Chapter 02 – Cost Concepts and Behavior
2-31
2-54. (30 min.) Prepare Statements for a Manufacturing Company: Butte
Components.
Butte Components
Statement of Cost of Goods Sold
For the Year Ended December 31
($000)
Work in process, Jan. 1 ……………………………………
$ 76
Manufacturing costs:
Direct materials:
Beginning inventory, Jan. 1 ………………………..
$ 48
Add materials purchases …………………………..
5,150
Direct materials available …………………………..
$5,198
Less ending inventory, Dec. 31 …………………..
55
Direct materials used ………………………………..
$ 5,143
Direct labor …………………………………………………
6,500
Manufacturing overhead:
Depreciation (factory) ………………………………..
$2,780
Depreciation (machines) …………………………...
4,620
Indirect labor (factory) ……………………………….
1,670
Indirect materials (factory)………………………….
480
Property taxes on factory …………………………..
185
Utilities (factory) ……………………………………….
530
Total manufacturing overhead …………………
10,265
Total manufacturing costs ……………………
21,908
Total cost of work in process during the year ………
$21,984
Less work in process, Dec. 31 ……………………….
68
Costs of goods manufactured during the year
$21,916
Beginning finished goods, Jan. 1 ………………………
987
Finished goods inventory available for sale ………..
$22,903
Less ending finished goods inventory, Dec. 31 ……
1,013
Cost of goods sold ………………………………………….
$21,890
Chapter 02 – Cost Concepts and Behavior
2-32
2-54. (continued)
Butte Components
Income Statement
For the Year Ended December 31
($000)
Sales revenue …………………………………………….…………
$30,110
Less: Cost of goods sold ……………………………..……………………
21,890
Gross margin ……………………………………………..………..
$ 8,220
Administrative costs …………………………………….…………………
Selling costs……………………………………………….………
Total marketing and administrative costs ………..…………………
3,170
Operating profit …………………………………………..…………..
$ 5,050
Chapter 02 – Cost Concepts and Behavior
2-33
2-55. (30 min.) Prepare Statements for a Manufacturing Company: Oakdale Tool
& Die.
.
Oakdale Tool & Die
Statement of Cost of Goods Sold
For the Year Ended December 31
($ 000)
Beginning work in process, Jan. 1…………………………
$ 96
Manufacturing costs:
Direct materials:
Beginning inventory, Jan. 1 …………………………...
$ 36
Add: Purchases ……………………………………………
10,950
Direct materials available …………………………..
10,986
Less ending inventory, Dec. 31 ………………………
42
Direct materials used …………………………………
$10,944
Direct labor …………………………………………………….
2,520
Manufacturing overhead:
Indirect factory labor …………………………………….
2,736
Factory supervision ………………………………………
1,470
Indirect materials and supplies ……………………….
2,055
Building utilities (90% of total) ………………………..
3,375
Building & machine depreciation (75% of $2,700)
2,025
Property taxes—factory (80% of total) …………….
2,016
Total manufacturing overhead …………………….
13,677
Total manufacturing costs ……………………….
27,141
Total cost of work in process during the year ………….
27,237
Less work in process, Dec. 31 …………………………..
87
Costs of goods manufactured during the year …..
27,150
Beginning finished goods, Jan. 1 ………………………….
162
Finished goods available for sale ………………………….
27,312
Less ending finished goods, Dec. 31 …………………….
195
Cost of goods sold ……………………………………………..
$ 27,117
Chapter 02 – Cost Concepts and Behavior
2-34
2-55. (continued)
Oakdale Tool & Die
Income Statement
For the Year Ended December 31
($ 000)
Sales revenue ……………………………………………………..
$38,910
Less: Cost of goods sold (per statement) …………………
27,117
Gross profit …………………………………………………………
$ 11,793
Marketing and administrative costs:
Depreciation (25% of total) …………………………………
$ 675
Utilities (10% of total) …………………………………………
375
Property taxes (20% of total) ………………………………
504
Administrative costs …………………………………………..
4,800
Marketing costs ………………………………………………..
2,613
Total marketing and administrative costs ……………..
8,967
Operating profit ……………………………………………………
$ 2,826
Chapter 02 – Cost Concepts and Behavior
2-35
2-56. (10 Min.) Cost Allocation with Cost Flow Diagram: Coastal Computer.
a.
(1)
Main Street
Lakeland Mall
Total
Number of computers sold ……..
2,000
1,600
3,600
Percentage ………………………...
55.56%
44.44%
100%
Allocated Accounting
Department cost ($180,000) …..
$100,000
$80,000
$180,000
(2)
Main Street
Lakeland Mall
Total
Revenue ……………………………..
$1,000,000
$2,000,000
$3,000,000
Percentage ………………………....
33.33%
66.67%
100%
Allocated Accounting
Department cost ($180,000) …..
$60,000
$120,000
$180,000
b.
a 33.33% = $1,000,000 ÷ ($1,000,000 + $2,000,000)
b 66.67% = $2,000,000 ÷ ($1,000,000 + $2,000,000)
Chapter 02 – Cost Concepts and Behavior
2-36
2-57. (20 Min.) Cost Allocation with Cost Flow Diagram: Wayne Casting, Inc.
a.
(1)
Chillicothe
Metals
Ames
Supply
Total
Material purchased (tons) ……...
130
120
250
Percentage ………………………...
52%
48%
100%
Allocated waste handling
cost ($300,000) …………………....
$156,000
$144,000
$300,000
(2)
Chillicothe
Metals
Ames
Supply
Total
Amount of waste (tons) ………....
12.8
2.2
15
Percentage ………………………....
85.33%
14.67%
100%
Allocated waste handling
cost ($300,000) …………………....
$256,000
$44,000
$300,000
(3)
Chillicothe
Metals
Ames
Supply
Total
Cost of materials purchased …..
$624,000
$876,000
$1,500,000
Percentage ………………………...
41.6%
58.4%
100%
Allocated waste handling
cost ($300,000) …………………....
$124,800
$175,200
$300,000
Chapter 02 – Cost Concepts and Behavior
2-37
2-57. (continued)
b.
a 52% = 130 tons ÷ (130 tons + 120 tons)
b 48% = 120 tons ÷ (130 tons + 120 tons)
Chapter 02 – Cost Concepts and Behavior
2-38
2-58. (20 Min.) Cost Allocation with Cost Flow Diagram: Pacific Business School.
a.
Undergraduate
Graduate
Total
Number of students ………………....
900
600
1,500
Percentage ………………………...
60%
40%
100%
Credit Hours …………………………..
13,500
16,500
30,000
Percentage ………………………...
45%
55%
100%
Allocation of student-related
costsa………………………………...
$1,350,000
$900,000
$2,250,000
Allocation of credit-hour costsb …..
803,250
981,750
1,785,000
Total Allocations …………………..
$2,153,250
$1,881,750
$4,035,000
a $1,350,000 = 60% x $2,250,000; $900,000 = 40% x $2,250,000.
b $803,250 = 45% x $1,785,000; $981,750 = 55% x $1,785,000.
Chapter 02 – Cost Concepts and Behavior
2-39
2-58. (continued)
b.
a 45% = 13,500 credit hours ÷ (13,500 credit hours + 16,500 credit hours)
b 55% = 16,500 students ÷ (13,500 credit hours + 16,500 credit hours)
c 60% = 900 students ÷ (900 students + 600 students)
d 40% = 600 students ÷ (900 students + 600 students)
Chapter 02 – Cost Concepts and Behavior
2-40
2-59. (40 Min.) Find the Unknown Information.
a.
Finished goods
beginning inventory
+
Cost of goods
manufactured
–
Cost of
goods sold
=
Finished goods
ending inventory
Finished goods
beginning inventory
+
$88,800
–
$87,040
=
$14,080
Finished goods
beginning inventory
=
$ 12,320
(= $14,080 – $88,800 + $87,040)
b.
Direct
materials
used
+
Direct
labor
+
Manufacturing
overhead
=
Total
manufacturing
costs
Direct
materials
used
+
$ 12,160
+
$23,040
=
$77,600
Direct
materials
used
=
$42,400
(= $77,600 – $12,160 – $23,040)
Alternative solution
Direct
materials
used
=
Beginning
inventory
+
Materials
purchased
–
Ending
inventory
Direct
materials
used
=
$16,000
+
$38,400
–
$12,000
Direct
materials
used
=
$42,400
c.
Sales revenue
–
Cost of goods sold
=
Gross margin
Sales revenue
–
$87,040
=
$52,480
Rearranging,
Sales revenue
=
$139,520
(= $52,480 + $87,040)
Gross margin %
=
$52,480 ÷ $139,520
= 37.6%