Solution manual for managerial accounting 1st edition oliver

Max­Fli Golf Company Schedule of Cost of Goods Manufactured Year Ended December 31, 2010 Beginning work in process inventory $ 6,000 Add: Direct materials used 15,000... 1 Denim Bones Sc

   FA    6 Reports audited annually by independent certified   

public accountants

   e        1.Providing high­quality, reliable products/services for

a  reasonable price in a timely manner    

    d        1 A philosophy of delighting customers by providing them

with superior products and services. Requires improving quality and eliminating defects and waste.

    b       4 A system in which a company produces just in time to

satisfy needs. Suppliers deliver materials just in time to begin production, and finished units are completed just in time for delivery to customers.

The Glass Pro Cost of Goods Sold Computation

d $203,200 (Gross margin, $114,000, plus cost of goods sold, 

$89,200 [see f. below])

e $60,000 (Cost of goods available for sale, $91,000, minus   beginning inventory, $31,000)

f $89,200 (Cost of goods available for sale, $91,000, minus   ending inventory, $1,800)

g $31,000 (Gross   margin,   $114,000,   minus   selling   and   administrative expenses, $83,000)

Suggested approach: Solve in the following order: (b), (a), and (c). Then (e), (f), (d), and (g).

101 Cookies Computation of Direct Materials Used

Direct materials used:

Beginning materials inventory $  4,200 Purchases of direct materials $6,700

Ending materials inventory         (1,600)

Max­Fli Golf Company Schedule of Cost of Goods Manufactured

Year Ended December 31, 2010 Beginning work in process inventory $  6,000 Add:  Direct materials used 15,000

  classified as part of manufacturing overhead, an inventoriable   cost. However, some companies might consider the software

  an administrative cost, which would be a period cost.

g Choosing   goals   and   the   means   to   achieve   them   is   the

planning function of management.

a  Just­in­time    (  JIT)manufacturing is a management philosophy

that focuses on  producing   products   as   needed   by   the customer.

b The   goal   of  total   quality   management   (TQM)  is   to   please

customers   by   providing   them   with   superior   products   and services by eliminating defects and waste.

c Enterprise  Resource  Planning (ERP)  can integrate all of a

company’s worldwide functions, departments, and data.

d Firms   adopt  e­commerce  to   conduct   business   on   the  

Internet.

Buddy Grooming Income Statement Month of November

Georgie’s Grooming Income Statement Quarter Ended March 31, 2011

Req. 1

Gonzales Brush Company Income Statement Year Ended December 31, 2011

Total manufacturing

costs to account for $56,400 (e) 105,800 $7,700 Less: Ending work in

process inventory (c)  (4,500) (25,700) (2,800) Costs of goods

= Ending work in process inventory $   4,500

= $437,000 ÷ 3,200 lamps = $136.56 per  lamp

Less: Ending work in process

inventory        (29,000) Cost of goods manufactured   211,000 Add: Beginning finished goods

inventory         15,000 Cost of goods available for sale 226,000 Less: Ending finished goods

inventory          26,000 Cost of goods sold $200,000

Req. 1

Although the amount is not large now, the repeated nature of the thefts means that they add up over time. Also, the repeated nature   of   the   thefts   increases   the   severity   of   Cory   Loftus’ unethical   behavior   A   new   employee   who   has   engaged   in repeated   thefts   is  unlikely  to   become   a   valued   and   trusted employee. This type of behavior is unethical.

As controller, Mary Gonzales probably hired Cory, and she is also responsible for the lack of controls that permitted a new employee to commit this theft. However, this is no excuse for Cory’s unethical behavior. The controller should think carefully whether it is in her or the company’s interest to keep Cory. This incident also reflects poorly on Mary’s competence. She needs

to   learn   from   the   experience   and  supervise   the   next bookkeeper more carefully.

Req. 2

The   new   information   makes   Mary’s   decision   more   complex Being   new,   she   may   want   to  discuss   the   situation   with   the company president. Even if the bookkeeper believed he was just “borrowing” the money, his behavior still is unethical. It

this behavior will not be tolerated in the future and to establish better controls and closer supervision.

Students’ responses will vary.

Yes. 

(continued)   P1­23A

Req. 4

Enterprise resource planning (ERP) 

Clyde’s Pets Income Statement Year Ended December 31, 2011

Req. 1

Denim Bones Schedule of Cost of Goods Manufactured

Year Ended December 31, 2011 Beginning work in process inventory $         0 Add: Direct materials used:

Req. 2

Denim Bones Income Statement Year Ended December 31, 2011

Webber Manufacturing Company Schedule of Cost of Goods Manufactured

Month Ended June 30, 2012 Beginning work in process inventory $  20,000 Direct materials used:

Webber Manufacturing Company

Income Statement Month Ended June 30, 2012

Req. 1 and 2

Flow of Costs Through West Shoe Company’s Inventory Accounts Direct Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning inventory……      $  .9M Beginning inventory……… $    1.2M Beginning inventory……… $    .4M + Purchases……… (a)   2.0M + Direct materials used………… $  2.3M + Cost of goods manufactured     25.3M

+ Direct labor………   18.8M + Manufacturing overhead…… (c)   4.7M Total manufacturing costs

incurred during the  year…….

    25.8M

= Direct materials = Total manufacturing  = Cost of goods available for

available for use… (b)   2.9M costs to account for   27.0M sale………   25.7M

− Ending inventory……              .6M − Ending inventory……… (d)     (1.7)M − Ending inventory……… (f)        .5M

= Direct materials used      $2.3M = Cost of goods manufactured (e) $25.3M = Cost of goods sold………… (g) $25.2M

Req. 3

$2.3M ­ $0.9M + $0.6M = $2.0M 

a If the goods have been received, postponing recording of the purchase   understates   liabilities   This   is   unethical   and inconsistent   with   the   IMA   standards  even   if   the   supplier agrees to delay billing.

b The   software   has   not   been   sold   Therefore,   it   would   be inconsistent with the IMA standards to record it as sales.

c Delaying   year­end   closing   incorrectly   records   next   year’s sales   as   this   year’s   sales   This   is   clearly   unethical   and inconsistent with the IMA standards.

d The   appropriate   allowance   for   bad   debts   is   a   difficult judgment. The decision should not be driven by the desire to meet a profit goal. It should be based on the likelihood that the company will collect the debts. We cannot determine this without   more   information   However,   since   the   company emphasizes   earnings   growth,   which   can   lead   to   sales   to customers   with   weaker   credit   records,   reducing   the allowance   seems   questionable   This   strategy  is   not   clear whether it is inconsistent with the IMA standards.

e If the maintenance is postponed, there is no transaction to record   This   strategy   is   beyond   the   responsibility   of   the controller, so it does not violate IMA standards.

Strategies  a, b, and c are clearly  unethical and inconsistent with  the IMA standards of integrity, objectivity, and perhaps competence. Strategy d is likely unethical, but we cannot be certain without more information. The controller should  resist attempts to implement a, b, and c, and she should gather more information   about  d   If   the   president   ignores   Reinhardt’s concerns and still insists that these strategies be implemented, then   Reinhardt   needs   to   decide  if   she   wants   to   work   for   a company that engages in unethical behavior.

The Tree People could use a/an enterprise resource planning  (ERP) system to integrate all their data.

Cam’s Pets Income Statement Year Ended December 31, 2011

Req. 1

Chewy Bones Schedule of Cost of Goods Manufactured

Year Ended December 31, 2011 Beginning work in process inventory $         0 Add:  Direct materials used:

Req. 2

Chewy Bones Income Statement Year Ended December 31, 2011

Nelly Manufacturing Company Schedule of Cost of Goods Manufactured

Month Ended June 30, 2012 Beginning work in process inventory $  28,000 Direct materials used:

Cost of goods sold:

Beginning finished goods inventory   $115,000

Marketing expenses 92,000

Administrative expenses         67,000    159,000

*From the Schedule of Cost of Goods Manufactured

Flow of Costs Through Happy Feet Shoe Company’s Inventory Accounts Direct Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning inventory……      $  .5M Beginning inventory……… $    1.8M Beginning inventory……… $    1.1M + Purchases………     2.8M + Direct materials used……… $2.7M + Cost of goods manufactured     25.6M

+ Direct labor………   11.8M + Manufacturing overhead……     11.3M Total manufacturing costs

incurred during the year     25.8M

= Direct materials = Total manufacturing  = Cost of goods available for

available for use…       3.3M costs to account for……   27.6M sale……… 26.7M

− Ending inventory……            .6M − Ending inventory……… (b)         2.0M − Ending inventory……… (d)       .7M

c Delaying closing to improperly inflate sales  is inconsistent with the IMA standards.

d The   appropriate   allowance   for   bad   debts   is   a   difficult judgment. The allowance for bad debts should not be driven

by the desire to meet a profit goal. It should be based on the collectibility   of   the   accounts   receivable   Without   more information on the collectibility of accounts receivable,  it is not clear whether this strategy would violate IMA standards.

e Postponing   route   monthly   maintenance   expenditures   is   a management   decision   and  does   not   violate   the   IMA standards.

Strategies a, b and c are clearly unethical and violate the IMA standards   of   integrity,   objectivity,   and   perhaps   competence Without  more information, it  is  not clear  whether strategy d violates   the   IMA   standards   The   controller   should  resist attempts   to   implement  a,   b   and   c   and   should  gather   more information about  d. If the president ignores Tom’s concerns, then Tom needs to consider if she wants to work for a company that engages in unethical behavior.

Shaft and handle of weed eating: direct materials

Motor of weed eating: direct materials

Factory labor for workers assembling weed eaters: direct labor Nylon thread in weed eater: factory overhead

Haupt Consulting Schedule of Cost of Goods Manufactured

Month Ended January 31, 2012 Beginning work in process inventory $      0 Direct materials used: