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Chapter 16: 11RQ (page 885)
What are the three manufacturing costs for a manufacturing company? Describe each.
The three manufacturing costs are direct material, direct labor, and manufacturing overhead.
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Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA): 1. Helps creditors make lending decisions
Preparing an income statement and calculating unit cost for a merchandising company
Dillon Young owns Dillon鈥檚 Pets, a small retail shop selling pet supplies. On December 31, 2018, the accounting records for Dillon鈥檚 Pets showed the following:
Merchandise Inventory on December 31, 2018 $ 10,500
Merchandise Inventory on January 1, 2018 16,000
Net Sales Revenue 56,000
Utilities Expense for the shop 3,200
Rent for the shop 4,100
Sales Commissions 2,750
Purchases of Merchandise Inventory 25,000
Requirements
1. Prepare an income statement for Dillon鈥檚 Pets for the year ended December 31, 2018.
2. Dillon鈥檚 Pets sold 5,550 units. Determine the unit cost of the merchandise sold, rounded to the nearest cent.
ABC Manufacturing Company has the following data for 2019 (amounts in millions):
Direct Materials, January 1 $ 5
Direct Materials, December 31 7
Work-in-Process Inventory, January 1 12
Work-in-Process Inventory, December 31 16
Finished Goods Inventory, January 1 8
Finished Goods Inventory, December 31 6
Direct Materials Purchased, including Freight In 25
Direct Labor 36
Manufacturing Overhead 17
Prepare the schedule of cost of goods manufactured and the cost of goods sold section of the income statement for the year ended December 31, 2019.
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
i. Life insurance on the CEO.
Computing cost of goods manufactured
Use the following inventory data for Caddy Golf Company to compute the cost of goods manufactured for the year:
Direct Materials Used $ 12,000
Manufacturing Overhead 21,000
Work-in-Process Inventory:
Beginning Balance 1,000
Ending Balance 5,000
Direct Labor 9,000
Finished Goods Inventory:
Beginning Balance 18,000
Ending Balance 4,000
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