Title: Exercise 18-5
QA_Ori:
1.
Cost by Behavior Cost by Traceability
Product Cost Variable Fixed Direct Indirect
1. Leather cover for soccer balls…………….. X X
2. Annual flat fee paid for office
security………………………………………….
X X
2. Most fixed costs are indirect. Fixed costs normally are resources acquired to
For example, as production increases, the total cost of the laces consumed in
In addition, the direct costs—direct materials and direct labor—are variable.
Title: Exercise 18-6
QA_Ori:
Product Cost
Period
Cost
Direct
Cost
Indirect
Cost
Prime Conversion
Direct
Materials
Direct
Labor
Direct
Labor
Over-h
ead
1. Factory utilities X X
2. Advertising X
3. Amortization of patents on
factory machine X X
*There are certain costs that can be classified as direct for one company and indirect for
** Direct labor is a prime and conversion cost because this labor force is in direct contact with
the product in the conversion process.
Title: Exercise 18-7
QA_Ori:
Part 1
Company 1, Sun Fresh Foods, is a merchandising firm with only one inventory
Part 2
Company 1
Sun Fresh Foods
Current Asset Section
December 31, 2013
Cash…………………………………………………………………………………………………$ 7,000
Company 2
Salomon Skis Mfg.
Current Asset Section
December 31, 2013
Cash…………………………………………………………………………………………………$ 5,000
Accounts receivable…………………………………………………………………………… 75,000
Discussion: The current asset section of the balance sheet for these two
companies differs because one is a merchandiser and one is a manufacturer.
Title: Exercise 18-8
QA_Ori:
Garcia
Company
Culpepper
Company
1. COST OF GOODS MANUFACTURED
Direct materials
Beginning raw materials inventory…………………. $ 7,250 $ 9,000
Raw materials purchases……………………………… 33,000 52,000
Direct labor……………………………………………………. 19,000 35,000
Factory overhead
Rental cost on factory equipment…………………… 27,000 22,750
Total manufacturing costs………………………………… 104,180 135,910
2. COST OF GOODS SOLD
Beginning finished goods inventory…………………… $ 12,000 $ 16,450
QA_Edit:
Title: Exercise 18-9
QA_Ori:
Merchandising Business
VIKING RETAIL
Partial Income Statement
For Year Ended December 31, 2013
Cost of goods sold
Merchandise inventory, December 31, 2012…………………………… $ 275,000
Manufacturing Business
LOG HOMES MANUFACTURING
Partial Income Statement
For Year Ended December 31, 2013
Cost of goods sold
Finished goods inventory, December 31, 2012……………………. $ 450,000
Title: Exercise 18-10
QA_Ori:
Direct materials used
in production
$502,500
Factory overhead
used in production
$750,000
Ending
raw
materials inventory
$175,000
Beginning raw
materials inventory
$145,500
Raw materials
available
for use in
production
$677,500
Raw materials
purchases
$532,000
Production
Activity
Sales
Activity
Materials
Activity
Direct labor used
in production
$350,000
Ending goods in
process inventory
$93,500
Total goods in
process
$1,687,000
Beginning goods in
process inventory
$84,500
Ending finished
goods inventory
$139,950
Finished goods sold
$1,600,300
Beginning finished
goods inventory
$146,750
Finished goods
available for sale
$1,740,250
Finished goods
manufactured
$1,593,500
QA_Edit:
Direct materials used
in production
$502,500
used in production
$750,000
Sales
in production
$350,000
Ending goods in
process inventory
Total goods in
process
$1,687,000
Beginning goods in
process inventory
$84,500
Ending finished
goods inventory
$139,950
$1,600,300
Beginning finished
goods inventory
$146,750
Finished goods
available for sale
$1,740,250
Finished goods
$1,593,500
Ending raw
materials inventory
$175,000
Beginning raw
materials inventory
$145,500
Raw materials available
for use in production
$677,500
Raw materials
purchases
$532,000
Materials
Activity
Account
Balance
Sheet
Income
Statement
Manufacturing
Statement
Overhead
Report
Accounts receivable…………………………..
Computer supplies used in office…………
Beginning finished goods inventory………
Title: Exercise 18-12
QA_Ori:
SHANTA COMPANY
Manufacturing Statement
For Year Ended December 31, 2013
Direct materials
Raw materials inventory, December 31, 2012……………………$ 37,000
Raw materials purchases ………………………………………………. 175,600
Factory overhead
Factory computer supplies used……………………………………… 17,840
Indirect labor…………………………………………………………………47,000
Title: Exercise 18-13
QA_Ori:
SHANTA COMPANY
Income Statement
For Year Ended December 31, 2013
Sales……………………………………………………………………………… $1,250,000
Cost of goods sold
Finished goods inventory, December 31, 2012…………………..$ 62,750
Title: Exercise 18-14
QA_Ori:
1. (b) and (a)