close solutoin list

Flow of costs and income statement Ginocera Inc. is a designer, manufacturer, and distributor of low-cost. high-quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 20Y8. In January, the company spent $600,000 to develop a late-night advertising infomercial for the new product. During 20Y8, the company spent $1,400,000 advertising the product through these infomercials. In addition, the company incurred $800.000 in legal costs. The knives were ready for manufacture on January 1. 20Y8. Ginocera uses a job order cost system to accumulate costs associated with the kitchen knife. The unit direct materials cost for the knife is as follows: Hardened steel blanks (used for knife shaft and blade) $4.00 Wood (for handle) 1.50 Packaging 0.50 The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material .supplier, are stamped into a single piece of metal that includes both the blade and the shaft. The stamping machine requires one hour per 250 knives. After the knife shafts are stamped, they are brought to an assembly area where an employee attaches the handle to the shaft and packs the knife in a decorative box. The direct labor cost is $0.50 per unit. The knives are sold to stores. Each store is given promotional materials sudi as posters and aisle displays. Promotional materials cost $60.00 per store. In addition, shipping costs average $0.20 per knife. Total completed production was 1.200.000 units during the year. Other information is as follows: Number of customers (stores) 60,000 Number of knives sold 1,120,000 Wholesale price (to store) per knife $16 Factory overhead cost is applied to jobs at the rate of $800 per stamping machine hour after the knife blanks are stamped. There were an additional 25,000 stamped knives, handles, and cases waiting to be assembled on December 31, 20Y8. Instructions 1. Prepare an annual income statement for the Kitchen Ninja knife series, including supporting calculations, from the information provided. 2. Determine the balances in the work in process and finished goods inventories for the Kitchen .Ninja knife series on December 31, 20Y8.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 19, Problem 19.5APR
Textbook Problem

Flow of costs and income statement

Ginocera Inc. is a designer, manufacturer, and distributor of low-cost. high-quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 20Y8. In January, the company spent $600,000 to develop a late-night advertising infomercial for the new product. During 20Y8, the company spent $1,400,000 advertising the product through these infomercials. In addition, the company incurred $800.000 in legal costs. The knives were ready for manufacture on January 1. 20Y8.

Ginocera uses a job order cost system to accumulate costs associated with the kitchen knife. The unit direct materials cost for the knife is as follows:

Hardened steel blanks (used for knife shaft and blade) $4.00
Wood (for handle) 1.50
Packaging 0.50

The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material .supplier, are stamped into a single piece of metal that includes both the blade and the shaft. The stamping machine requires one hour per 250 knives.

After the knife shafts are stamped, they are brought to an assembly area where an employee attaches the handle to the shaft and packs the knife in a decorative box. The direct labor cost is $0.50 per unit.

The knives are sold to stores. Each store is given promotional materials sudi as posters and aisle displays. Promotional materials cost $60.00 per store. In addition, shipping costs average $0.20 per knife.

Total completed production was 1.200.000 units during the year. Other information is as follows:

Number of customers (stores) 60,000
Number of knives sold 1,120,000
Wholesale price (to store) per knife $16

Factory overhead cost is applied to jobs at the rate of $800 per stamping machine hour after the knife blanks are stamped. There were an additional 25,000 stamped knives, handles, and cases waiting to be assembled on December 31, 20Y8.

Instructions

1. Prepare an annual income statement for the Kitchen Ninja knife series, including supporting calculations, from the information provided.

2. Determine the balances in the work in process and finished goods inventories for the Kitchen .Ninja knife series on December 31, 20Y8.

Expert Solution

Want to see this answer and more?

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

See solution

Chapter 19 Solutions

Accounting
Show all chapter solutions
Ch. 19 - Issuance of materials On May 7, Bergan Company...Ch. 19 - Issuance of materials On August 4, Rothchild...Ch. 19 - Direct labor costs During May, Bergan Company...Ch. 19 - Direct labor costs During August, Rothchild...Ch. 19 - Factory overhead costs During May, Bergan Company...Ch. 19 - Factory overhead costs During August, Rothchild...Ch. 19 - Applying factory overhead Bergan Company estimates...Ch. 19 - Applying factory overhead Rothchild Company...Ch. 19 - Job costs At the end of May, Bergan Company had...Ch. 19 - Job costs At the end of August, Rothchild Company...Ch. 19 - Transactions in a job order cost system Five...Ch. 19 - Cost of materials issuances under the FIFO method...Ch. 19 - Entry for issuing materials Materials issued for...Ch. 19 - Entries for materials GenX Furnishings...Ch. 19 - Entry for factory labor costs A summary of the...Ch. 19 - Entry for factory labor costs The weekly time...Ch. 19 - Entries for direct labor and factory overhead...Ch. 19 - Factory overhead rates, entries and account...Ch. 19 - Predetermined factory overhead rate Street....Ch. 19 - Predetermined factory overhead rate Poehling...Ch. 19 - Entry for jobs completed; cost of unfinished jobs...Ch. 19 - Entries for factory costs and jobs completed Old...Ch. 19 - Financial statements of a manufacturing firm The...Ch. 19 - Decision making with job order costs Alvarez...Ch. 19 - Decision making with job order costs Raneri...Ch. 19 - Job order cost accounting for a Service company...Ch. 19 - Job order cost accounting for a service company...Ch. 19 - Entries for costs in a job order cost system...Ch. 19 - Entries and schedules for unfinished jobs and...Ch. 19 - Job order cost sheet Remnant Carpet Company sells...Ch. 19 - Analyzing manufacturing cost accounts Fire Rock...Ch. 19 - Flow of costs and income statement Ginocera Inc....Ch. 19 - Entries for costs in a job order cost system Royal...Ch. 19 - Entries and schedules for unfinished Jobs and...Ch. 19 - Job order cost sheet Stretch and Trim Carpet...Ch. 19 - Analyzing manufacturing cost accounts Clapton...Ch. 19 - Flow of costs and income statement Technology...Ch. 19 - Communication TAC Industries sells heavy equipment...Ch. 19 - Predetermined overhead rates As an assistant cost...Ch. 19 - Communication Carol Creedence, the plant manager...Ch. 19 - Job order decision making and rate deficiencies...Ch. 19 - Recording manufacturing costs Todd Lay just began...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
Fill in the blanks:

Principles of Macroeconomics (MindTap Course List)

What are the two main causes of market failure? Give an example of each.

Principles of Microeconomics (MindTap Course List)

Is a physical inventory necessary under the perpetual system? Why or why not?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

MVA Henderson Industries has 500 million of common equity on its balance sheet; its stock price is 60 per share...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is a nondiscretionary bonus?

PAYROLL ACCT.,2019 ED.(LL)-TEXT