PROBLEM 2-18 Schedule of Cost of Goods Manufactured; Income Statement; Cost Behavior [LO2,LO3, LO4, LO5, LO6]Various cost and sales data for Meriwell Company for the just completed year appear in the work-sheet below:E Hicrosoft ExcelEle Edt Vew rcert Fgrmat Iools Rata Wndow elp12- BIU2E17B$20,000$40,000$110,000$105,000$125,000$9,000$6,000$70,000S17,000$30,000$500,000S80,000A1 Finished goods inventory, beginning2 Finished goods inventory, ending3 Administrative expenses4 Manufacturing overhead5 Purchases of raw materials6 Raw materials inventory, beginning7 Raw materials inventory, ending8 Direct labor9 Work in process inventory, beginning10 Work in process inventory, ending11 Sales12 Selling expenses13N MSheeti/Sheet2 / Sheets /Of the $105,000 of manufacturing overhead, $15,000 is variable and $90,000 is fixed.Required:1. Prepare a schedule of cost of goods manufactured.2. Prepare an income statement.3. Assume that the company produced the equivalent of 10,000 units of product during thejust completed. What was the average cost per unit for direct materials? What was the averagecost per unit for fixed manufacturing overhead?4. Assume that the company expects to produce 15,000 units of product during the coming year.What average cost per unit and what total cost would you expect the company to incur fordirect materials at this level of activity? For fixed manufacturing overhead? Assume that directmaterials is a variable cost.As the manager responsible for production costs, explain to the president any difference in theaverage costs per unit between (3) and (4) above.уcar5.

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Microsoft Excel Ele Edit New Insert Format Tools Date Window Help ✔n. Σ 100% BIUR E%-A- E17 A B 1 Finished goods inventory, beginning $20,000 2 Finished goods inventory, ending $40,000 3 Administrative expenses $110,000 4 Manufacturing overhead $105,000 5 Purchases of raw materials $125,000 $9,000 6 Raw materials inventory, beginning 7 Raw materials inventory, ending Direct labor $6,000 8 $70,000 $17,000 9 Work in process inventory, beginning 10 Work in process inventory, ending 11 Sales $30,000 $500,000 12 Selling expenses $80,000 GD f x

Microsoft Excel Ele Edit New Insert Format Tools Date Window Help ✔n. Σ 100% BIUR E%-A- E17 A B 1 Finished goods inventory, beginning $20,000 2 Finished goods inventory, ending $40,000 3 Administrative expenses $110,000 4 Manufacturing overhead $105,000 5 Purchases of raw materials $125,000 $9,000 6 Raw materials inventory, beginning 7 Raw materials inventory, ending Direct labor $6,000 8 $70,000 $17,000 9 Work in process inventory, beginning 10 Work in process inventory, ending 11 Sales $30,000 $500,000 12 Selling expenses $80,000 GD f x

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter5: Accounting For Merchandising Businesses

Section: Chapter Questions

Problem 5.26EX

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Variable and absorption costingthree products Happy Feet Inc. manufactures and sells three types of shoes. The income statements prepared under the-absorption costing method for the three shoes are-as follows: Happy Feet Inc. Product Income StatementsAbsorption Costing For the Year Ended December 31, 2016 Cross Training Shoes Golf Shoes Running Shoes Revenues 800,000 690,000 625,000 Cost of goods sold 416,000 338,100 418,750 Gross profit 384,000 351,900 206,250 Selling and administrative expenses 336,000 248,400 350,000 Income from operations 48,000 103,500 (143,750) In addition, you have determined the following information with respect to allocated fixed costs: Cross Training Shoes Golf Shoes Running Shoes Fixed costs: Cost of goods sold 128,000 9,700 118,750 Selling and administrative expenses 96,000 82.800 118,750 These fixed costs are used to support all three product lines. In addition, you have determined that the inventory is negligible. The management of the company has deemed the profit performance of the running shoe line as unacceptable. As a result, it has decided to eliminate the running shoe line. Management does not expect to be able to increase sales in the other two lines. However, as a result of eliminating the running shoe line, management expects the- profits of the company to increase by 143,750. a. Do you agree with managements decision and conclusions? b. Prepare a variable costing income statement for the three products. c. Use the report in (b) to determine the profit impact of eliminating the running shoe line, assuming no other changes.
2-18 Use the following information for Multiple- Choice Questions 2-13 through 2-18: Last year, Barnard Company incurred the following costs: Barnard produced and sold 10,000 units at a price of 31 each. Refer to the information for Barnard Company on the previous page. Operating income is a. 34,000. b. 110,000. c. 234,000. d. 270,000. e. 74,000.
Construct and interpret a product profitability report, allocating selling and administrative expenses Naper Inc. manufactures power equipment. Naper has two primary productsgenerators and air compressors. The following report was prepared by the controller for Napers senior marketing management for the year ended December 31: Generators Air Compressors Total Revenue 4,200,000 3,000,000 7,200,000 Cost of goods sold 2,940,000 2,100,000 5,040,000 Gross profit 1,260,000 900,000 2,160,000 Selling and administrative expenses 610,000 Income from operations 1,550,000 The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing. The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale customer service. The controller was able to determine the activity base and activity rate for each activity, as follows: Activity Activity Base Activity Rate Sales order processing Sales orders 65 per sales order Post-sale customer service Service requests 200 per customer service request The controller determined the following activity-base usage information about each product: Generators Air Compressors Number of sales orders 3,000 4,000 Number of service requests 225 550 A. Determine the activity cost of each product for sales order processing and post-sale customer service activities. B. Use the information in (A) to prepare a complete product profitability report dated for the year ended December 31. Compute the gross profit to sales and the income from operations to sales percentages for each product. (Round to two decimal places.) C. Interpret the product profitability report. How should management respond to the report?
Communication Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Date Units Purchased Unit Cost Total Cost April 6 31,000 36.60 1,134,600 May 18 33,000 39.00 1,287,000 June 6 40,000 39.60 1,584,000 July 10 40,000 42.00 1,680,000 August 10 27,200 42.75 1,162,800 October 25 12,800 43.50 556,800 November 4 8,000 44.85 358,800 December 10 8,000 48.00 384,000 200,000 8,148,000 Sales: April 16,000 units May 16,000 June 20,000 July 24,000 August 28,000 September 28,000 October 18,000 November 10,000 December 8,000 Total Units 168,000 Total sales 10,000,000 The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the companys financial statements.
PROBLEM 2-27 Schedule of Cost of Goods Manufactured; Income Statement; Cost Behavior[LO1, LO2, LO3, LO4, LO5]The following selected account balances for the year ended December 31 are provided for ValenkoCompany Advertising expense . . . . . . . . . . . . . . . . . . $215,000Insurance, factory equipment. . . . . . . . . . . . $8,000Depreciation, sales equipment. . . . . . . . . . . $40,000Rent, factory building . . . . . . . . . . . . . . . . . . $90,000Utilities, factory. . . . . . . . . . . . . . . . . . . . . . . $52,000Sales commissions . . . . . . . . . . . . . . . . . . . $35,000Cleaning supplies, factory . . . . . . . . . . . . . . $6,000Depreciation, factory equipment . . . . . . . . . $110,000Selling and administrative salaries. . . . . . . . $85,000Maintenance, factory . . . . . . . . . . . . . . . . . . $74,000Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . ?Purchases of raw materials . . . . . . . . . . . . . $260,000 Inventory balances at the beginning and…
iii) Determine the cost of direct material and salesman salary if the company produces *XX,XXX (80,000-90,000) bottles of drink. (CLO3, C3) iv) If production unit is *XXXXX (90,000 – 110,000): (CLO3, C3) a) Calculate total product cost b) Calculate total period cost v) Form cost function for: (CLO3, C3) a) Product cost b) Period cost
CS_3_QA3_LA: Req 3A: Compute the unit product cost for Year 1, Year 2, and Year 3. (Round your intermediate calculations and final answers to 2 decimal places.) Unit Product Cost Year 1 Year 2 Year 3 Req 3B: Prepare an income statement for Year 1, Year 2, and Year 3. (Round your intermediate calculations to 2 decimal places.) O’Brien Company Absorption Costing Income Statement Year 1 Year 2 Year 3 Sales Cost of goods sold Gross margin 0 0 0 Selling and administrative expenses Net operating income $0 $0 $0
Subject: Business Economics QUESTION – 3The following data have been taken from the book of Ubaida Company Ltd. For the year 2002-03.Inventories July 1 June 30Raw Materials Rs. 36,000 Rs. 75,000Goods In Process 90,000 75,000Finished Goods 50,000 75,000 Data for the YearSales Rs. 960,000 Purchases ( Raw Materials ) Rs. 410,000Purchase discount 15,000 Direct Labour incurred 175,000Purchase Return 20,000 Transportation Inward 10,000Rent (Factory) 35,000 Fuel & Power 55,000Rent (Office) 3,000 Utility (Factory) 13,000Utility (Office) 1,500 Transportation Outward 15,000Factory Supervisor Salary 8,000 Depreciation ( Furniture) 10,000Depreciation( Machines) 20,000…
PROBLEM 2–25 Working with Incomplete Data from the Income Statement and Schedule of Cost ofGoods Manufactured [ LO4 , LO5 ]Supply the missing data in the following cases. Each case is independent of the others. Case1 2 3 4Schedule of Cost of Goods ManufacturedDirect materials . . . . . . . . . . . . . . . . . . . . . . . . . $4,500 $6,000 $5,000 $3,000Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ? $3,000 $7,000 $4,000Manufacturing overhead . . . . . . . . . . . . . . . . . . $5,000 $4,000 ? $9,000Total manufacturing costs . . . . . . . . . . . . . . . . . $18,500 ? $20,000 ?Beginning work in process inventory . . . . . . . . . $2,500 ? $3,000 ?Ending work in process inventory . . . . . . . . . . . ? $1,000 $4,000 $3,000Cost of goods manufactured . . . . . . . . . . . . . . . $18,000 $14,000 ? ?Income StatementSales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30,000 $21,000 $36,000 $40,000Beginning fi nished goods inventory . . . . . . . .…
PROBLEM 2-25 Schedule of Cost of Goods Manufactured; Income Statement [LO1, LO2, LO3, LO4]Skyler Company was organized on November 1 of the previous year. After seven months of start-uplosses, management had expected to earn a profi t during June, the most recent month. Managementwas disappointed, however, when the income statement for June also showed a loss. June’s incomestatement follows:Variable or FixedDirect or Direct or with RespectIndirect Cost of Indirect Cost of to the Numberthe Immunization Particular of ImmunizationsCenter Patients AdministeredItem Description Direct Indirect Direct Indirect Variable FixedExample: The cost of polioimmunizationtablets . . . . . . . . . . . . . . . . X X XSkyler CompanyIncome StatementFor the Month Ended June 30Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $600,000Less operating expenses:Selling and administrative salaries . . . . . . . $ 35,000Rent on facilities . . . . . . . . . . . . . . . . . . . . . .…
iii) Determine the cost of direct material and salesman salary if the company produces 80,000 bottles of drink. (CLO3, C3) iv) If production unit is 90,000 (CLO3, C3) a) Calculate total product cost b) Calculate total period cost v) Form cost function for 90,000 unit refer to the answer at iv) (CLO3, C3) a) Product cost b) Period cost