...Information Materials Purchased Direct Labor Sales Gross Margin Cost of Goods Available for Sale Prime Costs Manufacturer Overhead Direct Materials Beginning Balances Raw Materials Works in Progress Finished Goods Notes Conversion cost = Manufacturing overhead + direct labor Known: Manufacturing overhead= 65% of conversion Direct labor= Direct = 35% of Conversion costs 220,000= 35% of Conversion 220,000/.35= Conversion cost Conversion cost = Manufacturing overhead + direct labor Direct labor= Manufacturing overhead = Prime Cost = direct materials cost + direct labor costs. 545,000 = direct materials cost + 220,000 Direct materials cost = 325,000 $325,000 $220,000 $1,350,000 30% $1,020,000 $545,000 65% of Conversion $325,000 $41,000 $56,000 $35,000 $220,000 35% $628,571 $220,000 $408,571 Answers Raw Materials Cost (purchased) Work in Progress Finished Goods Inventory $325,000 $24,471 $75,000 Calculations Calculating Gross Margin Sales Cost of Goods Sold: Beginning Finished Goods Inventory Add: Cost of Goods Manufactured Cost of Goods Available for Sale Deduct: Ending Finished Goods Inventory *Gross Margin *Gross Margin= 30%($1,350,000) Cost of Goods Sold Beginning balance finished goods Add: Cost of goods manufactured Goods available for sale Less: Ending balance, finished goods Cost of goods sold Total manufacturing cost Direct materials Direct labor Manufacturing overhead Total manufacturing cost $ 35,000 985,000 1,020,000 75,000 $ 1,350,000 945,000 405,000 ...
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...of Goods Available for Sale $1,020,000 Prime Costs $545,000 Manufacturer Overhead 65% of Conversion cost Direct Materials $325,000 Beginning Inventory numbers: Raw Materials $41,000 Works in Process $56,000 Finished Goods $35,000 Formulas: Prime cost = Direct Materials cost + Direct Labor cost Conversion cost = Direct Labor cost + Manufacturing overhead cost (65% conversion) Prime cost = 325,000 + $220,000 545,000 ( Data given) Trying to get to the Conversion cost. Direct labor = 220,000 = 35% of conversion costs = 220,000/.35 = 628,571.42 Manufacturing Overhead = 628,571 - 220,000 = 408,571 Prime cost = direct material cost + 220,000 545,000 = direct material cost + 220,000 545,000 – 220,000 = 325,000 Direct material cost = 325,000 Gross Margin = 30% of $1,350,000 = 405,000. $1,350,000 – 405,000 = 945,000 Ending balance finished goods = 945,000 Cost of Goods Available for Sale $1,020,000 - Finished Goods Inventory (Beginning) 35,000 = Cost of Goods Manufactured $985,000 Cost of Goods sold: Beginning balance finished goods $ 35,000 + Cost of Goods Manufactured $985,000 Goods available for sale $1020,000 - Ending balance finished goods 945,000 Cost of goods sold $ 75,000 Manufacturing Costs: Direct Materials $325,000 Direct Labor 220,000 Manufacturing overhead 408,471 Total $ 953,471 Cost of Goods Manufactured Beginning works...
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... (a) (1) The source documents are: Direct materials—Materials requisition slips. Direct labor—Time tickets. Manufacturing overhead—Predetermined overhead rate. (2) The predetermined overhead rate is 120% of direct labor cost. For example, on July 15, the computation is $528 ÷ $440 = 120%. The same result is obtained on July 22 and 31. (3) The total cost is: Direct materials $4,825 Direct labor 1,360 Manufacturing overhead 1,632 $7,820 The unit cost is $3.91 ($7,820 ÷ 2,000). (b) July 31 Finished Goods Inventory 7,820 Work in Process Inventory 7,820 E2-9 At May 31, 2005, the accounts of Yellow Knife Manufacturing Company show the following. 1. May 1 inventories—finished goods $12,600, work in process $14,700, and raw materials $8,200. 2. May 31 inventories—finished goods $11,500, work in process $17,900, and raw materials $7,100. 3. Debit postings to work in process were: direct materials $62,400, direct labor $32,000, and manufacturing overhead applied $48,000. 4. Sales totaled $200,000. Instructions (a) Prepare a condensed cost of goods manufactured schedule. (b) Prepare an income statement for May through gross profit. (c) Indicate the balance sheet presentation of the manufacturing inventories at May 31, 2005. (a) YELLOW...
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...Thinking AICPA FN: Reporting LO: 2 Level: Easy 5. Multiple departmental overhead rates generally provide more accurate product costs than a single plant-wide overhead rate. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy 6. If direct labor-hours is used as the allocation base in a job-order costing system, but overhead costs are not caused by direct-labor-hours, then jobs with high direct labor requirements will tend to be overcosted relative to jobs with low direct labor requirements. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy 7. The journal entry for cost of goods manufactured includes only the costs of units that are finished. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium 8. The following entry would be used to record depreciation on manufacturing equipment:...
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...LUCI CARRIEDO 4.25.2015 BE16.9 PRIME VS CONVERSION COSTS Star Repairs Co. does all the repair work for a medium-sized manufacture of handheld computer games. The games are sent directly to Star, and after the games are repaired, Star bills the game manufacturer for cost plus 20 percent markup. In the month of February, purchases of parts (replacement parts) by Star amounted to $97,000, the beinning inventory of parts was $38,500, and the ending inventory of parts was $15,250. Payments to repair technicians during the month of February totalted $52,500. Overhead incurred was $121,000. A. What was the cost of materials used for repair work during the month of February? Beginning Inventory of Parts $ 38,500 Purchase of replacement parts $ 97,000 LESS: Ending inventory of parts $ (15,250) Cost of materials used $ 120,250 B. What was the prime cost of February? (prime cost = (direct materials + direct labor) Cost of Materials used $ 120,250 Add: Payments to repair technicians $ 52,500 Prime Cost $ 172,750 C. What was the conversion cost of February? (conversion cost = (direct labor + overhead expenses) payments to repair technicians $ 52,500 Overhead expenses $ 121,000 Conversion Cost $ 173,500 D. What was the total repair cost for February? Total Cost = (direct material + direct labor = overhead expenses) Cost of Materials used $ 120,250 payments to repair technicians...
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...broken. (Businessdictionary.com, 2014) “A commercial enterprise that provides work performed in an expert manner by an individual or team for the benefit of its customers. The typical service business provides intangible products, such as accounting, banking, consulting, cleaning, landscaping, education, insurance, treatment, and transportation services.” What is a Manufacturing Company? A manufacturing company is a company that makes certain product to sell to other companies. The company makes the product then puts it on a truck to bring to other businesses. (Waht is a Manufacturing business? Definition& Examples, A.Hill, 2014) “A manufacturing business is any business that uses components, parts or raw materials to make a finished good. These finished goods can be sold directly to consumers or to other manufacturing businesses that use them for making a different product. Manufacturing businesses in today's world are normally comprised of machines, robots, computers and humans that all...
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...and the distance from the supplier to the manufacturing facility can play a major role in the cost of the product. In service organizations, particularly in the financial sectors, these factors are irrelevant because no physical product is moving except perhaps a few sheets of paper. While the manufacturing industry tries to negotiate better shipping rates and fill containers with product to reduce unit cost, the service industry upgrades servers and installs new software to speed the flow of communication, thereby reducing the labor costs necessary to produce a finished product. Finished Goods Traditionally, a finished good is a product that has been completely transformed from a raw material form to a form that is ready to sell to the customer. It's a physical unit that has been assembled, tested and packaged, and is now sitting on a shelf at a warehouse or a store, ready to be sold. In the service industry, a finished good...
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...amounted to $97,000, the beginning of inventory of parts was $38,500, and the ending inventory of parts was $15,250. Payments to repair technicians during the month of February totaled $52,500. Overhead incurred was $121,000. a. What was the cost of materials used for repair work during the month of February? $38,500 + $97,000 – $15,250 = $120,250 b. What was the prime cost for February? $120,250 + $52,500 = $172,750 c. What was the conversion cost for February? $52,500 + $121,000 = $173,500 d. What was the total repair cost for February? $120,250 + $52,500 + 121,000 = $293,750 E16.1 Listed below are eight technical accounting terms introduced or emphasized in this chapter: Work in Process Inventory Cost of finished goods manufactured Conversion costs Cost of Goods Sold Period costs Management accounting Product costs Manufacturing overhead Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer “None” if the statement does not correctly describe any of the terms. a. The preparation and use of accounting information designed to assist managers in planning and controlling the operations of a business. Management accounting b. All manufacturing costs other than direct materials used and direct labor. Manufacturing overhead c. Direct materials and direct labor used in manufacturing a product....
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...Labor $220,000 Sales $1,350,000 Gross Margin 30% Cost of Goods Available for Sale $1,020,000 Prime Costs $545,000 Manufacturer Overhead 65% Conversion Direct Materials $325,000 Beginning Balances Raw Materials $41,000 Works in Progress $56,000 Finished Goods $35,000 Conversion Cost= Manufacturing Overhead + Direct Labor Manufacturing Overhead= 65% of Conversion Direct labor= $220,000 Direct = 35% of Conversion 220,000= 35% of Conversion cost Conversion Cost= Manufacturing Overhead + Direct Labor $628,571 Direct Labor= $220,000 Manufacturing Overhead $408,571 Prime Cost= Direct Materials Cost = Direct Labor Costs 545,000 = Direct Materials Cost + 220,000 Direct Materials Cost= 325,000 Gross Margin Sales $1,350,000 Cost of Goods Sold: Beginning Finished Goods Inventory 35,000 Add: Cost of Goods Manufactured 985,000 Cost of Goods Available for Sale 1,020,000 Less: Ending Finished Goods Inventory (75,000) (945,000) Gross Margin $405,000 1,350,000*.3= 405,000 Cost of Goods Sold Beginning balance finished goods $35,000 Add: Cost of Goods Manufactured 985,000 Goods Available for Sale $1,020,000 Less: Ending Balance, Finished Goods (945,000) Cost of Goods Sold $75,000 Total Manufacturing Cost Direct Materials $325,000 Direct Labor 220,000 Manufacturing Overhead 408,471 Total Manufacturing Cost $953,471 Costs of Goods Manufactured Beginning Balance Works in Progress $56...
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...1-1. Financial accounting is the opposite of managerial accounting. For financial accounting, all the information is given to the extern, for instant: stockholders, creditors. For managerial accounting, the information is limited inside of the company. People such as: CEO, CFO, managers, those who operate the company. 1-2. Planning, directing and motivating, and controlling. 1-3. The four steps start with formulating long-and short-term plans, implementing plans, and measuring performance, comparing actual to planned performance, and finally go back to where they are started. The cycle goes though the three major activities of manager and they all involve decision making. 1-4. Managerial accounting prepare reports with details to the people who actual run the company, such as strategies, plan, and those reports are updated frequently. Financial accounting is prepare the data or reports to show the company’s past financial performance, and always provide annually. 1-5. Direct material, direct labor, and manufacturing overhead. 1-6. Direct materials are used direct to the product, they are physical and tangible. Direct materials are used to support the production processes. Direct labor is the people work in the first line and the costs can be easily traced to a product. Indirect labor is the people involved in the production process, but not making the product directly. Manufacturing overhead including indirect material and indirect labor, it...
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...proposal made by the team of business students? Explain the differences between these two operations. Biddy’s Bakery is set up with a make-to-order strategy, and would have to shift to a make-to-stock strategy to facilitate the high volumes of of McDoogle pies to be delivered twice a week. In a make-to-stock strategy the product is made and put into an inventory until the customer orders it. In a make-to-order strategy the customer places the order and the product is made to accommodate their needs. 4. Elizabeth senses that the business would be different if she accepts the proposal but does not know how and why. Explain how it would be different. Elizabeth would go from essentially no inventory of finished goods to having a high inventory of one finished good. This would factor in...
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...Garrison 14e Practice Exam – Chapter 3 Print these pages. Answer each of the following questions, explaining your answers or showing your work, and then compare your solutions to those provided at the end of the practice exam. 1. Reformer Company estimates that 64,000 direct labor hours will be worked and 80,000 machine hours will be incurred during the year. In addition, the company has developed the following cost estimates for next year: |Sales commissions |$600,000 | |Direct labor |440,000 | |Salary of production supervisor |280,000 | |Rent on factory equipment |128,000 | |Direct materials |120,000 | |Advertising expense | 88,000 | |Indirect materials |40,000 | If overhead is applied on the basis of direct labor hours, what is the company’s predetermined overhead rate? 2. Sunstead Company uses a job-order costing system and applies manufacturing overhead to Work in Process inventory using a predetermined overhead rate. The company had no beginning or ending inventories in the current month. During the month, the company’s transactions included the following: |Manufacturing overhead cost incurred |$1,000,000 ...
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...In the light of your critical readings how far areLear and Macbeth tragic protagonists? Example intro Normally, the common hero would be a character embodying megalopsychia. However, both Lear and Macbeth are conventionally tragic figures, even displaying anti-heroic qualities. Aristotle’s “Poetics” suggests that a tragic protagonist has greatness which is readily evident in the play. The Victorian critic A.C. Bradley picks up Aristotle’s notion to contend and mentions that although the protagonist is a person of greatness, they are not perfect and contain a tragic flaw which can lead to his downfall. Unlike most tragic protagonists, Lear’s fall occurs early in the play when he decides to express his “darker purpose” to Gloucester by dividing the kingdom between his three daughters. Firstly, this rash decision implies Lear’s downfall and prepares the audience for what is to come. Secondly, this would have alarmed a Jacobean audience who would remember how the question of succession had loomed large during the reign of Elizabeth 1. However, Lear does not show many noble attributes before his fall when he loses his temper at Cordelia and he tells her he will, “disclaim all my paternal care,” because she refuses to flatter him with praises and love. This is different to Macbeth who is seen as “brave” and “noble” in the early stages of the play due to killing the rebel, Macdonwald, and fighting off an attack from the Norwegians. Example 2 1. Throughout literary history, there...
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...WHICH OIL IS RIGHT FOR YOU? MotorOilMatters.org API’s Certification Mark and Service Symbol identify quality motor oils for gasolineand diesel-powered vehicles. Oils displaying these marks meet performance requirements set by U.S. and international vehicle and engine manufacturers and the lubricant industry. More than 500 companies worldwide participate in this voluntary program, which is backed by a marketplace sampling and testing program. GET MORE FROM YOUR MOTOR OIL. Follow your vehicle manufacturer’s oil change recommendations. This includes using recommended SAE oil viscosity and ILSAC or API performance standard. If you find it necessary to mix brands of oil, use same viscosity grade and API service category to maintain performance. Properly dispose of used oil. Learn more about recycling used oil at www.recycleoil.org. Go to www.earth911.com/ recycling/used-motor-oiland-filters for used oil collection center locations. The API Certification Mark, also known as the “Starburst” An oil displaying this mark meets the current engine protection standard and fuel economy requirements of the International Lubricant Specification Advisory Committee (ILSAC), a joint effort of U.S. and Japanese automobile manufacturers. Automobile manufacturers recommend oils that carry the API Certification Mark. See the ILSAC STANDARD FOR PASSENGER CAR ENGINE OILS chart on the next page for descriptions of current and obsolete ILSAC standards. ® The API Service Symbol, also known...
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...Chapter 3 Rolling of metals Subjects of interest • Introduction/objectives • Rolling mills • Classification of rolling processes • Hot rolling • Cold rolling • Forces and geometry relationships in rolling • Simplified analysis of rolling load: Rolling variables • Problems and defects in rolled products • Rolling-mill control • Theories of cold rolling • Theories of hot rolling • Torque and power Suranaree University of Technology Tapany Udomphol Jan-Mar 2007 Objectives • This chapter provides information on different types of metal rolling processes which can also be divided in to hot and cold rolling process. • Mathematical approaches are introduced for the understanding of load calculation in rolling processes. • Finally identification of defects occurring during and its solutions are included. Suranaree University of Technology Tapany Udomphol Jan-Mar 2007 Introduction- Definition of rolling process • Definition of Rolling : The process of plastically deforming metal by passing it between rolls. • Rolling is the most widely used forming process, which provides high production and close control of final product. • The metal is subjected to high compressive stresses as a result of the friction between the rolls and the metal surface. www.world-aluminium.org Rolling process Note: rolling processes can be mainly divided into 1) hot rolling and 2) cold rolling. Suranaree University of Technology Tapany Udomphol Jan-Mar 2007 Introduction- Hot and cold rolling processes...
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