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Chapter 16: 7RQ (page 884)
Describe a merchandising company, and give an example.
The merchandising company sells products that are not produced by them and the examples are Walmart and Aptos.
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Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
g. Depreciation on the manufacturing plant.
Computing direct materials used
Tuscany, Inc. has compiled the following data:
Purchases of Direct Materials $ 6,300
Freight In 400
Property Taxes 800
Ending Direct Materials 1,300
Beginning Direct Materials 4,100
Compute the amount of direct materials used.
Comparing managerial accounting and financial accounting
Match the following terms to the appropriate statement. Some terms may be used more than once, and some terms may not be used at all.
Directing Managerial
Creditors Managers
Controlling Planning
Financial Stockholders
a. Accounting systems that must follow GAAP.
b. External parties for whom financial accounting reports are prepared.
c. The role managers play when they are monitoring day-to-day operations and keeping the company on track.
d. Internal decision makers.
e. Accounting system that provides information on a company鈥檚 past performance.
f. Accounting system not restricted by GAAP.
g. The management function that involves choosing goals and deciding how to achieve them
Selected data for three companies are given below. All inventory amounts are ending balances and all amounts are in millions.
Company A Company B Company C
Cash \( 6 Wages Expense \) 12 Administrative Expenses $ 4
Net Sales Revenue 48 Equipment 32 Cash 25
Finished Goods Inventory 10 Accounts Receivable 8 Net Sales Revenue 75
Cost of Goods Sold 23 Service Revenue 65 Selling Expenses 8
Selling Expenses 4 Cash 34 Merchandise Inventory 12
Equipment 67 Rent Expense 12 Equipment 55
Work-in-Process Inventory 9 Accounts Receivable 19
Accounts Receivable 14 Cost of Goods Sold 25
Cost of Goods Manufactured 23
Administrative Expenses 7
Raw Materials Inventory 6
Identifying differences between service, merchandising, and manufacturing companies Using the data on the previous page, calculate operating income for each company.
Question:Preparing a schedule of cost of goods manufactured and an income statement for a manufacturing company
Gourmet Bones manufactures its own brand of pet chew bones. At the end of December 2018, the accounting records showed the following:
Balances: Beginning Ending
Direct Materials \( 13,500 \) 7,500
Work-in-Process Inventory 0 3,500
Finished Goods Inventory 0 5,200
Other information:
Direct materials purchases$ 36,000
Plant janitorial services 700
Sales salaries 6,000
Delivery costs1,300
Net sales revenue 107,000
Utilities for plant 1,300
Rent on plant 17,000
Customer service hotline costs 1,200
Direct labor23,000
Requirements
1. Prepare a schedule of cost of goods manufactured for Gourmet Bones for the year ended December 31, 2018.
2. Prepare an income statement for Gourmet Bones for the year ended December 31, 2018.
3. How does the format of the income statement for Gourmet Bones differ from the income statement of a merchandiser?
4. Gourmet Bones manufactured 17,900 units of its product in 2018. Compute the company鈥檚 unit product cost for the year, rounded to the nearest cent.
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