Chapter 2 Tutorial Solutions Discussed In Week 3

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ACC2131 Cost Information for Decision Making Week 3 (Chapter 2) Tutorial Solutions Semester 1, 2015 Note to students: Beware! These solutions are not necessarily model answers. In exams, you will not have demonstrated your understanding of the answers to these exercises if you seek only to memorise them. You are encouraged to use tutorial time to discuss issues that will test and clarify your understanding of these exercises, as well as expanding your analytical and critical-thinking skills. 2.5 Costs can be classified and reported in many different ways, depending on the purpose for which managers will use the information. Students should be careful how they interpret this phrase. It is not really different costs but the same bundle of…show more content…
(45 minutes) Schedules of cost of goods manufactured and sold; income statement 1 Maximus Manufacturing Ltd Schedule of cost of goods manufactured for the year ended 31 December Direct material: Raw materials inventory, 1 January Add: Purchases of raw materials Raw material available for use Deduct: Raw materials inventory, 31 December $106 800 877 200 984 000 70 800 Raw material used $913 200 Direct labour 568 800 Manufacturing overhead: Indirect material 54 000 Indirect labour 180 000 Depreciation on factory building 150 000 Depreciation on factory equipment 72 000 Electricity for factory 84 000 Council rates 108 000 3 Insurance 48 000 Total manufacturing overhead 696 000 Total manufacturing costs Add: 2 178 000 Work in process inventory, 1 January 0 Subtotal Less: 2 178 000 Work in process inventory, 31 December Cost of goods manufactured 48 000 $2 130 000 2 Maximus Manufacturing Ltd Schedule of Cost of Goods Sold for the year ended 31 December Finished goods inventory, 1 January Add: Cost of goods manufactured Cost of goods available for sale Finished goods inventory, 31 December Cost of goods sold $ 42 000 2 130 000 2 172 000 48 000 $2 124 000 4 3 Maximus Manufacturing Ltd Income Statement for the year ended 31 December Sales revenue Less: Cost of goods sold $2 526 000 2 124 000 Gross margin 402 000 Selling and administrative expenses 322 800 Profit before taxes 79 200 Income tax expense 30 000 Net profit $ 49 200

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