Prime costs are the combination of direct materials and direct labor costs, while con-version costs are the combination of direct labor costs and factory overhead costs.. Product costs
Trang 1CHAPTER 16 (FIN MAN); CHAPTER 1 (MAN)
MANAGERIAL ACCOUNTING CONCEPTS
AND PRINCIPLES
DISCUSSION QUESTIONS
1 Financial accounting and managerial
ac-counting are different in several ways
Financial accounting information is reported
in statements that are useful to persons or
groups outside of a company These
state-ments objectively report the results of past
operations at fixed periods and the financial
condition of the business under generally
accepted accounting principles Managerial
accounting information uses both subjective
and objective information to meet the
spe-cific needs of management The information
can be reported periodically or as needed by
management and can be reported for the
entire entity or for segments of the
organiza-tion.
2 a A line department is directly involved in
the basic objectives of the organization,
while a staff department provides
ser-vice, assistance, or advice to line
de-partments or other staff dede-partments.
b (1) Sales Department
(2) Personnel Department
3 Direct materials cost
4 Prime costs are the combination of direct
materials and direct labor costs, while
con-version costs are the combination of direct
labor costs and factory overhead costs
5 Product costs are composed of three
elements of manufacturing costs: direct
ma-terials cost, direct labor cost, and factory
overhead cost These costs are treated as
assets until the product is sold Product
costs are sometimes referred to as
invento-riable costs Period costs are costs that are
used in generating revenue during the
current period They are recognized as penses on the current period’s income state- ment.
ex-6 The three inventory accounts for a
manufac-turing business are as follows:
a Finished goods, representing goods in
the state in which they are to be sold.
b Work in process, representing goods in
the process of manufacture.
c Materials, representing goods in the
state in which they were acquired.
7 Finished goods, work in process, and
mate-rials
8 The cost of finished goods and the cost of
work in process included the following:
a Direct materials—the costs of materials
that enter directly into the finished uct.
prod-b Direct labor—the wages of factory
work-ers who convert materials into a finished product.
c Factory overhead—the remaining costs,
other than direct materials and direct bor, of operating a factory.
la-9 Cost of goods sold
10. A merchandising business purchases chandise (products) in a finished state for resale to customers The cost of product
mer-sold is called cost of merchandise mer-sold A
manufacturer makes the product it sells ing direct materials, direct labor, and factory overhead The cost of the product sold is
us-generally called cost of goods sold.
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Trang 2d DM (or FO if the cost is immaterially small)
PE 16–3A (FIN MAN); PE 1–3A (MAN)
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accessible website, in whole or in part.
Trang 3PE 16–5A (FIN MAN); PE 1–5A (MAN)
a Work in process inventory, January 1 $ 50,000 Cost of direct materials used in production $12,000
Direct labor 31,000
Factory overhead 20,000
Total manufacturing costs incurred during
January 63,000 Total manufacturing costs $113,000 Less work in process inventory, January 31 53,000 Cost of goods manufactured $ 60,000
b Finished goods inventory, January 1 $21,000 Cost of goods manufactured 60,000 Cost of finished goods available for sale $81,000 Less finished goods inventory, January 31 24,000 Cost of goods sold $57,000
3
© 2012 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Trang 4PE 16–5B (FIN MAN); PE 1–5B (MAN)
a Work in process inventory, July 1 $ 41,000 Cost of direct materials used in production $ 84,000
Direct labor 110,000
Factory overhead 56,000
Total manufacturing costs incurred during July 250,000 Total manufacturing costs $291,000 Less work in process inventory, July 31 37,000 Cost of goods manufactured $254,000
b Finished goods inventory, July 1 $ 47,000 Cost of goods manufactured 254,000 Cost of finished goods available for sale $301,000 Less finished goods inventory, July 31 34,000 Cost of goods sold $267,000
4
© 2012 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Trang 5Ex 16–1 (FIN MAN); Ex 1–1 (MAN)
a Factory overhead cost
b Factory overhead cost
c Direct materials cost
d Direct labor cost
e Direct materials cost
f Direct materials cost
g Factory overhead cost
h Direct materials cost
Ex 16–2 (FIN MAN); Ex 1–2 (MAN)
a Direct materials cost
b Direct labor cost
c Direct materials cost
d Factory overhead cost
e Factory overhead cost
f Factory overhead cost
g Factory overhead cost
h Direct materials cost
i Factory overhead cost
j Direct labor cost
Ex 16–3 (FIN MAN); Ex 1–3 (MAN)
© 2012 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Trang 6© 2012 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Trang 7Ex 16–8 (FIN MAN); Ex 1–8 (MAN)
1 The maintenance salaries and indirect materials should be included as tory overhead.
fac-2 The factory overhead incorrectly includes the following items: sales salaries, promotional expenses, corporate office insurance, and corporate office depreciation These items should not be included as factory overhead The corrected report is as follows:
NUUMAN INC.
Manufacturing Costs For the Quarter Ended June 30, 2012 Cost of direct materials used in production $ 690,000 Direct labor 620,000 Factory overhead:
Maintenance salaries $ 80,000
Indirect materials 70,000
Supervisor salaries 510,000
Heat, light, and power 135,000
Insurance and property taxes—plant 143,000
Depreciation—plant and equipment 119,000 1,057,000 Total $2,367,000
7
© 2012 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Trang 8Ex 16–9 (FIN MAN); Ex 1–9 (MAN)
a.
AIR TEMP MANUFACTURING COMPANY
Income Statement For the Month Ended January 31, 20—
Revenues $325,000 Cost of goods sold 170,000 Gross profit $155,000 Operating expenses:
Ex 16–10 (FIN MAN); Ex 1–10 (MAN)
LAWLER COMPANY Balance Sheet December 31, 2012 Current assets:
Cash $ 64,000 Accounts receivable 60,000 Inventories:
Finished goods $23,000
Work in process 90,000
Materials 50,000 163,000 Supplies 41,000 Prepaid insurance 23,000 Total current assets $351,000
Trang 9Materials inventory, April 1, 2012 $ 350,000 Add materials purchased during April 860,000 Cost of materials available for use $1,210,000 Less materials inventory, April 30, 2012 300,000 Cost of direct materials used in production $ 910,000
Ex 16–12 (FIN MAN); Ex 1–12 (MAN)
Ex 16–13 (FIN MAN); Ex 1–13 (MAN)
Work in process inventory, January 1, 2012 $ 85,000 Add manufacturing costs incurred during January:
Cost of direct materials used in production $215,000
Direct labor 185,000
Factory overhead 130,000
Total manufacturing costs incurred 530,000 Total manufacturing costs $615,000 Less work in process inventory, January 31, 2012 94,000 Cost of goods manufactured $521,000
Ex 16–14 (FIN MAN); Ex 1–14 (MAN)
Trang 10Ex 16–15 (FIN MAN); Ex 1–15 (MAN)
a.
BEDFORD MANUFACTURING COMPANY Statement of Cost of Goods Manufactured For the Month Ended May 31, 2012 Work in process inventory, May 1, 2012 $ 240,000 Direct materials:
Materials inventory, May 1, 2012 $168,000
Purchases 302,000
Cost of materials available for use $470,000
Less materials inventory, May 31, 2012 139,000
Cost of direct materials used in
Total factory overhead 144,200
Total manufacturing costs incurred during May 950,200
Total manufacturing costs $1,190,200 Less work in process inventory, May 31, 2012 260,000 Cost of goods manufactured $ 930,200 b.
Finished goods inventory, May 1, 2012 $ 182,000 Cost of goods manufactured 930,200 Cost of finished goods available for sale $1,112,200 Less finished goods inventory, May 31, 2012 214,200 Cost of goods sold $ 898,000
Trang 11a Finished goods inventory, July 1, 2012 $ 66,000 Cost of goods manufactured 270,000 Cost of finished goods available for sale $336,000 Less finished goods inventory, July 31, 2012 62,000 Cost of goods sold $274,000
b Sales $515,000 Cost of goods sold 274,000 Gross profit $241,000
c Gross profit $241,000 Operating expenses:
b Cost of goods manufactured $315,000 Less cost of goods sold 260,000 Finished goods inventory $ 55,000
c Purchased materials $164,000 Less materials inventory 22,000 Direct materials cost $142,000
d Total manufacturing costs $362,000 Less: Direct materials $142,000
Factory overhead costs (indirect labor
and factory depreciation) 106,000 * 248,000 Direct labor cost $114,000
*$84,000 + $22,000
e Total manufacturing costs $362,000 Less cost of goods manufactured 315,000 Work in process inventory $ 47,000
Trang 12PROBLEMS Prob 16–1A (FIN MAN); Prob 1–1A (MAN)
Product Costs Period Costs
Trang 13Product Costs Period Costs
Trang 14Prob 16–3A (FIN MAN); Prob 1–3A (MAN)
1 The most logical definition for the final cost object would be the patient The reason is that the cost can be accumulated at the patient level for billing and insurance reimbursement purposes.
Trang 15December 1, 2012 $295,000 Direct materials:
Materials inventory, December 1, 2012 $118,000
Purchases 228,000
Cost of materials available for use $346,000
Less materials inventory,
December 31, 2012 120,000
Cost of direct materials used in
production $226,000 Direct labor 344,000
Factory overhead 120,000
Total manufacturing costs incurred during
December 690,000 Total manufacturing costs $985,000 Less work in process inventory,
December 31, 2012 302,000 Cost of goods manufactured $683,000
Trang 16Prob 16–4A (FIN MAN); Prob 1–4A (MAN) (Concluded)
3.
JERRY COMPANY Income Statement For the Month Ended December 31, 2012 Sales $1,117,000 Cost of goods sold:
Finished goods inventory, December 1, 2012 $136,000
Cost of goods manufactured 683,000
Cost of finished goods available for sale $819,000
Less finished goods inventory,
December 31, 2012 118,000
Cost of goods sold 701,000 Gross profit $ 416,000 Operating expenses 160,000 Net income $ 256,000
Trang 17THE GREEN HORNET CORPORATION Statement of Cost of Goods Manufactured For the Year Ended December 31, 2012 Work in process inventory, January 1, 2012 $ 306,000 Direct materials:
Materials inventory, January 1, 2012 $165,000
Purchases 325,000
Cost of materials available for use $490,000
Less materials inventory,
Depreciation expense—factory equipment 20,900
Heat, light, and power—factory 8,400
Property taxes—factory 6,800
Rent expense—factory 11,500
Supplies—factory 5,700
Miscellaneous cost—factory 3,600
Total factory overhead 86,000
Total manufacturing costs incurred during
the year 726,000 Total manufacturing costs $1,032,000 Less work in process inventory,
December 31, 2012 290,000 Cost of goods manufactured $ 742,000
Trang 18Prob 16–5A (FIN MAN); Prob 1–5A (MAN) (Concluded)
2.
THE GREEN HORNET CORPORATION
Income Statement For the Year Ended December 31, 2012 Sales $1,530,000 Cost of goods sold:
Finished goods inventory, January 1, 2012 $ 298,000
Cost of goods manufactured 742,000
Cost of finished goods available for sale $1,040,000
Less finished goods inventory,
December 31, 2012 284,000
Cost of goods sold 756,000 Gross profit $ 774,000 Operating expenses:
Sales salaries expense 188,000 336,000
Total operating expenses 490,000 Net income $ 284,000
Trang 19Product Costs Period Costs
Trang 20Prob 16–2B (FIN MAN); Prob 1–2B (MAN)
Product Costs Period Costs
Trang 211 The most logical definition for the final cost object would be a guest Guests consume services such as a meal, a night’s stay in a hotel room, room ser- vice, a telephone call, etc.
Trang 22Prob 16–4B (FIN MAN); Prob 1–4B (MAN)
*Note: The student must calculate part (b) prior to calculating part (a), since
the solution to part (b) is needed as an input to part (a).
Statement of Cost of Goods Manufactured For the Month Ended December 31, 2012 Work in process inventory,
December 1, 2012 $ 85,000 Direct materials:
Materials inventory, December 1, 2012 $ 47,000
Purchases 202,000
Cost of materials available for use $249,000
Less materials inventory,
December 31, 2012 22,000
Cost of direct materials used in
production $227,000 Direct labor 277,000
Factory overhead 106,000
Total manufacturing costs incurred during
December 610,000 Total manufacturing costs $695,000 Less work in process inventory,
December 31, 2012 123,000 Cost of goods manufactured $572,000
Trang 23MARGO COMPANY Income Statement For the Month Ended December 31, 2012 Sales $805,000 Cost of goods sold:
Finished goods inventory, December 1, 2012 $160,000
Cost of goods manufactured 572,000
Cost of finished goods available for sale $732,000
Less finished goods inventory,
December 31, 2012 141,000
Cost of goods sold 591,000 Gross profit $214,000 Operating expenses 84,000 Net income $130,000
Trang 24Prob 16–5B (FIN MAN); Prob 1–5B (MAN)
1.
YU COMPANY Statement of Cost of Goods Manufactured For the Year Ended December 31, 2012 Work in process inventory, January 1, 2012 $ 67,000 Direct materials:
Materials inventory, January 1, 2012 $ 47,000
Purchases 76,000
Cost of materials available for use $123,000
Less materials inventory,
Depreciation expense—factory equipment 9,000
Heat, light, and power—factory 3,600
Property taxes—factory 2,500
Rent expense—factory 4,000
Supplies—factory 3,000
Miscellaneous cost—factory 2,000
Total factory overhead 38,500
Total manufacturing costs incurred during
the year 218,000 Total manufacturing costs $285,000 Less work in process inventory,
December 31, 2012 59,000 Cost of goods manufactured $226,000