Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
909
Exercise 14–15 (25 minutes)
1.
Beck Manufacturing
Schedule of Cost of Goods Manufactured
For Year Ended December 31
Direct materials
Raw materials inventory, beginning …………
$10,000
Raw materials purchases …………………………
45,000
Raw materials available for use ……………….
Less raw materials inventory, ending ……….
8,500
Direct materials used ………………………………
Direct labor ……………………………………………….
Total manufacturing costs …………………………
Add work in process inventory, beginning ….
Total cost of work in process ……………………..
2.
Cost of goods sold
Finished goods inventory, beginning ………….
$ 16,000
Cost of goods manufactured ………………………
131,000
Goods available for sale …………………………….
Less finished goods inventory, ending ……….
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
910
Exercise 14-16 (15 minutes)
Note: Italicized numbers must be computed.
Materials Activity
Production Activity
Raw materials
purchased, $532,000
Direct labor used,
$350,000
Factory overhead used,
$750,000
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
911
Exercise 14–17 (20 minutes)
(1)
(2)
(3)
Direct materials used ……………………………….
$ 46,500
$150,480
$33,890
Direct labor used ……………………………………..
75,000
55,380
45,720
32,840
60,275
Total manufacturing costs ………………………..
139,885
Total cost of work in process ……………………
148,130
23,905
22,545
11,250
Situation 1
a) Direct materials used + $75,000 + $122,000 = $243,500
Direct materials used = $46,500
c) Work in process inventory, ending = $289,325 – $265,420 = $23,905
Work in Process Inventory
Beginning
45,825
Direct materials
46,500
Factory overhead
Cost of Goods Manufactured
Ending
23,905
Situation 2
d) $150,480 + Direct labor used + $32,840 = $238,700
Direct labor used = $55,380
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
Exercise 14-17 (continued)
f) Cost of goods manufactured = $295,620 – $22,545 = $273,075
Work in Process Inventory
Beginning
56,920
Direct materials
Factory overhead
32,840
Cost of Goods Manufactured
Ending
22,545
Situation 3
g) Total manufacturing costs = $33,890 + $45,720 + $60,275 = $139,885
Beginning
Direct materials
Factory overhead
Cost of Goods Manufactured
Ending
Exercise 14–18 (10 minutes)
1. C 4. A
Exercise 14–19 (10 minutes)
1. Profit
4. Profit
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
913
PROBLEM SET A
Problem 14-1A (30 minutes)
Part 1
Costs
Product
Period
1.
Plastic for casing—$17,000 …………………………………………..
$17,000
2.
Wages of assembly workers—$82,000 …………………………..
82,000
4.
Office accounting salaries—$35,000 ……………………………..
5.
Drum stands—$26,000 ………………………………………………….
26,000
6.
Rent cost of office for accountants—$10,000 …………………
7.
Office management salaries—$125,000 …………………………
8.
Annual fee for factory maintenance—$10,000 …………………
10,000
9.
Sales commissions—$15,000 ……………………………………….
Factory machinery depreciation, straight-line—$40,000 …
Part 2
Calculation of Manufacturing Cost per Drum Set
Manufacturing costs
Plastic for casing ……………………………………
$ 17,000
Wages of assembly workers ……………………
82,000
Drum stands …………………………..………………
26,000
Factory machinery depreciation ………………
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
914
Problem 14-2A (30 minutes)
Product Costs
Period Costs
Costs
Direct
Mtls.
Direct
Labor
Over-
head
Selling
Gen. &
Admin
Advertising expense …………………………………..
X
Depreciation expense—Office equipment ……
X
Depreciation expense—Selling equipment ….
X
Depreciation expense—Factory equipment …
X
Raw materials purchases …………………………...
Maintenance expense—Factory equipment …
Factory utilities ………………………………………….
X
Direct labor ………………………………………………..
Indirect labor ……………………………………………..
X
Office salaries expense ………………………………
X
Rent expense—Office space ……………………….
X
Rent expense—Selling space ……………………..
X
Rent expense—Factory building …………………
X
Sales salaries expense ……………………………….
X
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
915
Problem 14-3A (30 minutes)
Part 1
LEONE COMPANY
Schedule of Cost of Goods Manufactured
For Year Ended December 31
Direct materials
Raw materials inventory, beginning ………………..
$ 166,850
Raw materials purchases ……………………………….
925,000
Raw materials available for use ………………………
1,091,850
Less raw materials inventory, ending ……………..
Direct materials used ……………………………………..
Factory overhead
Indirect labor ………………………………………………….
159,475
Factory utilities ………………………………………………
33,000
Depreciation expense—Factory equipment …….
49,325
Rent expense—Factory building …………………….
76,800
Maintenance expense—Factory equipment …….
35,400
Total factory overhead ……………………………………
Total manufacturing costs ………………………………..
Total cost of work in process …………………………….
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
916
Problem 14-3A (Continued)
Part 2
LEONE COMPANY
Income Statement
For Year Ended December 31
Sales ………………………………………………………….
$4,462,500
Cost of goods sold
Finished goods inventory, beginning ………..
$ 167,350
Goods available for sale …………………………...
Cost of goods sold ……………………………………
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
Problem 14-4A (20 minutes)
MERCHANDISING BUSINESS
MUSIC WORLD RETAIL
Cost of Goods Sold for the Year
Cost of goods sold
Merchandise inventory, beginning ………………………….
$ 200,000
Cost of merchandise purchased……………………………..
Goods available for sale …………………………………………
Less merchandise inventory, ending ………………………
MANUFACTURING BUSINESS
WAVE–BOARD MFG.
Cost of Goods Sold for the Year
Cost of goods sold
Finished goods inventory, beginning ……………………..
$ 500,000
Cost of goods manufactured ………………………………….
Goods available for sale …………………………………………
Less finished goods inventory, ending……………………
Problem 14-5A (20 minutes)
1. Raw materials inventory turnover = Raw materials used
Average raw materials inventory
2. Unfavorable
3. Days’ sales in raw materials inventory =
(Ending raw materials inventory/Raw materials used) x 365
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
918
PROBLEM SET B
Problem 14-1B (30 minutes)
Part 1 Cost classification and amounts
Costs
Product
Period
1.
Plastic for BDs—$1,500 …………………………………………………
$ 1,500
2.
Wages of assembly workers—$30,000 …………………………..
30,000
3.
Factory rent—$6,750 ……………………………………………………..
4.
Human resources staff salaries—$15,000 ………………………
5.
BD labeling—$3,750 ………………………………………………………
6.
Office equipment rent—$1,050 ………………………………………
7.
Office management salaries—$120,000 ………………………….
8.
Annual fee for factory maintenance—$21,000 …………………
21,000
Part 2
Calculation of Manufacturing Cost per BD
Manufacturing costs
Plastic for BDs ………………………………………..
$ 1,500
Wages of assembly workers ……………………
Factory rent …………………………………………….
BD labeling …………………………..…………………
Factory machinery depreciation ……………..
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
919
Problem 14–2B (30 minutes)
Product Costs
Period Costs
Costs
Direct
Mtls.
Direct
Labor
Over-
head
Selling
Gen. &
Admin
Advertising expense …………………………….
X
Depreciation expense—Office equip ……..
X
Depreciation expense—Selling equip ……
X
Depreciation expense—Factory equip …..
Maintenance expense—Factory equip …..
Factory utilities ……………………………………
Direct labor ………………………………………….
Indirect labor ……………………………………….
Office salaries expense ………………………..
X
Rent expense—Office space …………………
X
Rent expense—Selling space ……………….
X
Rent expense—Factory building …………..
Sales salaries expense …………………………
X
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
920
Problem 14-3B (30 minutes)
Part 1
BEST BIKES
Schedule of Cost of Goods Manufactured
For Year Ended December 31
Direct materials
Raw materials inventory, beginning …………………..
$ 40,375
Raw materials purchases ………………………………….
894,375
Raw materials available for use …………………………
Less raw materials inventory, ending …………………
70,430
Direct materials used ………………………………………..
Indirect labor …………………………………………………….
Factory utilities …………………………………………………
37,500
Depreciation expense—Factory equipment ……….
49,900
Rent expense—Factory building ……………………….
93,500
Maintenance expense—Factory equipment ……….
30,375
Total factory overhead ………………………………………
Total manufacturing costs …………………………………..
Total cost of work in process ……………………………….
Less work in process inventory, ending ……………….
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 14
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Problem 14-3B (Continued)
Part 2
BEST BIKES
Income Statement
For Year Ended December 31
Sales …………………………………………………………………..
$4,942,625
Cost of goods sold
Finished goods inventory, beginning …………………
$ 177,200
Cost of goods manufactured ……………………………..
1,816,995
Goods available for sale …………………………………….
Less finished goods inventory, ending……………….
Cost of goods sold …………………………………………….