1082
Problem 18-2B (30 minutes)
Costs
Product
Cost
Dir.
Mtls.
Dir.
Labor
Over-
head
Period
Cost
Selling
Gen. &
Admin
Advertising expense
X
X
Depr. expense-Office equip.
X
X
Depr. expense-Selling equip.
X
X
Depr. expense-Factory equip.
X
Factory supervision
X
Factory supplies used
X
Direct labor
X
Indirect labor
X
Misc. production costs
X
Office salaries expense
X
X
Raw materials purchases
X
Rent expense-Office space
X
X
Rent expense-Selling space
X
X
Rent expense-Factory equip.
X
Maint. expense-Factory equip.
X
Sales salaries expense
X
X
1083
Problem 18-3B (75 minutes)
Part 1
BEST BIKES
Schedule of Cost of Goods Manufactured
For Year Ended December 31, 2017
$ 40,375
894,375
1084
Problem 18-3B (Continued)
Part 2
BEST BIKES
Income Statement
For Year Ended December 31, 2017
Sales ……………………………………………………………………..
$4,942,625
Cost of goods sold
Finished goods inventory, December 31, 2016………
Cost of goods manufactured ………………………………..
Goods available for sale ………………………………………
Less finished goods inventory, December 31, 2017 …..
Cost of goods sold ………………………………………………
Operating expenses
Selling expenses
Advertising expense …………………………………………..
20,250
10,125
27,000
Sales salaries expense ……………………………………….
Total selling expenses ……………………………………….
General and administrative expenses
Office salaries expense ………………………………………
70,875
Total general and administrative expenses …………
Total operating expenses …………………………………….
Income taxes expense ……………………………………………
1085
Problem 18-3B (Concluded)
Part 3
Raw
Materials
Finished
Goods
Cost of raw materials used ………………………………………
$864,320
Cost of goods sold ………………………………………………….
$1,852,445
Beginning inventory ………………………………………………..
Discussion: The inventory turnover ratio for the raw materials inventory is
higher than the turnover ratio for finished goods. One reason for the
1086
Problem 18-4B (40 minutes)
Part 1
Unit and dollar amounts of raw materials inventory in blades
Beginning inventory, December 31, 2016 2,500 $20 $50,000
Purchases during 2017 45,000 20 900,000
Part 2
Topics of discussion for the memorandum include:
• General description of the JIT inventory system and how it operates.
1087
Problem 18-5B (40 minutes)
Part 1
MERCHANDISING BUSINESS
TEEMART
Partial Income Statement
For Year Ended December 31, 2017
Cost of goods sold
Merchandise inventory, December 31, 2016 …………………………..
$100,000
Merchandise purchases ……………………………………………………….
Goods available for sale ……………………………………………………….
MANUFACTURING BUSINESS
AIM LABS
Partial Income Statement
For Year Ended December 31, 2017
Cost of goods sold
Finished goods inventory, December 31, 2016……………………….
$300,000
Cost of goods manufactured …………………………………………………
Goods available for sale ……………………………………………………….
Less finished goods inventory, December 31, 2017 ……………….
Cost of goods sold ……………………………………………………………….
Part 2
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
The answers will vary slightly but should include:
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 18
1088
SERIAL PROBLEM — SP 18
Serial Problem, Business Solutions (50 minutes)
1.
Product Costs
Variable
Fixed
Direct
Indirect
1. Monthly flat fee to clean workshop ……..
X
X
2.
Business Solutions
Schedule of Cost of Goods Manufactured
For Month Ended January 31, 2018
Direct materials ………………………………………………………………………….
$2,200
Total cost of work in process ………………………………………………………
3.
Business Solutions
Partial Income Statement
For Month Ended January 31, 2018
Cost of goods sold
Finished goods inventory, December 31, 2017 ………………..
$ 0
Cost of goods manufactured ………………………………………….
Goods available for sale …………………………………………………
2. Laminate coverings for desktops ………..
X
X
3. Taxes on assembly workshop …………….
X
X
5. Wages of desk assembler …………………..
X
X
6. Electricity for workshop ……………………..
X
X
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 18
1089
Reporting in Action — BTN 18-1
1. From its 2015 10-K report, Apple reports warranty expense (“accruals
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 18
1090
Comparative Analysis — BTN 18-2
1. The purpose of Apple’s audit committee is to:
a. Assist the Board in oversight and monitoring of:
i. the Corporation’s financial statements and other financial
information provided to shareholders and others;
2. The purpose of Google’s (Alphabet) audit committee is to:
a. Oversee Alphabet’s accounting and financial reporting
processes.
3. Management accountants would be involved in:
• Ensuring compliance with regulations.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 18
1091
Ethics Challenge — BTN 18-3
1. Raw materials are part of inventory and should be capitalized (set up as
assets). Their costs are subsequently reported as part of cost of goods
2. The challenge is how to handle a request to use one’s accounting skills
in an inappropriate manner. It is important to remember that the
behavior of the managerial accountant is governed by rules of ethical
Communicating in Practice — BTN 18-4
Instructor note: The solution to this project depends on the database and career fields reviewed.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 18
1092
Taking It to the Net — BTN 18-5
1. Standards of Ethical Conduct for Management Accountants are posted
at the Web site: http://www.IMAnet.org.
These standards (in abbreviated form) are:
3. The IMA suggests first trying to resolve ethical conflicts by applying the
policies of your organization. If this is unsuccessful, contact your
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 18
1093
Teamwork in Action — BTN 18-6
Part 1
a. Materials used
= Beg. Materials
+ Materials purchased
– End. materials
b. Factory overhead
= Depreciation on factory equipment + factory supervision + factory supplies used +
c. Total manufacturing costs
d. Total cost of work in process
e. Cost of goods manufactured
Part 2
= $177,500
+ $872,500
– $168,125
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 18
1094
Teamwork in Action (Continued)
Part 3
a. Net sales
b. Cost of goods sold
c. Gross profit
d. Total operating expenses
e. Net income before taxes
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 18
Entrepreneurial Decision — BTN 18-7
1. Manufacturing costs for NatureBox include (a) direct materials such as
nuts, dried fruits, cheese, pretzels, oatmeal (b) direct labor to mix
2. Four goals of a total quality management (TQM) process include
reduced waste, better inventory control, fewer defects, and continuous
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 18
Hitting the Road — BTN 18-8
Instructor note: Student responses will vary depending on the restaurant chosen.
The general framework of a good response includes:
1. The usual activities are
• serving customer at counter
2. Costs associated with each activity include
• Direct and indirect materials – such as meat, bread, pickles, and
3. Answers will vary because classification of fixed or variable depends
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 18
Global Decision — BTN 18-9
1. From its 2015 annual report, Samsung reports a warranty expense
2. From its 2015 10–K report, Apple reports warranty expense (“accruals
3. Based on this one year of data, Samsung was more accurate in
estimating warranty expense. Samsung’s warranty expense for the year