Ch1 b

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Louisiana State University *

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7060

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Accounting

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Feb 20, 2024

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Printed by: kmilut1@lsu.edu. Printing is for personal use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. E1.10 ( LO 3 ), AP An incomplete cost of goods manufactured schedule is presented here. Hobbit Company Cost of Goods Manufactured Schedule For the Year Ended December 31, 2022 Work in process, January 1 $210,000 Direct materials Raw materials inventory, January 1 $? Raw materials purchases 158,000 Total raw materials available for use ? Less: Raw materials inventory, December 31 22,500 Direct materials used $180,000 Direct labor ? Manufacturing overhead Indirect labor 18,000 Factory depreciation 36,000 Factory utilities 68,000 Total manufacturing overhead 122,000 Total manufacturing costs ? Total cost of work in process ? Less: Work in process, December 31 81,000 Cost of goods manufactured $540,000 Instructions Complete the cost of goods manufactured schedule for Hobbit Company. (Assume that all raw materials used were direct materials.) Determine the missing amount of different cost items . E1.11 ( LO 3 ), AN Manufacturing cost data for Copa Company are presented as follows. Case A Case B Case C Direct materials used $(a) $68,400 $130,000 Direct labor 57,000 86,000 (g) Manufacturing overhead 46,500 81,600 102,000 Total manufacturing costs 195,650 (d) 253,700 Work in process 1/1/22 (b) 16,500 (h) Total cost of work in process 221,500 (e) 337,000 Work in process 12/31/22 (c) 11,000 70,000 Cost of goods manufactured 185,275 (f) (i) Instructions Determine the missing amount for each letter (a) through (i). Determine the missing amount of different cost items, and prepare a condensed cost of goods manufactured schedule . E1.12 ( LO 3 ), AN Incomplete manufacturing cost data for Horizon Company for 2022 are presented as follows for these four independent situations. Direct Materials Used Direct Labor Manufacturing Overhead Total Manufacturing Costs Work in Process Jan. 1 Work in Process Dec. 31s Cost of Goods Manufactured 1. $117,000 $140,000 $ 87,000 $(a) $33,000 $(b) $360,000 2. (c) 200,000 132,000 450,000 (d) 40,000 470,000 3. 80,000 100,000 (e) 265,000 60,000 80,000 (f) 4. 70,000 (g) 75,000 288,000 45,000 (h) 270,000 kmilut1@lsu.edu

Printed by: kmilut1@lsu.edu. Printing is for personal use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. Instructions 1. Determine the missing amount for each letter. 2. Prepare a condensed cost of goods manufactured schedule for situation (1) for the year ended December 31, 2022. Prepare a cost of goods manufactured schedule and a partial income statement . E1.13 ( LO 3 ), AP Cepeda Corporation has the following cost records for June 2022. Indirect factory labor $4,500 Direct materials used 20,000 Work in process, 6/1/22 3,000 Work in process, 6/30/22 3,800 Finished goods, 6/1/22 5,000 Finished goods, 6/30/22 7,500 Factory utilities 400 Depreciation, factory equipment 1,400 Direct labor 40,000 Maintenance, factory equipment 1,800 Indirect materials used 2,200 Factory manager's salary 3,000 Instructions 1. Prepare a cost of goods manufactured schedule for June 2022. 2. Prepare an income statement through gross profit for June 2022 assuming sales revenue is $92,100. Classify various costs into different categories and prepare cost of services performed schedule . E1.14 ( LO 2 , 3 ), AP Keisha Tombert, the bookkeeper for Washington Consulting, a political consulting firm, has recently completed a managerial accounting course at her local college. One of the topics covered in the course was the cost of goods manufactured schedule. Keisha wondered if such a schedule could be prepared for her firm. She realized that, as a service± oriented company, it would have no work in process inventory to consider. Listed here are the costs her firm incurred for the month ended August 31, 2022. Supplies used on consulting contracts $1,700 Supplies used in the administrative oﬃces 1,500 Depreciation on equipment used for contract work 900 Depreciation on administrative oﬃce equipment 1,050 Salaries of professionals working on contracts 15,600 Salaries of administrative oﬃce personnel 7,700 Janitorial services for professional oﬃces 700 Janitorial services for administrative oﬃces 500 Insurance on contract operations 800 Insurance on administrative operations 900 Utilities for contract operations 1,400 Utilities for administrative oﬃces 1,300 Instructions 1. Prepare a schedule of cost of contract services performed (similar to a cost of goods manufactured schedule) for the month. 2. List the costs not included in (a), and then explain how they would be classified and reported in the financial statements. Determine cost of goods manufactured and prepare a partial income statement . E1.15 ( LO 3 ), AP The following information is available for Aikman Company. kmilut1@lsu.edu

Printed by: kmilut1@lsu.edu. Printing is for personal use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. January 1, 2022 2022 December 31, 2022 January 1, 2022 2022 December 31, 2022 Raw materials inventory $21,000 $30,000 Work in process inventory 13,500 17,200 Finished goods inventory 27,000 21,000 Materials purchased $150,000 Direct labor 220,000 Manufacturing overhead 180,000 Sales revenue 910,000 Instructions 1. Compute cost of goods manufactured. (Assume that all raw materials used were direct materials.) 2. Prepare an income statement through gross profit. 3. Show the presentation of the ending inventories on the December 31, 2022, balance sheet. 4. How would the income statement and balance sheet of a merchandising company be different from Aikman's financial statements? Indicate in which schedule or financial statement(s) different cost items would appear . E1.16 ( LO 3 ), C University Company produces collegiate apparel. From its accounting records, it prepares the following schedule and financial statements on a yearly basis. 1. Cost of goods manufactured schedule. 2. Income statement. 3. Balance sheet. The following items are found in the company's accounting records and accompanying data. 1. Direct labor. 2. Raw materials inventory, January 1. 3. Work in process inventory, December 31. 4. Finished goods inventory, January 1. 5. Indirect labor. 6. Depreciation expense of factory machinery. 7. Work in process, January 1. 8. Finished goods inventory, December 31. 9. Factory maintenance salaries. 10. Cost of goods manufactured. 11. Depreciation expense of delivery equipment. 12. Cost of goods available for sale. 13. Direct materials used. 14. Heat and electricity for factory. 15. Repairs to roof of factory building. 16. Cost of raw materials purchases. Instructions List the items (1)–(16). For each item, indicate by using the appropriate letter or letters, the schedule and/or financial statement(s) in which the item would appear. Prepare a cost of goods manufactured schedule, and present the ending inventories on the balance sheet . E1.17 ( LO 3 ), AP An analysis of the accounts of Roberts Company reveals the following manufacturing cost data for the month ended June 30, 2022. Inventory Beginning Ending Raw materials $9,000 $13,100 Work in process 5,000 7,000 Finished goods 9,000 8,000 kmilut1@lsu.edu

Printed by: kmilut1@lsu.edu. Printing is for personal use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. Costs incurred: raw materials purchases $54,000, direct labor $47,000, manufacturing overhead $19,900. The specific overhead costs were: indirect labor $5,500, factory insurance $4,000, machinery depreciation $4,000, machinery repairs $1,800, factory utilities $3,100, and miscellaneous factory costs $1,500. (Assume that all raw materials used were direct materials.) Instructions 1. Prepare the cost of goods manufactured schedule for the month ended June 30, 2022. 2. Show the presentation of the ending inventories on the June 30, 2022, balance sheet. Determine the amount of cost to appear in various accounts, and indicate in which financial statements these accounts would appear . E1.18 ( LO 3 ), AP McQueen Motor Company manufactures automobiles. During September 2022, the company purchased 5,000 head lamps at a cost of $15 per lamp. Fifty of these lamps were used to replace the head lamps in autos used by traveling sales staff, and 4,600 lamps were put in autos manufactured during the month. Of the autos put into production during September 2022, 90% were completed and transferred to the company's storage lot. Of the cars completed during the month, 70% were sold by September 30. Instructions 1. Determine the cost of head lamps that would appear in each of the following accounts at September 30, 2022: Raw Materials, Work in Process, Finished Goods, Cost of Goods Sold, and Selling Expenses. 2. Write a short memo to the chief accountant, indicating whether and where each of the accounts in (a) would appear on the income statement or on the balance sheet at September 30, 2022. Identify various managerial accounting practices . E1.19 ( LO 4 ), C The following is a list of terms related to managerial accounting practices. 1. Activity±based costing. 2. Just±in±time inventory. 3. Balanced scorecard. 4. Value chain. Instructions Match each of the terms with the statement below that best describes the term. 1. ________ A performance±measurement technique that attempts to consider and evaluate all aspects of performance using financial and nonfinancial measures in an integrated fashion. 2. ________ The group of activities associated with providing a product or performing a service. 3. ________ An approach used to reduce the cost associated with handling and holding inventory by reducing the amount of inventory on hand. 4. ________ A method used to allocate overhead to products based on each product's use of the activities that cause the incurrence of the overhead cost. Problems Classify manufacturing costs into different categories and compute the unit cost . P1.1 ( LO 2 ), AP Ohno Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Ohno's monthly manufacturing costs and other expense data are as follows. Rent on factory equipment $11,000 Insurance on factory building 1,500 Raw materials used (plastics, polystyrene, etc.) 75,000 Utility costs for factory 900 Supplies used for general oﬃce 300 Wages for assembly±line workers 58,000 Depreciation on oﬃce equipment 800 Miscellaneous materials used (glue, thread, etc.) 1,100 Factory manager's salary 5,700 Property taxes on factory building 400 kmilut1@lsu.edu

Printed by: kmilut1@lsu.edu. Printing is for personal use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. Advertising for helmets 14,000 Sales commissions 10,000 Depreciation on factory building 1,500 Check figures provide a key number to let you know you are on the right track. Instructions 1. Prepare an answer sheet with the following column headings. Product Costs Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs Enter each cost item on your answer sheet, placing the dollar amount under the appropriate heading. Total the dollar amounts in each of the columns. a.DM $75,000 DL $58,000 MO $22,100 PC $25,100 2. Compute the cost to produce one helmet. Classify manufacturing costs into different categories and compute the unit cost . P1.2 ( LO 2 ), AP Bell Company has been a retailer of audio systems for the past 3 years. However, after a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory. Production began October 1, 2022. Direct materials costs for an audio system total $74 per unit. Workers on the production lines are paid $12 per hour. An audio system takes 5 labor hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $4,900 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,000. Factory janitorial costs are $1,300 monthly. Advertising costs for the audio system will be $9,500 per month. The factory building depreciation is $7,800 per year. Property taxes on the factory building will be $9,000 per year. Instructions 1. Prepare an answer sheet with the following column headings for October 2022. Product Costs Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs Assuming that Bell manufactures, on average, 1,500 audio systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate heading. Total the dollar amounts in each of the columns. a.DM $111,000 DL $90,000 MO $18,100 PC $9,500 2. Compute the cost to produce one audio system. Determine the missing amount of different cost items, and prepare a condensed cost of goods manufactured schedule, an income statement, and a partial balance sheet . P1.3 ( LO 3 ), AN Incomplete manufacturing costs, expenses, and selling data for two different cases for the year ended December 31, 2022, are as follows. Case 1 2 Direct materials used $9,600 $(g) Direct labor 5,000 8,000 Manufacturing overhead 8,000 4,000 Total manufacturing costs (a) 16,000 kmilut1@lsu.edu

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