,000 Pepper company $ 16,450 *Work in process inventory, beginning Garcon Company $14,500 Pepper company $19,950 *Raw materials inventory, beginning Garcon Company $7,250 Pepper company $9,000 *Rental cost on factory equipment Garcon Company $27,000 Pepper company $22,750 *Direct labor Garcon Company $19,000 Pepper company $35,000 *Finished goods inventory, ending Garcon Company $17,650 Pepper company $13,300 *Work in process inventory, ending Garcon Company $22,000 Pepper company $16,000 *Raw materials inventory, ending Garcon Company $5,300 Pepper company $7,200 *Factory utilities Garcon Company $9,000 Pepper company $12,000 *General and Administrative expenses Garcon Company $21,000 Pepper company $ 43,000 *Indirect labor Garcon Company $9,450 Pepper company $10,860 *Repairs-Factory equipment Garcon Company $4,780 Pepper company $1,500 *Raw materials purchases Garcon Company $33,000 Pepper company $52,000 *Selling expenses Garcon Company $50,000 Pepper company $46,000 *Sales Garcon Company $195,030 Pepper company $290,010 Cash Garcon Company $20,000 Pepper company $15,700 Accounts receivable, net Garcon Company $13,200 Pepper company $19,450 1. Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31. 2. Complete the table to calculate the costs of goods sold for both Garcon Company and Pepper Company for the year ended December 31.ny for the year ended December 31.

1. ****Garcon Company**** DIRECT MATERIALS *Raw materials inventory, beginning $7,250 *Add: Raw materials purchases $33,000 = Raw materials available for use $40,250 *Less: Raw materials inventory, ending $5,300 = Direct materials used $34,950 Direct labor $19,000 FACTORY OVERHEAD *Rental cost on factory equipment $27,000 *Factory utilities $9,000 *Indirect labor $9,450 *Repairs-Factory equipment $4,780 *Total factory overhead $50,230 *Total manufacturing costs $104,180 Add: Work in process inventory, beginning $14,500 = Total cost of work in process $118,680 *Less: Work in process inventory, ending $22,000 = COST OF GOODS MANUFACTURED $96,680 ****Pepper Company**** DIRECT MATERIALS *Raw materials inventory, beginning $9,000 *Add: Raw materials purchases $52,000 = Raw materials available for use $61,000 *Less: Raw materials inventory, ending $7,200 = Direct materials used $53,800 Direct labor $35,000 FACTORY OVERHEAD *Rental cost on factory equipment $22,750 *Factory utilities $12,000 *Indirect labor $10,860 *Repairs-Factory equipment $1,500 *Total factory overhead $47,110 *Total manufacturing costs $135,910 Add: Work in process inventory, beginning $19,950 = Total cost of work in process $155,860 *Less: Work in process inventory, ending $16,000 = COST OF GOODS MANUFACTURED $139,860 2. ****Garcon Company**** *Finished goods inventory, beginning $12,000 *Add: Cost of goods manufactured $96,680 =Goods available for sale $108,680 *Less: Finished goods inventory, ending $17,650 =Cost of goods sold $91,030 ****Pepper Company**** *Finished goods inventory, beginning $16,450 *Add: Cost of goods manufactured $139,860 =Goods available for sale $156,310 *Less: Finished goods inventory, ending $13,300 =Cost of goods sold $143,010

The following data is provided for Garcon Company and Pepper Company for the year ended December 31. *Finished goods inventory, beginning Garcon Company $13,800 Pepper company $ 18,400 *Work in process inventory, beginning Garcon Company $18,400 Pepper company $23,700 *Raw materials inventory, beginning Garcon Company $10,200 Pepper company $15,000 *Rental cost on factory equipment Garcon Company $33,500 Pepper company $26,350 *Direct labor Garcon Company $22,000 Pepper company $35,800 *Finished goods inventory, ending Garcon Company $18,350 Pepper company $14,100 *Work in process inventory, ending Garcon Company $25,300 Pepper company $19,600 *Raw materials inventory, ending Garcon Company $7,600 Pepper company $8,800 *Factory utilities Garcon Company $13,650 Pepper company $15,000 *General and Administrative expenses Garcon Company $27,500 Pepper company $ 53,500 *Indirect labor Garcon Company $14,000 Pepper company $12,780 *Repairs-Factory equipment Garcon Company $5,300 Pepper company $3,900 *Raw materials purchases Garcon Company $44,000 Pepper company $55,500 *Selling expenses Garcon Company $51,600 Pepper company $58,000 *Sales Garcon Company $299,640 Pepper company $396,600 Cash Garcon Company $34,000 Pepper company $17,700 Accounts receivable, net Garcon Company $14,600 Pepper company $23,450 1. Compute the total prime costs for Garcon Company and Pepper Company. 2. Compute the total conversion costs for both Garcon Company and Pepper Company.

1. **Garcon Company: Raw materials inventory, beginning $10,200 + Raw materials purchases $44,000 = Raw materials available for use $54,200 - Raw materials inventory, ending $7,600 = DIRECT MATERIALS USED $46,600 + Direct Labor $22,000 = TOTAL PRIME COSTS $68,600 **Pepper Company: Raw materials inventory, beginning $15,000 + Raw materials purchases $55,500 = Raw materials available for use $70,500 - Raw materials inventory, ending $8,800 = DIRECT MATERIALS USED $61,700 + Direct Labor $35,800 = TOTAL PRIME COSTS $97,500 2. **Garcon Company: Direct Labor $22,000 Factory overhead *Rental cost on factory equipment $33,500 +Factory utilities $13,650 +Indirect labor $15,000 +Repairs-Factory equipment $5,300 = Total factory overhead $67,450 (+Direct Labor $22,000) = Total conversion costs $89,450 **Pepper Company: Direct Labor $35,800 Factory overhead +Rental cost on factory equipment $26,350 +Factory utilities $15,000 +Indirect labor $15,000 +Repairs-Factory equipment $5,300 = Total factory overhead $61,650 (+Direct Labor $35,800) = Total conversion costs $97,450

Determine the missing amount for each separate situation involving work in process cost flows. 1. *Total manufacturing costs _____ *Work in process inventory, beginning $105,000 *Work in process inventory, ending $84,000 *Cost of goods manufactured $200,000 2. *Total manufacturing costs $150,000 *Work in process inventory, beginning _____ *Work in process inventory, ending $22,000 *Cost of goods manufactured $138,000 3. *Total manufacturing costs $217,000 *Work in process inventory, beginning $32,000 *Work in process inventory, ending _____ *Cost of goods manufactured $237,000

1. Cost of goods manufactured $200,000 + Work in process inventory, ending $84,000 - Work in process inventory, beginning $105,000 = Total manufacturing costs $179,000 2. Cost of goods manufactured $138,000 + Work in process inventory, ending $22,000 - Total manufacturing costs $150,000 = Work in process inventory, beginning $10,000 3. Total manufacturing costs $217,000 + Work in process inventory, beginning $32,000 - Cost of goods manufactured $237,000 = Work in process inventory, ending $12,000

Determine the missing amount for each separate situation involving inventory cost flows. 1. *Cost of merchandise purchased _____ *Merchandise inventory, beginning $107,700 *Merchandise inventory, ending $83,700 *Cost of goods sold $206,700 2. *Cost of merchandise purchased $141,700 *Merchandise inventory, beginning _____ *Merchandise inventory, ending $34,700 *Cost of goods sold $129,700 3. *Cost of merchandise purchased $290,700 *Merchandise inventory, beginning $29,700 *Merchandise inventory, ending _____ *Cost of goods sold $268,700

1. Cost of goods sold $206,700 + Merchandise inventory, ending $83,700 - Merchandise inventory, beginning $107,700 = Cost of merchandise purchased $182,700. 2. Cost of goods sold $129,700 + Merchandise inventory, ending $34,700 - Cost of merchandise purchased $141,700 = Merchandise inventory, beginning $22,700. 3. Cost of merchandise purchased $290,700 + Merchandise inventory, beginning $29,700 - Cost of goods sold $268,700 = Merchandise inventory, ending $51,700

A company manufactures tennis balls. Classify each of the following costs as either direct materials, direct labor, or factory overhead. 1. Rubber used to form the cores. 2. Factory maintenance. 3. Wages paid to assembly workers. 4. Glue used in binding rubber cores to felt covers. 5. Depreciation on Factory equipment. 6. Cans to package the balls.

1. Direct materials 2. Factory overhead 3. Direct labor 4. Factory overhead 5. Factory overhead 6. Direct materials

A company manufactures tennis balls. Classify each of the following costs as either direct materials, direct labor, or factory overhead. 1. Factory electricity costs. 2. Glue used in binding rubber cores to felt covers. 3. Felt covering of tennis ball. 4. Cans to package the balls. 5. Factory rent. 6. Factory manager's salary.

1. Factory overhead 2. Factory overhead 3. Direct materials 4. Direct materials 5. Factory overhead 6. Factory overhead

Indicate whether each decision is most likely to be made using managerial accounting information or financial accounting information. 1. Measure profitability of an individual store. 2. Determine location and size for an new plant. 3. Prepare financial reports according to GAAP. 4. Report financial performance to investors. 5. Assess control of manufacturing costs. 6. Estimate profits from a new service opportunity. 7. Determine whether to automate a production process. 8. Determine whether to expand into a new market.

1. Managerial 2. Managerial 3. Financial 4. Financial 5. Managerial 6. Managerial 7. Managerial 8. Managerial

A company manufactures guitars. Identify each of the following costs as either a prime cost, a conversion cost, or both. 1. Wood used to build the guitar body. 2. Glue used to bind the guitar wood. 3. Wages paid to assembly workers. 4. Depreciation on factory equipment. 5. Rent on factory building. 6. Wood to build the guitar bridge.

1. Prime cost 2. Conversion cost 3. Both 4. Conversions cost 5. Conversion cost 5. Prime cost

Classify each of the following costs as either a product cost or a period cost for a manufacturer. 1. Rent on factory building. 2. Tax accountant salary. 3. Office manager salary. 4. Indirect labor used in making goods. 5. Depreciation on factory equipment. 6. Advertising. 7. Factory manager's salary. 8. Administrative expenses.

1. Product cost 2. Period cost 3. Period cost 4. Product cost 5. Product cost 6. Period cost 7. Product cost 8. Period cost

In a recent annual report and related Global Responsibility Report, Starbucks provides information on a company performance on several dimensions. Select whether the following items best fit into the financial (label your answer "Profit"), social (label your answer "People"), or environmental (label your answer "Planet") aspects of triple bottom line reporting. 1. Net income totaled $2.9 billion. 2. Increased hiring of military veterans. 3. Increased aluminum recycling. 4. Operating cash flow totaled $4.2 billion. 5. Increased diversity training for employees. 6. Operating income totaled $4.1 billion.

1. Profit 2. People 3. Planet 4. Profit 5. People 6. Profit

Many fast-food restaurants compete on lean business practices. Match each of the following activities at a fast-food restaurant with the lean business concept it strives to achieve. Some activities might relate to more than one lean business concept. 1. Orders fill accurately 2. Food produced to order 3. Standardized food-making processes 4. Updated menu items 5. Customer satisfaction surveys 6. Employees trained in food safety techniques

1. Total Quality Management (TQM) 2. Just-in-time (JIT) 3. Total Quality Management (TQM) 4. Continuous Improvement (CI) 5. Continuous Improvement (CI) 6. Total Quality Management (TQM)

Topeka Manufacturing reported sales of $750,000 during the current year. The company used $300,000 of raw materials to produce the units that were sold. Its raw materials inventory totaled $10,000 at the beginning of the year and $14,000 at the end of the year. What is the company's days' sales in raw materials inventory at the end of the current year?

17.03 days Days' sales in raw materials inventory = ending raw materials inventory of $14,000 ÷ raw materials used of $300,000 × 365 = 17.03 days.

Compute cost of goods sold using the following information. *Finished goods inventory, beginning $500 *Cost of goods manufactured $4,000 *Finished goods inventory, ending $700

Finished goods inventory, beginning $500 Add: Cost of goods manufactured $4,000 = Goods available for sale $4,500 Less: Finished goods inventory, ending $700 = Cost of goods sold $3,800

Compute cost of goods sold using the following information. *Finished goods inventory, beginning $660 *Cost of goods manufactured $5,000 *Finished goods inventory, ending $1,150

Finished goods inventory, beginning $660 Add: Cost of goods manufactured $5,000 = Goods available for sale $5,660 Less: Finished goods inventory, ending $1,150 = Cost of goods sold $4,510

Prepare the current assets section of the balance sheet at December 31 for Bin Manufacturing using the following information. Hint: Not all information given is needed for the solution. *Cash $23,100 *Accounts payable $3,100 *Raw materials inventory $9,100 *General and administrative expenses $43,100 *Accounts receivable, net $13,100 *Selling expenses $13,100 *Finished goods inventory $23,100 *Work in process inventory $19,100 *Prepaid insurance $5,100 *Cost of goods sold $34,100

Balance sheet: *Cash $23,100 *Raw materials inventory $9,100 *Accounts receivable, net $13,100 *Finished goods inventory $23,100 *Work in process inventory $19,100 *Prepaid insurance $5,100 = Total current assets $92,600

Which of these phrases describes the fact that employees understand the changing needs and wants of their customers and align their management and operating practices accordingly? (A) Global economy (B) Service economy (C) Value chain (D) Customer orientation (E) E-commerce

D Customer orientation describes the fact that employees understand the changing needs and wants of their customers and align their management and operating practices accordingly.

_____ costs are cost-effectively traced to a cost object.

Direct Direct costs cost-effectively traced to a cost object. Indirect costs cannot be easily and cost-effectively traced to a single cost object.

Use the following selected account balances of Delray Manufacturing for the year ended December 31. Sales $1,250,000 Raw materials inventory, beginning $37,000 Work in process inventory, beginning $53,900 Finished goods inventory, beginning $62,700 Raw materials purchases $175,600 Direct labor $225,000 Indirect labor $47,000 Repairs-Factory equipment $23,000 Rent cost of factory building $57,000 Selling expenses $94,000 General and administrative expenses $129,300 Raw materials inventory, ending $42,700 Work in process inventory, ending $41,500 Finished goods inventory, ending $67,300 Prepare its schedule of cost of goods manufactured for the year ended December 31.

Direct materials: *Raw materials inventory, beginning $37,000 *Add: Raw materials purchases $175,600 = Raw materials available for use $212,600 *Less: Raw materials inventory, ending $42,700 *Direct materials used $169,900 *Direct labor $225,000 FACTORY OVERHEAD: *Indirect labor $47,000 *Repairs-Factory equipment $23,000 *Rent cost of factory building $57,000 *Total factory overhead $127,000 *Total manufacturing costs $521,900 (169,900 + 225,000 + 127,000) *Add: Work in process inventory, beginning $53,900 = Total cost of work in process $575,800 *Less: Work in process inventory, ending $41,500 = Cost of goods manufactured $534,300

If the cost of the beginning work in process inventory is $85,100, cost of goods manufactured is $965,000, direct materials cost is $345,000, Direct labor cost is $225,000, and overhead cost is $330,000, calculate the ending work in process inventory:

Ending Work in Process Inventory = Beginning Work in Process Inventory + Direct Materials Costs + Direct Labor Cost + Overhead Costs - Cost of Goods Manufactured. Ending Work in Process Inventory = $85,100 + $345,000 + $225,000 + $330,000 - $965,000 = $20,100.

Compute cost of goods sold using the following information. *Finished goods inventory, beginning $345,000 *Work in process inventory, beginning $83,000 *Work in process inventory, ending $72,000 *Cost of goods manufactured $918,000 * Finished goods inventory, ending $283,000

Finished goods inventory, beginning $345,000 Add: Cost of goods manufactured $918,000 = Goods available for sale $1,263,000 Less: Finished goods inventory, ending $283,000 = Cost of goods sold $980,000

Compute cost of goods sold using the following information. *Finished goods inventory, beginning $362,000 *Work in process inventory, beginning $86,000 *Work in process inventory, ending $75,300 *Cost of goods manufactured $961,300 * Finished goods inventory, ending $316,000

Finished goods inventory, beginning $362,000 Add: Cost of goods manufactured $961,300 = Goods available for sale $1,323,300 Less: Finished goods inventory, ending $316,000 = Cost of goods sold $1,007, 300

Compute cost of goods sold using the following information. *Merchandise inventory, beginning $12,800 *Cost of merchandise purchased $85,800 *Merchandise inventory, ending $18,800

Merchandise inventory, beginning $12,800 Add: Cost of merchandise purchased $85,800 = Goods available for sale $98,600 Less: Merchandise inventory, ending $18,800 = Cost of goods sold $79,800

Common examples of _____ costs include selling expenses and general office personnel, advertising expenses, and depreciation of office equipment.

Period Period costs refer to expenditures identified more with a time period than with finished products. Common examples of period costs include selling expenses, salaries of salespersons and general office personnel, advertising expenses, and depreciation on office equipment. Product costs refer to expenditures necessary and integral to finished products.

End-of-year current assets for two different companies follow. One is a manufacturer, Rayzer Skis Manufacturing, and the other, Sunrise Foods, is a merchandiser. *Cash Company 1 $12,000 Company 2 $10,000 *Merchandise inventory Company 1: $40,125 Company 2: --- *Raw materials inventory Company 1: --- Company 2: $37,125 *Work in process inventory Company 1: --- Company 2: $27,000 *Finished goods inventory Company 1: --- Company 2: $47,000 *Accounts receivable, net Company 1: $58,000 Company 2: $75,000 *Prepaid expenses Company 1: $3,500 Company 2: $100 1. Identify which set of numbers relates to the manufacturer and which to the merchandiser. 2a & 2b. Prepare the current asset section of the balance sheet at December 31 for each company.

REQUIRED 1 Which of these companies is a manufacturer? Company 2 = Rayzer Skis Manufacturing. Data reveals a manufacturing company as there are three inventory categories (Raw materials, Work in process, and Finished goods). Which of these companies is a merchandiser? Company 1 = Sunrise Foods. Data shows a merchandising firm as there is only one inventory item, Merchandise inventory. REQUIRED 2A *Cash $12,000 *Accounts receivable, net $58,000 *Merchandise inventory $40,125 *Prepaid expenses $3,500 *TOTAL CURRENT ASSETS $113,625 REQUIRED 2B *Cash $10,000 *Accounts receivable, net $75,000 *Raw Materials inventory $37,125 *Work in process inventory $37,000 *Finished Goods inventory $47,000 *TOTAL CURRENT ASSETS $196,825

The following data is provided for Garcon Company and Pepper Company for the year ended December 31. *Finished goods inventory, beginning Garcon Company $12,000 Pepper company $ 16,450 *Work in process inventory, beginning Garcon Company $14,500 Pepper company $19,950 *Raw materials inventory, beginning Garcon Company $7,250 Pepper company $9,000 *Rental cost on factory equipment Garcon Company $27,000 Pepper company $22,750 *Direct labor Garcon Company $19,000 Pepper company $35,000 *Finished goods inventory, ending Garcon Company $17,650 Pepper company $13,300 *Work in process inventory, ending Garcon Company $22,000 Pepper company $16,000 *Raw materials inventory, ending Garcon Company $5,300 Pepper company $7,200 *Factory utilities Garcon Company $9,000 Pepper company $12,000 *General and Administrative expenses Garcon Company $21,000 Pepper company $ 43,000 *Indirect labor Garcon Company $9,450 Pepper company $10,860 *Repairs-Factory equipment Garcon Company $4,780 Pepper company $1,500 *Raw materials purchases Garcon Company $33,000 Pepper company $52,000 *Selling expenses Garcon Company $50,000 Pepper company $46,000 *Sales Garcon Company $195,030 Pepper company $290,010 Cash Garcon Company $20,000 Pepper company $15,700 Accounts receivable, net Garcon Company $13,200 Pepper company $19,450 1. Prepare income statements for both Garcon Company and Pepper Company. 2. Prepare current assets section of the balance sheet for each company.

REQUIRED 1 GARCON: INCOME STATEMENT *Sales: $195,030 *Cost of goods sold: ***Finished goods inventory, beginning: $12,000 ***Cost of goods manufactured: $96,680 *Goods available for sale: 108,680 *Less: Finished goods inventory, ending: (17,650) Cost of goods sold: $91,030 Gross profit: $104,000 (195,030 - 91,030) Selling expenses: $50,000 General and administrative expenses: $21,000 Net income: (104,000 - 50,000 - 21,000) = $33,000 REQUIRED 1 PEPPER: INCOME STATEMENT *Sales: $290,010 *Cost of goods sold: ***Finished goods inventory, beginning: $16,450 ***Cost of goods manufactured: $139,860 *Goods available for sale: 156,310 *Less: Finished goods inventory, ending: 13,300 Cost of goods sold: $143,010 Gross profit: $147,000 (290,010 - 143,010) Selling expenses: $46,000 General and administrative expenses: $43,000 Net income: (147,000 - 46,000 - 43,000) = $58,000 REQUIRED 2 GARCON: BALANCE SHEET *Cash: $20,000 *Accounts receivable, net: $13,200 *Raw materials inventory: $5,300 *Work in process inventory: $22,000 *Finished goods inventory: $17,650 Total current assets: $78,150 REQUIRED 2 PEPPER: BALANCE SHEET *Cash: $15,700 *Accounts receivable, net: $19,450 *Raw materials inventory: $7,200 *Work in process inventory: $16,000 *Finished goods inventory: $13,300 Total current assets: $71,650

Note: Assume all raw materials were used as direct materials. Inventories: ***Raw materials inventory Beginning of year $6,000 End of year $7,000 ***Work in process inventory Beginning of year $12,000 End of year $9,000 ***Finished goods inventory Beginning of year $8,000 End of year $5,000 Activity during current year: ***Raw materials purchased $123,000 ***Direct labor $94,000 ***Factory overhead $39,000 Compute the cost of direct materials used for the current year.

Raw materials inventory, beginning $6,000 Add: Raw materials purchased $123,000 = Raw materials available for use $129,000 Less: Raw materials inventory, ending $7,000 = Direct materials used $122,000

Note: Assume all raw materials were used as direct materials. Inventories: ***Raw materials inventory Beginning of year $7,700 End of year $10,900 ***Work in process inventory Beginning of year $15,400 End of year $10,700 ***Finished goods inventory Beginning of year $11,900 End of year $7,200 Activity during current year: ***Raw materials purchased $126,900 ***Direct labor $95,700 ***Factory overhead $44,100 Compute the cost of direct materials used for the current year.

Raw materials inventory, beginning $7,700 Add: Raw materials purchased $126,900 = Raw materials available for use $134,600 Less: Raw materials inventory, ending $10,900 = Direct materials used $123,700

Garcia company reports beginning raw materials inventory of $855 and ending raw materials inventory of $717. If the company purchased $3,646 of raw materials during the month, what is the amount of materials used during the month? Note: Assume all raw materials were used as direct materials.

Raw materials used = $3,784 Explanation: Raw materials inventory, beginning $855 Add: Raw materials purchased $3,646 = Raw materials available for use $4,501 Less: Raw materials inventory, ending $717 = Direct materials used $3,784

Determine the missing amounts for each separate situation involving manufacturing cost flows. SITUATION 1: *Direct materials used (A) *Direct labor used $75,000 *Factory overhead $122,000 *Total manufacturing costs $243,500 *Work in process inventory, beginning (B) *Total work in process $289,325 *Work in process inventory, ending (C) *Cost of goods manufactured $265,420 SITUATION 2: *Direct materials used $150,480 *Direct labor used (A) *Factory overhead $32,840 *Total manufacturing costs $238,700 *Work in process inventory, beginning $56,920 *Total work in process (B) *Work in process inventory, ending $22,545 *Cost of goods manufactured (C) SITUATION 3: *Direct materials used #33,890 *Direct labor used $45,720 *Factory overhead $60,275 *Total manufacturing costs (A) *Work in process inventory, beginning $8,245 *Total work in process (B) *Work in process inventory, ending $11,250 *Cost of goods manufactured (C)

SITUATION 1: A) Direct materials used + $75,000 + $122,000 = $243,500 Direct materials used = $46,500 B) $289,325 = Work in process inventory, beginning + $243,500 Work in process inventory, beginning = $45,825 C) Work in process inventory, ending = $289,325 - $265,420 = $23,905 SITUATION 2: A) $150,480 + Direct labor used + $32,840 = $238,700 Direct labor used = $55,380 B) Total cost of work in process = $56,920 + $238,700 = $295,620 C) Cost of goods manufactured = $295,620 - $22,545 = $273,075 SITUATION 3: A) Total manufacturing costs = $33,890 + $45,720 + $60,275 = $139,885 B) Total cost of work in process = $139,885 + $8,245 = $148,130 C) Cost of goods manufactured = $148,130 - $11,250 = $136,880


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