Problem 18-1B (continued)
Part 2
Maxwell
Calculation of Manufacturing Cost per BD
For Year Ended December 31, 2015
Item
Total cost
(at 15,000 units) Per unit cost *
Variable production costs
Plastic for BDs $ 1,500 $ 0.10
Part 3
If 10,000 BDs are produced, we would expect the cost of the plastic for the BDs to
Part 4
If 10,000 BDs are produced, we would expect the cost of the factory rent to
Problem 18-2B (30 minutes)
Costs Product
Cost
Dir.
Mtls.
Dir.
Labo
r
Over-
head
Period
Cost Sellin
g
Gen. &
Admin
Advertising expense X X
Depr. expense-Office equip. X X
Depr. expense-Selling equip. X X
Depr. expense-Factory equip. X X
Problem 18-3B (75 minutes)
Part 1
BEST BIKES
Schedule of Cost of Goods Manufactured
For Year Ended December 31, 2015
Direct materials
Raw materials inventory, December 31, 2014………. $ 40,375
Direct labor…………………………………………………………. 562,500
Factory overhead
Depreciation expense—Factory equipment…………. 35,400
Problem 18-3B (Continued)
Part 2
BEST BIKES
Income Statement
For Year Ended December 31, 2015
Sales…………………………………………………………………… $4,942,625
Cost of goods sold
Finished goods inventory, December 31, 2014………$ 177,200
Cost of goods manufactured……………………………….1,816,995
Goods available for sale……………………………………..1,994,195
Less finished goods inventory, December 31, 2015….. 141,750
Problem 18-3B (Concluded)
Part 3
Raw
Materials
Finished
Goods
Cost of raw materials used………………………………………$864,320
Cost of goods sold………………………………………………… $1,852,445
Beginning inventory……………………………………………….$ 40,375 $ 177,200
* To calculate the turnover and days’ sales in inventory for raw materials, use raw materials used
rather than cost of goods sold.
Discussion: The inventory turnover ratio for the raw materials inventory is
higher than the turnover ratio for finished goods. One reason for the
The company is carrying 29.7 days supply of raw materials inventory and
increased its inventory of raw materials by 74% but decreased its inventory
Problem 18-5B (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
Cost of goods sold
………………………………………………………………
$200,000
MANUFACTURING BUSINESS
AIM LABS
Partial Income Statement
For Year Ended December 31, 2015
Cost of goods sold
Cost of goods sold………………………………………………………………
$686,000
Part 2
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
The answers will vary slightly but should include:
The Merchandise Inventory account on December 31 for TeeMart and the
SERIAL PROBLEM — SP 18
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
2.
Business Solutions
Schedule of Cost of Goods Manufactured
For Month Ended January 31, 2016
Direct materials…………………………………………………………………………$2,200
Direct labor ……………………………………………………………………………… 900
Cost of goods sold
……………………………………………………….
$2,700
Reporting in Action — BTN 18-1
1. Apple’s warranty reserve is established at the time the related revenue is
recognized, based on historical and projected warranty claim rates and
2. It is commonly the managerial accountant’s responsibility to try to
3. Factors that could impact the warranty accrual include improved (or