Problem 14-4B (40 minutes)
Part 1
Unit and dollar amounts of raw materials inventory in blades
Note: 20,750 pairs of skates require 41,500 blades.
Part 2
Topics of discussion for the memorandum include:
General description of the JIT inventory system and how it operates.
The funds freed up could be used to reduce debt, train employees, or
purchase new equipment.
Additional costs from a JIT system would arise from more frequent
ordering, deliveries, and possibly handling.
Problem 14-5B (40 minutes)
Part 1
MERCHANDISING BUSINESS
TEEMART
Partial Income Statement
For Year Ended December 31, 2015
Cost of goods sold
Merchandise inventory, December 31, 2014…………….……………..$100,000
Merchandise purchases……………….……………………….….……….…. 250,000
SERIAL PROBLEM — SP 14
Serial Problem, Business Solutions (50 minutes)
1.
Product Costs Variable Fixed Direct Indirect
1. Monthly flat fee to clean workshop......... X X
2. Laminate coverings for desktops………… X X
6. Electricity for workshop…………..……….... X X
7. Depreciation on tools…………………………. X X
2.
Business Solutions
Schedule of Cost of Goods Manufactured
For Month Ended January 31, 2016
Direct materials……………….……………..………………………..……….………..$2,200
Direct labor ……………….……………….………………..………….……….……….. 900
Total cost of work in process………….……………..……………………………. 3,590
Less work in process, January 31, 2016………………..…………………….. 540
Cost of goods manufactured……………….……………………..……....
$3,050
3.
Business Solutions
Partial Income Statement
For Month Ended January 31, 2016
Cost of goods sold
Finished goods inventory, December 31, 2015…………….….. $ 0
Cost of goods manufactured…………….……………………………. 3,050
Reporting in Action — BTN 14-1
1. Apple’s warranty reserve is established at the time the related revenue is
recognized, based on historical and projected warranty claim rates and
costs-per-claim. The company also considers knowledge of specific
product failures that are outside of its typical experience. Adjustments
2. It is commonly the managerial accountant’s responsibility to try to
attach a dollar value to the individual estimates. The less certain the
3. Factors that could impact the warranty accrual include improved (or
4. Solutions depend on the annual report information collected.
Financial and Managerial Accounting, 6th Edition
Comparative Analysis — BTN 14-2
1. The purpose of Apple’s audit committee is to:
a. Assist the Board in oversight and monitoring of:
i. the Corporation’s financial statements and other financial
information provided to shareholders and others;
requirements;
iii. the independent auditors, including their qualifications
and independence;
vii. the auditing, accounting, and financial reporting process.
b. Prepare the report required under SEC rules to be included in
2. The purpose of Google’s audit committee is to:
a. Oversee Google’s accounting and financial reporting processes.
c. Provide oversight regarding significant financial matters,
including tax planning, treasury policies, currency exposure,
dividends and share issuance and repurchase.
3. Management accountants would be involved in:
Ensuring compliance with regulations.
Management accountants might also be involved in other aspects of the
financial reporting and disclosure process.
Ethics Challenge — BTN 14-3
1. Raw materials are part of inventory and should be capitalized (set up as
assets). Their costs are subsequently reported as part of cost of goods
2. The challenge is how to handle a request to use one’s accounting skills
in an inappropriate manner. It is important to remember that the
behavior of the managerial accountant is governed by rules of ethical
an individual.
Communicating in Practice — BTN 14-4
Instructor note: The solution to this project depends on the database and career fields reviewed.
The objective of this Communicating in Practice project is to make
students aware of the earnings potential of different professions—
Financial and Managerial Accounting, 6th Edition