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Chapter 16: Q2TI_3 (page 869)

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost.

8. Property taxes on the factory

Short Answer

Expert verified

It is product cost, manufacturing overhead and it is a conversion cost.

Step by step solution

01

Definition of the property tax

The property tax is defined as the compulsory payment to the government on the property owned by some individual or legal entity.

02

Identification of costs

The property tax is considered as the product cost as it is associated with the production of goods.

It will be manufacturing overhead as it does not affect production directly. It is a conversion cost.

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Most popular questions from this chapter

This is the first problem in a sequence of problems for Piedmont Computer Company, a manufacturer of personal computers and tablets. During its first month of manufacturing, Piedmont Computer Company incurred the following manufacturing costs:

Balances: Beginning Ending

Direct Materials \( 10,500 \) 9,700

Work-in-Process Inventory 0 17,000

Finished Goods Inventory 0 31,000

Other information:

Direct materials purchases $ 16,000

Plant janitorial services 500

Sales salaries expense 10,000

Delivery expense 1,600

Sales revenue 1,100,000

Utilities for plant 16,000

Rent on plant 9,000

Customer service hotline costs 19,000

Direct labor 210,000

Prepare a schedule of cost of goods manufactured for Piedmont Computer Company for the month ended January 31, 2020.

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.

Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA):

3. Is not required to follow GAAP.

Preparing a schedule of cost of goods manufactured and an income statement for a manufacturing company

Certain item descriptions and amounts are missing from the monthly schedule of cost of goods manufactured and income statement of Elly Manufacturing Company. Fill in the blanks with the missing words, and replace the Xs with the correct amounts.

Beginning Direct Ending Direct Direct Manufacturing Overhead Total Total Ending Direct Materials Beginning Direct Materials Purchases of Direct Materials \( 27,000 \) X \( X X X (25,000) 180,000 44,000 \) X 56,000 84,000 (20,000) ELLY MANUFACTURING COMPANY

Net Sales Revenue Cost of Goods Sold Total Income Cost of Goods Sold: Gross Profit Expenses: Selling Expenses Administrative Expenses Cost of Goods Ending Beginning \( X \) X 232,000 258,000 X 160,000 98,000 $ 110,000 X X X E
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