40 Minutes, Strong PROBLEM 16.8B
JACKSON ENGINEERING CO.
a.
JACKSON ENGINEERING CO.
Schedule of the Cost of Finished Goods Manufactured
PROBLEM 16.8B
JACKSON ENGINEERING CO. (concluded)
d.
(
46,000
)
$
191,000
Evaluation of Jackson’s conclusions:
Jackson is in error about the $67.10 unit cost of production and the overall unprofitability
of the business. In concluding that the business sustained a net loss, Jackson treated product
the business as follows:
Net loss calculated by Jackson
Add: Product costs erroneously deducted as expense
40 Minutes, Strong CASE 16.1
WEST TEXAS GUITAR COMPANY
a.
(1)
The errors and shortcomings in the illustrated income statement include the following:
All manufacturing costs incurred during the first year of operations have incorrectly
CASE 16.1
WEST TEXAS GUITAR COMPANY (concluded)
c.
Manufacturing costs assigned to production:
Direct materials used [part b (1)] 422,000$
Direct labor 225,000
d.
Net sales 1,300,000$
Add: Cost of goods sold:
Cost of finished goods manufactured 924,400$
Less: Operating expenses:
Rent ($144,000 × 40%) 57,600$
Insurance ($16,000 × 40%) 6,400
WEST TEXAS GUITAR COMPANY
Income Statement
For the Year Ended December 31, 20__
WEST TEXAS GUITAR COMPANY
Schedule of the Cost of Finished Goods Manufactured
For the Year Ended December 31, 20__
40 Minutes, Strong CASE 16.2
PRESCOTT MANUFACTURING
Current Last
Year Year
a. (1) Inventory of finished goods, beginning of year 255,000$ 85,000$
Cost of goods sold:
CASE 16.2
PRESCOTT MANUFACTURING (concluded)
b.
Evaluation of Walker’s statements:
Walker’s statements are misleading. He claims that his plant “has made real gains” in
controlling manufacturing costs through efficient operations. Yet the manufacturing cost per
CASE 16.3
PFIZER, INC.
INTERNET
a.
b.
15 Minutes, Easy
Pfizer’s Inventories footnote shows the three typical categories of inventory—finished goods,
By using the current and previous years’ Finished Goods balance sheet data and the current
year’s Cost of Goods Sold amount, the following formula can be applied to calculate the cost
of finished goods manufactured:
CASE 16.4
CODE OF CONDUCT AT COCA-COLA
ETHICS, FRAUD & CORPORATE GOVERNANCE
a.
45 Minutes, Medium
Two of the bulleted highlights of the code are directly related to accounting. First, financial
records must be timely and accurate and second, company assets must be safeguarded and
not used for personal benefit.