Questions

# Klear Seal Corporation. (Review problem 2.
Page: 61)
Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . $140,000
Raw materials inventory, January 1 . . . . . . . . . . . $90,000
Raw materials inventory, December 31 . . . . . . .. . $60,000
Utilities, factory . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,000
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . $150,000
Depreciation, factory . . . . . . . . . . . . . . . . . . . . . . . $162,000
Purchases of raw materials . . . . . . . . . . . . . . . . . . $750,000
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,500,000
Insurance, factory . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
Supplies, factory . . . . . . . . . . . . . . . . . . . . . . . . . . $15,000
Administrative expenses . . . . . . . . . . . . . . . . . . . . $270,000
Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000
Maintenance, factory . . . . . . . . . . . . . . . . . . . . . . . $87,000
Work in process inventory, January 1 . . . . . . . . . . $180,000
Work in process inventory, December 31 . . . . . . . $100,000
Finished goods inventory, January 1 . . . . . . . . . . . $260,000
Finished goods inventory, December 31 . . . . . . . . $210,000
 Prepare a schedule of cost of goods manufactured. (1650000)
 Compute the cost of goods sold. (1700000)
 Prepare an income statement. (390000)
# Classification of Costs as Period or Product Costs (exercise 2-

2 page 74)
1. The cost of the memory chips used in a radar set.
2. Factory heating costs.
3. Factory equipment maintenance costs.
4. Training costs for new administrative employees.
5. The cost of the solder that is used in assembling the radar sets.
6. The travel costs of the company’s salespersons.
7. Wages and salaries of factory security personnel.
8. The cost of air-conditioning executive offices.
9. Wages and salaries in the department that handles billing customers.
10. Depreciation on the equipment in the fitness room used by factory workers.
11. Telephone expenses incurred by factory management.
12. The costs of shipping completed radar sets to customers.
13. The wages of the workers who assemble the radar sets.
14. The president’s salary.
15. Health insurance premiums for factory personnel.
* Classify the above costs as either product (inventoriable) costs or period
(noninventoriable) costs for purposes of preparing the financial statements for
the bank. (production cost: 1,2,3,5,7,10,11,13,15 period cost: 4,6,8,9,12,14)
# Mannerman Fabrication manufactures a variety of products

in its factory. Data for the most recent month’s operations
appear below. (exercise: 2-4 page 74)
Beginning raw materials inventory . . . . . . . . . . $55,000
Purchases of raw materials . . . . . . . . . . . . . . . . $440,000
Ending raw materials inventory . . . . . . . . . . . . . $65,000
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $215,000
Manufacturing overhead. . . . . . . . . . . . . . . . . . . $380,000
Beginning work in process inventory . . . . . . . . $190,000
Ending work in process inventory . . . . . . . . . . . $220,000
# The following cost and inventory data for the just completed
year are taken from the accounting records of Eccles
Company: (exercise 2-11 page 77)
Advertising expense . . . . . . . . . . . . . . . . . .. . . $100,000
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . $90,000
Purchases of raw materials . . . . . . . . . . . . . . $132,000
Rent, factory building . . . . . . . . . . . . . . . . . . . $80,000
Indirect labor. . . . . . . . . . . . . . . . . . . . . . . . . . . $56,300
Sales commissions. . . . . . . . . . . . . . . . . . . . . . . $35,000
Utilities, factory . . . . . . . . . . . . . . . . . . . . . . . . $9,000
Maintenance, factory equipment . . . . . . . . . $24,000
Supplies, factory . . . . . . . . . . . . . . . . . . . . . . . $700
Depreciation, office equipment . . . . . . . . . . $8,000
Depreciation, factory equipment. . . . . . .. . . $40,000
Inventories Beginning of year End of year
Raw materials $ 8000 $ 10000
Work in process $ 5000 $ 20000
Finished goods $ 70000 $ 25000
 Prepare the cost of goods sold section of Eccles Company’s income
statement for the year. (460000)
# Listed below are costs found in various organization:

(Problem 2-14 page 78)
1. Depreciation, executive jet.
2. Costs of shipping finished goods to customers.
3. Wood used in manufacturing furniture.
4. Sales manager’s salary.
5. Electricity used in manufacturing furniture.
6. Secretary to the company president.
7. Aerosol attachment placed on a spray can produced by the company.
8. Billing costs.
9. Packing supplies for shipping products overseas.
10. Sand used in manufacturing concrete.
11. Supervisor’s salary, factory.
12. Executive life insurance.
13. Sales commissions.
14. Fringe benefits, assembly-line workers.
15. Advertising costs.
16. Property taxes on finished goods warehouses.
17. Lubricants for production equipment.
* Cost classification.
# Various cost and sales data for Medco, Inc., are given below
for the just completed year. (problem 2-19 page 81)
1. Purchase of raw materials …………………………..90000
2. Raw materials inventory beginning ……………..10000
3. Raw materials inventory ending……………………$17000
4. Depreciation, factory ……………………………………$42000
5. Insurance, factory ………………………………………..$5000
6. Direct labor ………………………………………………….$60000
7. Maintenance factory ……………………………………..$30000
8. Administrative expense …………………………………$70000
9. Sales ………………………………………………………………$450000
10.Utilities, factory …………………………………….$27000
11.Supplies, factory …………………………………….$1000
12.Selling expenses ……………………………………..$80000
13.Indirect labor ………………………………………..$65000
14.Work in process inventory, beginning ……$7000
15.Work in process inventory, ending …………$30000
16.Finished goods inventory, beginning ………$10000
17.Finished goods inventory, ending ……………$40000
Instructions:
1) Prepare a schedule of cost of goods manufactured. (290000)
2) Prepare an income statement. (40000)
3) Assume that the company produced the equivalent of 10,000 units of
product during the year. What was the average cost per unit for direct
materials? What was the average cost per unit for factory depreciation?
(8.3, 4.2)
4) Assume that the company expects to produce 15,000 units of product
during the coming year. What average cost per unit and what total cost
would you expect the company to incur for direct materials at this level of
activity? For factory depreciation? (In preparing your answer, assume that
direct materials is a variable cost and that depreciation is a fixed cost; also
assume that depreciation is computed on a straight-line basis.) (8.3, 2.8)
5) As the manager responsible for production costs, explain to the president
any difference in the average costs per unit between (3) and (4) above.
(operation cost is fixed 2.8)
# The following selected account balances for the year ended
December 31 are provided for Valenko Company. (Problem 2-
27 page 87)
Advertising expense . . . . . . . . . . . . . . . . . . $215,000
Insurance, factory equipment. . . . . . . . . . . . $8,000
Depreciation, sales equipment. . . . . . . . . . . $40,000
Rent, factory building . . . . . . . . . . . . . . . . . . $90,000
Utilities, factory. . . . . . . . . . . . . . . . . . . . . . . $52,000
Sales commissions . . . . . . . . . . . . . . . . . . . $35,000
Cleaning supplies, factory . . . . . . . . . . . . . . $6,000
Depreciation, factory equipment . . . . . . . . . $110,000
Selling and administrative salaries. . . . . . . . $85,000
Maintenance, factory . . . . . . . . . . . . . . . . . . $74,000
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Purchases of raw materials . . . . . . . . . . . . . $260,000
Beginning of year End of year
Raw materials 50000 40000
Work in process ? 33000
Finished goods 30000 ?
The total manufacturing costs for the year were $675,000; the goods
available for sale totaled $720,000; and the cost of goods sold totaled
$635,000.
Instructions:
1. Prepare a schedule of cost of goods manufactured and the cost of goods sold
section of the company’s income statement for the year.
2. Assume that the dollar amounts given above are for the equivalent of 30,000
units produced during the year. Compute the average cost per unit for direct
materials used, and compute the average cost per unit for rent on the factory
building.
3. Assume that in the following year the company expects to produce 50,000
units. What average cost per unit and total cost would you expect to be incurred
for direct materials? For rent on the factory building? (Assume that direct
material is a variable cost and that rent is a fixed cost.)
4. As the manager in charge of production costs, explain to the president the
reason for any difference in the average costs per unit between (2) and (3) above.
# Math formula:
Answer:
# EXHIBIT 5–14 (Page:211)
Answer: Net income = 90000.
#
Answer: (1) 4200 (2) Y= $4200 + 0.074x (3) 10120

# Exercise: 5-9 (page: 220).
Answer: (1) 4800 (2) Y= $4800 + 0.076x (3) 12400.

# Problem: 2-19
Here 40 units were sold. * do this math in traditional approach income statement
* do it repeat in contribution approach.
Answer: (1) 8000 (2) 8000.
# Problem: 5-15 (page:222)
Answer: (1) 19000 (2) 19000.
#
Answer: 1) cost of goods sold= variable, advertising= fixed, shipping= mixed,
salaries and commissions= mixed, insurance= fixed, depreciation= fixed. 2)
shipping expenses Y = A$1800 + A$4x per unit, salaries and commissions expenses
Y = A$30000 + A$12 per unit. 3) Net operating income 30000.
# Visic Corporation, a manufacturing company, produces a single product. The

following information has been taken from the company’s production, sales, and
cost records for the just completed year.
Answer: 1)
# Page: 255
(Solution to
Review
problem).
Answer: 1) 25%
and 75% 2)
16000 units and
$960000 3)
$100000 4)
22000 units.
#
Answer: 1)
1500units 2)
1625units.
Answer: 1)
12000 and
$360000 2) 18
per unit $216000
3) 17000 units 4)
$90000 and 20%
5) 60%
#
Answer: 1) $28 2) a: 15000units and $600000 b: 20000units and $800000 c: 11250

units and $450000

Questions

Uploaded by

Copyright:

Available Formats

Questions

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Questions

Uploaded by

Copyright:

Available Formats

# Klear Seal Corporation. (Review problem 2.

# Classiﬁcation of Costs as Period or Product Costs (exercise 2-

# Mannerman Fabrication manufactures a variety of products

# Listed below are costs found in various organization:

Answer: (1) 4200 (2) Y= $4200 + 0.074x (3) 10120

Answer: (1) 4800 (2) Y= $4800 + 0.076x (3) 12400.

# Visic Corporation, a manufacturing company, produces a single product. The

Answer: 1) $28 2) a: 15000units and $600000 b: 20000units and $800000 c: 11250

You might also like