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Title: Problem 18-7B
QA_Ori:
Part 1
ELEGANT FURNITURE
Manufacturing Statement
For Year Ended December 31, 2013
Direct materials
Raw materials inventory, December 31, 2012.............. $ 40,375
Direct labor....................................................................... 562,500
Factory overhead
Total manufacturing costs................................................ 1,818,595
Part 2
ELEGANT FURNITURE
Income Statement
For Year Ended December 31, 2013
Sales................................................................................ $5,000,000
Finished goods inventory, December 31, 2012.............. $
177,200
Operating expenses
Selling expenses
Advertising expense..................................................... 20,250
0
Total selling expenses.................................................. 352,675
General and administrative expenses
5
Total general and administrative expenses.................. 102,940
Part 3
Raw
Materials
Finished
Goods
Cost of raw materials used.................................................$864,320
Cost of finished goods sold................................................ $1,852,445
* 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 difference could be
The company is carrying 29.7 days supply of raw materials inventory and 27.9
Part 2
Part 3
Title: Problem 18-8B
QA_Ori:
1. A 6. A
2. B 7. A
QA_Edit:
Title: Serial Problem 1
QA_Ori:
Cost by
Behavior .
Cost by
Traceability .
Product Costs Variable Fixed Direct Indirect
1. Monthly flat fee to clean workshop.............. X X
2. Laminate coverings for desktops................ X X
QA_Edit:
Title: Serial Problem 2
QA_Ori:
Success Systems
Manufacturing Statement
For Month Ended January 31, 2014
Direct materials........................................................................................$2,200
Direct labor .............................................................................................. 900
QA_Edit:
Title: Serial Problem 3
QA_Ori:
Success Systems
Partial Income Statement
For Month Ended January 31, 2014
Cost of goods sold
Finished goods inventory, December 31, 2013......................... $ 0
Title: Reporting in Action 1
QA_Ori: The warranty period for Polaris’s products ranges from six months to
two years after sale, depending on the product. The warranty reserve is
Title: Reporting in Action 2
QA_Ori: It is commonly the managerial accountant’s responsibility to try to
Title: Reporting in Action 3
QA_Ori: Factors that could impact the warranty accrual include improved
QA_Edit:
Title: Reporting in Action 4
QA_Ori: Solutions depend on the annual report information collected.
QA_Edit: Depending on the annual report information collected, solutions may
vary.
Title: Comparative Analysis 1
QA_Ori:
Warranty information for Polaris
($ thousands)
December
31, 2011
December
31, 2010
December
31, 2009
For 2009, Polaris’s warranty claims paid was higher than its warranty
Title: Comparative Analysis 2
QA_Ori:
Warranty information for Arctic Cat
($ thousands)
March 31,
2011
March 31,
2010
March 31,
2009
For each of the three years, Arctic Cat’s warranty payments are higher than
its warranty provision (expense).
Title: Comparative Analysis 3
QA_Ori: For these three years, Arctic Cat’s estimates of warranty costs are
slightly more accurate than those of Polaris. Arctic Cat’s total warranty
