Title: Exercise 18-15
QA_Ori:
a.
b.
If customers rate any of the factors on the survey as anything other than “very
Title: Exercise 18-16
QA_Ori:
Cost by Behavior Cost by Traceability
Cost Variable Fixed Direct Indirect
1. Advertising…..………………………………….. X X
2. Beverages and snacks………………………. X X
QA_Edit:
Title: Problem 18-1A
QA_Ori:
The managerial accounting professional must do more than assign value to
ending inventory and cost of goods sold. S/he must understand the industry and
Specifically for the automobile industry, the managerial accountant must estimate
the potential revenue of a new vehicle and the costs of production. To properly
QA_Edit:
Title: Problem 18-2A
QA_Ori:
Instructor note: There can be more than one right answer to this problem. Students can experience some
challenges in completing this assignment. Their reaction is normal and a part of the process in learning
how difficult it is to make estimates of opportunity costs.
A good answer to this problem should show estimates for:
(b) the added costs associated with both re-work and lost production.
A good answer would also show that purchasing a lower-quality product at a
1) From the data available in Decision Maker, the company saves $30,000,
(2) Estimates must be made of opportunity costs (and revenues):
(a) Lost customer gross profit from repeat business and referrals (5 lost
(3) Recommend not to buy from Supplier (B) based on the following:
Title: Problem 18-3A
QA_Ori:
Part 1: Cost classification and amounts
Cost by Behavior Cost by Function
Costs Variable Fixed Product Period
3. Property taxes on factory—$5,000………. $ 5,000 5,000
4. Accounting staff salaries—$35,000………. 35,000 $35,000
Part 2
QA_Ori:
DrumBeat
Calculation of Manufacturing Cost per Drum Set
For Year Ended December 31, 2013
Item
Total cost
(at 1,000 units) Per unit cost*
Variable production costs
Plastic for casing…….………..………………………. $ 17,000 $ 17
Wages of assembly workers………………………. 82,000 82
*Total cost / 1,000 drum sets
Part 3
If 1,200 drum sets are produced, we would expect the cost of the plastic for the
casings to increase to $20,400 (1,200 drum sets x $17/set), but the cost per unit
Part 4
If 1,200 drum sets are produced, we would expect the cost of the property taxes
Title: Problem 18-4A
QA_Ori:
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
The memorandum content should include the following points:
Product and period costs are different. Product costs are defined as direct
material, direct labor, and factory overhead. Moreover, product costs are
capitalized and expensed as goods are sold. All other costs, such as
administrative and selling expenses, are reported and expensed in the period
incurred and are called period costs. Period costs are the types of expenses
usually identified as operating expenses.
Product costs can be further understood by thinking about what takes place in
the production process. Direct material and direct labor are primary
components to the production process, thus these costs are labeled prime
costs. Direct labor and factory overhead are key resources applied to the
conversion of the raw materials to a finished product, so these costs are
labeled conversion costs. A merchandising business does not transform a raw
material to a finished product. Therefore, a merchandising business does not
have to be concerned with prime and conversion costs. Purchases are the
only product cost category for a merchandiser.
Title: Problem 18-5A
QA_Ori:
Part 1
Units and dollar amounts of raw materials inventory in heels
Beginning inventory, December 31, 2012 (1,200 units x $8)……………$ 9,600
*Note: 16,600 pairs of boots manufactured require 33,200 heels.
Part 2
Analysis Component
Topics of discussion for this memorandum include:
Description (general) of the JIT inventory system and how it operates.
Title: Problem 18-6A
QA_Ori:
Part 1
MERCHANDISING BUSINESS
SPORTS WORLD RETAIL
Partial Income Statement
For Year Ended December 31, 2013
Cost of goods sold
Merchandise inventory, December 31, 2012……………………………… $ 200,000
MANUFACTURING BUSINESS
SNO–BOARD MFG.
Partial Income Statement
For Year Ended December 31, 2013
Cost of goods sold
Finished goods inventory, December 31, 2012……………………………$ 500,000
Part 2
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
The answers will vary but should include:
The Merchandise Inventory account on December 31 for Sports World and the
The inventory accounts must also be included in the current asset section of the
Title: Problem 18-7A
QA_Ori:
Part 1
DE LEON COMPANY
Manufacturing Statement
For Year Ended December 31, 2013
Direct materials
Raw materials inventory, December 31, 2012………….. $
166,850
Raw materials purchases………………………………………. 925,000
Direct labor…………………………………………………………….. 675,480
Factory overhead
Total factory overhead costs………………………………….. 354,000
Total manufacturing costs………………………………………… 1,939,330