Chapter 10 which enables management to adjust future pricing policies

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CHAPTER 10
ACCOUNTING SYSTEMS FOR
MANUFACTURING OPERATIONS
CLASS DISCUSSION QUESTIONS
1. Managerial accounting differs from financial
accounting in the following ways:
(1) Financial accounting records and re-
(2) Financial accounting reports information
on a periodic basis (monthly, quarterly,
or yearly), while managerial accounting
2. For a company that produces desktop com-
3. Product cost information is used by manag-
c. Process cost systems accumulate costs
for each department or process within a
factory.
are issued to indicate release of the proper
amount of materials from the storeroom.
7. a. The clock card is a means of recording
the hours spent by employees in the
a. Summary of the materials requisitions
9. The use of a predetermined factory over-
head rate in job order cost accounting as-
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10. a. The predetermined factory overhead
rate is determined by dividing the bud-
11. a. (1) If the amount of factory overhead
12. The simplest satisfactory procedure for
14. Job order cost accumulation would be most
appropriate for professional service firms
head would be applied using a predeter-
mined overhead rate. The costs accumu-
cost, and instant availability.
b. JIT processing combines traditional
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EXERCISES
E10–1
E10–2
a. Direct materials cost
f. Factory overhead cost
E10–3
E10–4
a. Period cost
j. Product cost
E10–5
a. period
e. direct materials
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E10–6
E10–7
a.
Cost of goods sold:
b.
Direct materials cost:
c.
Direct labor cost:
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E10–8
a.
RECEIVED ISSUED BALANCE
Receiving
Report
Number
Quantity
Unit
Price
Materials
Requi-
sition
Number
Quantity
Amount
Date
Quantity
Amount
Unit
Price
b. Ending wire cable balance:
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E10–9
b.
Balance Sheet
Statement of Assets =Liabilities +Stockholders’ Equity Income
Cash Flows Work in Factory Statement
Materials + Process +Overhead
E10–10
a. Materials purchases ...................................................... $1,060,000*
c.
Polyester
Fabric Filling Lumber Glue
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E10–11
a. Factory labor costs transferred to Work in Process: $40,350*
b.
Balance Sheet
Statement of Assets =Liabilities +Stockholders’ Equity Income
Cash Flows Work in Factory Wages Statement
Process +Overhead =Payable
E10–12
Supporting Calculations:
Labor Costs (Hourly Rate × Hours)
Direct
Labor
Hourly (sum of Indirect
Rate Job 560A Job 560B Job 560C job costs) Labor
b. The direct labor costs in the completed jobs (Jobs 560A and 560B) would
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E10–13
a. Factory labor costs transferred to Work in Process: $ 18,000*
Factory labor costs transferred to Factory Overhead: $1,750
c.
Balance Sheet
Statement of Assets =Liabilities +Stockholders’ Equity Income
Cash Flows Work in Factory Statement
Process + Overhead
E10–14
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E10–15
The estimated shop overhead is determined as follows:
Shop and repair equipment depreciation ......................................... $ 91,000
E10–16
a. Estimated annual operating room overhead: $1,260,000
Estimated operating room activity base (number of operating room hours):
b. Shirlee Greer’s procedure:

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