Managerial Accounting
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Solution 167 (10–12 min.)
Ex. 168
For each item listed below, indicate in the space to the left whether the item would be considered
a product cost or a period cost for a manufacturing company. Use the following code:
Pr = Product cost
Pe = Period cost
____ 1. Factory supervisory salaries
____ 2. Sales commissions
____ 3. Income tax expense
____ 4. Indirect materials used
____ 5. Indirect labor
____ 6. Office salaries expense
____ 7. Property taxes on factory building
____ 8. Sales manager’s salary
____ 9. Factory wages expense
____ 10. Direct materials used
Ans: N/A, LO: 4, Bloom: C, Difficulty: Easy, Min: 7, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Measurement, AICPA PC: None, IMA: FSA
Test Bank for Accounting, Tools for Business Decision Making Fifth Edition
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Solution 168 (7–10 min.)
Ex. 169
Yates Manufacturing Company incurs the following manufacturing costs and expenses during the
month of May.
1. Assembly line wages
2. Raw materials used directly in product
3. Depreciation on office equipment
4. Property taxes on factory building
5. Rent on factory building
6. Sales commissions
7. Depreciation on factory equipment
8. Factory utilities
9. Wages for factory maintenance workers
10. Advertising
11. Indirect materials used in production
12. Factory manager’s salary
Instructions
Complete the following matrix by placing an X mark under the appropriate headings.
Direct Direct Manufacturing Period
Cost Item Materials Labor Overhead Costs
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Managerial Accounting
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Solution 169 (10–15 min.)
Ex. 170
Presented below are incomplete 2013 manufacturing cost data for Tardy Corporation.
Direct Materials
Used
Direct
Labor
Manufacturing
Overhead
Total
Manufacturing
Costs
Work in
Process
(1/1)
Cost of
Goods
Manufactured
(a)
$38,000
$80,000
$48,000
?
$120,000
?
(b)
$149,000
$53,000
$90,000
$292,000
?
$311,000
(c)
$53,000
$116,000
$121,000
$290,000
$403,000
$515,000
Instructions
Determine the missing amounts.
$38,000
$80,000
$48,000
$166,000
$120,000
$96,000
$190,000
$149,000
$53,000
$90,000
$292,000
$117,000
$98,000
$311,000
$53,000
$116,000
$121,000
$290,000
$403,000
$178,000
$515,000
Test Bank for Accounting, Tools for Business Decision Making Fifth Edition
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Ex. 171
Among the items that Howard Print Shop accounts for are the following:
1. Direct labor ________
2. Office supplies used ________
3. Depreciation on printing machines ________
4. Finished goods inventory, 12/31 ________
5. Raw materials inventory, 1/1 ________
6. Cost of goods manufactured ________
7. Work in process, 1/1 ________
8. Office supplies inventory, 12/31 ________
9. Indirect labor ________
10. Heat and electricity for the print shop ________
Howard Print Shop prepares the following schedule and financial statements on a yearly basis:
(a) Cost of goods manufactured schedule.
(b) Income statement.
(c) Balance sheet.
Instructions
For each item, indicate by using the appropriate letter(s) the schedule and/or financial statements
in which the item will appear.
Managerial Accounting
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Ex. 172
Klein Company manufactures boats. During September, 2013, the company purchased 100
cellular phones at a cost of $130 each. Klein withdrew 70 phones from the warehouse during the
month. Twenty of these phones were installed in salespersons’ cars and the remaining 50 phones
were put in boats manufactured during the month.
Of the boats put into production during September, 2013, 80% were completed and transferred to
the company’s storage lot. Fifty percent of the boats completed during the month were sold by
September 30.
Instructions
Determine the cost of cellular phones that would appear in each of the following accounts at
September 30, 2013:
Raw materials inventory
Work in process inventory
Finished goods inventory
Cost of goods sold
Selling expenses
Ex. 173
Peters Manufacturing Company has the following data at June 30, 2013:
Raw materials inventory, June 1 $ 13,800
Work in process inventory, June 1 18,100
Finished goods inventory, June 1 43,500
Total manufacturing costs 430,000
Sales 590,000
Work in process inventory, June 30 30,400
Finished goods inventory, June 30 65,200
Raw materials inventory, June 30 18,000
Instructions
(a) Prepare an income statement through gross profit for the month of June.
(b) Indicate the balance sheet presentation of the June 30 inventories.
Test Bank for Accounting, Tools for Business Decision Making Fifth Edition
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Ex. 174
Glavine Corporation incurred the following costs while manufacturing its product.
Materials used in product $ 120,000 Advertising expense $45,000
Depreciation on plant 60,000 Property taxes on plant 19,000
Property taxes on store 7,500 Delivery expense 21,000
Labor costs of assembly-line workers 110,000 Sales commissions 35,000
Factory supplies used 23,000 Salaries paid to sales clerks 50,000
Work-in-process inventory was $22,000 at January 1 and $15,500 at December 31. Finished
goods inventory was $65,000 at January 1 and $50,600 at December 31.
Instructions
(a) Compute cost of goods manufactured.
(b) Compute cost of goods sold.
Managerial Accounting
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Solution 174 (10–12 min.)
Ex. 175
The following information is available for Elliot Company.
January 1, 2013 2013 December 31, 2013
Raw materials inventory $ 26,000 $30,000
Work in process inventory 13,500 22,200
Finished goods inventory 30,000 21,000
Materials purchased $170,000
Direct labor 220,000
Manufacturing overhead 180,000
Sales 800,000
Instructions
(a) Compute cost of goods manufactured.
(b) Prepare an income statement through gross profit.
Test Bank for Accounting, Tools for Business Decision Making Fifth Edition
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Solution 175 (12–16 min.)
Ex. 176
Manufacturing cost data for Morton Company are presented below.
Case A Case B Case C
Direct materials used (a) $65,400 $130,000
Direct labor $ 57,000 76,000 (g)
Manufacturing overhead 46,500 81,600 102,000
Total manufacturing costs 185,650 (d) 263,700
Work-in-process, 1/1/13 (b) 16,500 (h)
Total cost of work-in-process 221,500 (e) 327,000
Work-in-process, 12/31/13 (c) 9,000 80,000
Cost of goods manufactured 180,275 (f) (i)
Instructions
Indicate the missing amount for each letter (a) through (i).
Managerial Accounting
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Solution 176 (12–16 min.)
Ex. 177
From the account balances listed below, prepare a schedule of cost of goods manufactured for
Sampson Manufacturing Company for the month ended December 31, 2013.
Account Balances
Finished Goods Inventory, December 31 $42,000
Factory Supervisory Salaries 12,000
Income Tax Expense 18,000
Raw Materials Inventory, December 1 12,000
Work In Process Inventory, December 31 15,000
Sales Salaries Expense 14,000
Factory Depreciation Expense 8,000
Finished Goods Inventory, December 1 35,000
Raw Materials Purchases 95,000
Work In Process Inventory, December 1 20,000
Factory Utilities Expense 6,000
Direct Labor 70,000
Raw Materials Inventory, December 31 19,000
Sales Returns and Allowances 5,000
Indirect Labor 21,000
Test Bank for Accounting, Tools for Business Decision Making Fifth Edition
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Solution 177 (12–16 min.)
Ex. 178
Rabid Manufacturing Company has the following data:
Direct labor $140,000
Direct materials used 151,000
Total manufacturing overhead 208,000
Beginning work in process 26,000
Instructions
Compute (a) total manufacturing costs and (b) total cost of work in process.
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Ex. 179
The following costs and inventory data were taken from the accounts of Simon Company for
2012:
January 1, 2013 December 31, 2013
Inventories:
Raw materials $ 8,000 $ 7,000
Work in process 15,000 13,000
Finished goods 16,000 12,000
Costs incurred:
Raw materials purchases $93,000
Direct labor 42,000
Factory rent 8,000
Factory utilities 10,000
Indirect materials 4,000
Indirect labor 9,000
Operating expenses 17,000
Instructions
a. Prepare a schedule showing the amount of direct materials used in production during the
year.
b. Compute the amount of manufacturing overhead incurred during the year.
c. Prepare a schedule of Cost of Goods Manufactured for Simon Company for the year ended
December 31, 2013 in good form.
d. Prepare the Cost of Goods Sold section of the Income Statement for Simon Company for the
year ended December 31, 2013 in good form.
Test Bank for Accounting, Tools for Business Decision Making Fifth Edition
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Solution 179 (Cont.)
Ex. 180
Manufacturing costs for Carson Company for selected months are as follows:
April July October
Beginning work in process $ 80,000 (f) $ 98,000
Direct materials used 280,000 $190,000 155,000
Direct labor 195,000 170,000 (j)
Manufacturing overhead (a) 150,000 90,000
Total manufacturing costs 890,000 510,000 450,000
Total cost of work in process (b) 640,000 (k)
Ending work in process 75,000 (g) (l)
Cost of goods manufactured (c) 525,000 385,000
Beginning finished goods (d) 38,000 (m)
Cost of goods available for sale 960,000 (h) 480,000
Ending finished goods (e) 75,000 (n)
Cost of goods sold 820,000 (i) 355,000
Instructions
Indicate the missing amounts. (Show computations.)