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Current assets for two different companies at fiscal year-end 2017 are listed here. One is a manufacturer, Rayzer Skis Mfg.,

and the other, Sunrise Foods, is a grocery distribution company.

 

 

Required: Identify which set of numbers relates to the manufacturer and which to the merchandiser.

Which of these company is manufacturer: Company 2

Which of these company is merchandiser: Company 1

Prepare the current asset section for each company from this information.

 

Compute cost of goods sold for each of these two companies for the year ended December 31, 2017..

 

 

Prepare its schedule of cost of goods manufactured for the year ended December 31, 2017.

 

 

 

The following selected account balances are provided for Delray Mfg.

 

 

Prepare an income statement for Delray Mfg. (a manufacturer).

 

 

 

Which of the following accounts would appear on a schedule of cost of goods manufactured?

 

Raw materials, factory insurance expired, indirect labor.

Raw materials, work in process, finished goods.

Direct labor, delivery equipment, and depreciation on factory equipment.

Direct materials, indirect labor, sales salaries.

Direct labor, factory repairs and maintenance, wages payable.

 

 

The following information relates to the manufacturing operations of the Abbra Publishing Company for the year:

 

	Beginning	Ending
Raw Materials Inventory	$547,000	$610,000

 

The raw materials used in manufacturing during the year totaled $1,018,000. Raw materials purchased during the year amount to:

 

$955,000

$892,000

$1,565,000

$408,000

$1,081,000

 

Beginning Raw Materials + Purchases – Ending Raw Materials = Raw Materials Used
$547,000 + Purchases – $610,000 = $1,018,000;
Purchases = $1,018,000 + $610,000 – $547,000 = $1,081,000

 

 

Using the information below, calculate cost of goods sold for the period:

 

 

$774,000

$769,000

$530,000

$535,000

$448,000

 

Beginning Finished Goods Inventory + Cost of goods manufactured – Ending Finished Goods Inventory =

Cost of goods sold. $36,000 + 540,000 – 41,000 = $535,000.

 

 

Flexibility of practice when applied to managerial accounting means that:

 

The information must be presented in electronic format so that it is easily changed.

Managers must be willing to accept the information as the accountants present it to them, rather than in the format they ask for.

The managerial accountants need to be on call twenty-four hours a day.

Managerial accounting system differ across companies depending on the nature of the business and the arrangement of its internal operations.

Managers must be flexible with information provided in varying forms and using inconsistent measures.

 

 

The following information is available for the year ended December 31:

 

$87,500

$85,700

$86,900

$85,400

$86,600

Beginning Raw Materials + Purchases – Ending Raw Materials = Raw Materials Used
$11,000 + $86,000 – $10,400 = $86,600

All of the following statements regarding manufacturing costs are true except:

• Direct material costs that increase in total with volume of production are called variable costs.
• The reporting of fixed and variable costs separately is not helpful to managers in analyzing cost behavior.
• When overhead costs vary with production, they are called variable overhead.
• When overhead costs don’t vary with production, they are called fixed overhead.
• Overhead can be both variable and fixed.

Which of the following is not part of the sales activity in the flow of manufacturing activities?

• Beginning Finished Goods Inventory.
• Cost of Goods Manufactured.
• Total Finished Goods available for sale.
• Ending Work in Process Inventory.
• Cost of Goods Sold.

Beginning Finished Goods Inventory + Cost of Goods Manufactured = Finished Goods Available for Sale.

Finished Goods Available for Sale – Ending Finished Goods Inventory = Cost of Goods Sold.

A direct cost is a cost that is:

• Identifiable as controllable.
• Traceable to the company as a whole.
• Does not change with the volume of activity.
• Traceable to a single cost object.
• Traceable to multiple cost objects.

Total manufacturing costs incurred during the year do not include:

• Direct materials used.
• Factory supplies used.
• Work in Process inventory, beginning balance.
• Direct labor.
• Depreciation of factory machinery.

Managerial accounting is different from financial accounting in that:

• Managerial accounting is more focused on the organization as a whole and financial accounting is more focused on subdivisions of the organization.
• Managerial accounting never includes nonmonetary information.
• Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.
• Managerial accounting is used extensively by investors, whereas financial accounting is used only by creditors.
• Managerial accounting is mainly used to set stock prices

Cameroon Corp. manufactures and sells electric staplers for $15.40 each.

If 10,000 units were sold in December, and management forecasts 3% growth in sales each month,

the dollar amount of electric stapler sales budgeted for February should be:

 

$163,379

 

Bottom of Form

December sales $15.40 * 10,000 = $154,000
January sales = $154,000 * 1.03 = $158,620
February sales = $158,620 * 1.03 = $163,379

 

 

Bengal Co. provides the following sales forecast for the next three months:
 

	July			August			September
Sales units		5,300			6,000			5,860

 

The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales.

Finished goods inventory on June 30 is 1,325 units. The budgeted production units for July are:

 

5,475 units

 

Top of Form

 

 

July units + 25% of August units - June ending inventory = July production
5,300 units + (6,000 units * 0.25) - 1,325 units = 5,475 units

 

 

Bengal Co. provides the following sales forecast for the next three months:
 

	July			August			September
Sales units		6,000			6,700			6,450

 

The company wants to end each month with ending finished goods inventory equal to 30% of the next month's sales.

Finished goods inventory on June 30 is 1,800 units. The budgeted production units for August are:

Top of Form

 

6,625 units.

 

Bottom of Form

August units + 30% of September units - July ending inventory = August production
6,700 units + (6,450 units * 0.30) - (6,700 * 0.30) = 6,625 units
6,700 + 1,935 - 2,010 = 6,625 units

 

 

Flack Corporation, a merchandiser, provides the following information for its December budgeting process:

The November 30 inventory was 1,880 units.
Budgeted sales for December are 4,700 units.
Desired December 31 inventory is 3,290 units.

Budgeted purchases are:

 

Top of Form

6,110 units.

 

Budgeted sales units + desired ending inventory - beginning inventory = purchases
4,700 units + 3,290 units − 1,880 units = 6,110 units

 

 

A sporting equipment store expects to purchase $7,400 of ski boots in October. The store had $3,400 of ski boots in merchandise inventory at the

beginning of October and expects to have $2,400 of ski boots in merchandise inventory at the end of October to cover part of anticipated November sales.

What is the budgeted cost of goods sold for October?

Top of Form

 

$8,400.

 

Cost of Goods Sold = Beginning inventory + purchases - ending inventory
$3,400 + $7,400 - $2,400 = $8,400

 

 

Alliance Company’s budgets production of 24,000 units in January and 28,000 units in the February.

Each finished unit requires 3 pounds of raw material K that costs $3.00 per pound.

Each month’s ending raw materials inventory should equal 35% of the following month’s budgeted materials.

The January 1 inventory for this material is 25,200 pounds. What is the budgeted materials cost for January?

 

$228,600.

 

Budgeted production units * materials requirement per unit = materials needed
Materials needed + ending inventory requirements - beginning inventory available = materials to be purchased
24,000 * 3 lbs. = 72,000 lbs.
72,000 lbs. + (28,000 * 3 lbs. * 35%) - 25,200 lbs. = 76,200 lbs x $3.00 per lb. = $228,600.

 

 

Boulware Company’s budgeted production calls for 6,000 units in October and 9,000 units in November.

Each unit requires 7 pounds (lbs.) of raw material A. Each month’s ending inventory of raw materials should equal 25% of the following month’s

budgeted materials requirements. The October 1 inventory for this material is 10,500 pounds.

What is the budgeted materials purchases for this key material in pounds for October?

 

47,250 lbs.

 

Materials needed + ending inventory requirements - beginning inventory available = materials to be purchased
(6,000 units x 7 lbs./unit) + (9,000 units x 7 lbs./unit * 25%) - 10,500 lbs. = 47,250 lbs

 

 

Southland Company is preparing a cash budget for August.

The company has $16,400 cash at the beginning of August and anticipates $124,000 in cash receipts and $133,900 in cash disbursements during August.

Southland Company wants to maintain a minimum cash balance of $10,000.

The preliminary cash balance at the end of August before any loan activity is:

 

$6,500.

 

Beginning cash balance	$	16,400
Add cash receipts		124,000
Less cash disbursements		(133,900	)
Cash balance before financing	$	6,500

 

 

 

Frankie's Chocolate Co. reports the following information from its sales budget:

 

Expected Sales:	July	$	84,000
	August		104,000
	September		114,000

 

Cash sales are normally 30% of total sales and all credit sales are expected to be collected in the month following the date of sale.

The total amount of cash expected to be received from customers in September is:

 

$107,000.

 

September cash sales (30% × $114,000)	$	34,200
August credit sales (70% × $104,000)		72,800
Cash collected in September	$	107,000

 

Justin Company's budget includes the following credit sales for the current year:

 

September, $30,000

October, $41,000

November, $35,000

December, $37,000

 

Experience has shown that payment for the credit sales is received as follows: 10% in the month of sale, 65% in the first month after sale,

23% in the second month after sale, and 2% is uncollectible. How much cash can Justin Company expect to collect in

November as a result of current and past credit sales?

 

$37,050.

 

10% of November sales (10% × $35,000)	$	3,500
65% of October sales (65% × $41,000)		26,650
23% of September sales (23% × $30,000)		6,900
Total cash receipts	$	37,050

 

 

A company's history indicates that 30% of its sales are for cash and the rest are on credit.

Collections on credit sales are 20% in the month of the sale, 50% in the next month, 25% the following month, and 5% is uncollectible.

Projected sales for December, January, and February are $65,000, $90,000 and $100,000, respectively.

The February expected cash receipts from all current and prior credit sales is:

 

$56,875

 

Amount collected in February:

20% of February credit sales		20% * (70% * $100,000) =	$	14,000
50% of January credit sales		50% * (70% * $90,000) =		31,500
25% of December credit sales		25% * (70% * $65,000) =		11,375
Total collected in February			$	56,875

 

 

Memphis Company anticipates total sales for April, May, and June of $820,000, $920,000, and $970,000 respectively.

Cash sales are normally 25% of total sales. Of the credit sales, 40% are collected in the same month as the sale, 55%

are collected during the first month after the sale, and the remaining 5% are not collected.

Compute the amount of cash received from total sales during the month of June.

 

$913,000.

Bottom of Form

 

June cash sales (25% * $970,000)	$	242,500
40% of June credit sales (40% * 75% * $970,000)		291,000
55% of May credit sales (55% * 75% * $920,000)		379,500
Total cash receipts	$	913,000

 

Bakker Corporation has provided the following production and average cost data for two levels of monthly production volume.

The company produces a single product.

 

Production volume                            4,000 units                  5,000

Direct materials                                  $89.70 per unit          $89.70 per unit

Direct labor                                        $22.60 per unit          $22.60 per unit

Manufacturing overhead                  $70.50 per unit          $60.30 per unit

 

The best estimate of the total variable manufacturing cost per unit is:

 

$89.70

$131.80

$19.50

$112.30

 

 

The following account balances have been provided for the end of the most recent year:

 

 

 

 

 

The book value per share of common stock is:

 

$22

$25

$20

$28

 

Homework  1.1 1.2  2.1 2.2  3.1 3.2  4.1 4.2 5.1 5.2  6.1 6.2  7.1  7.2  8.1  8.2  9.1   9.2  10.1  10.2  11.1  11.2  12.1 12.2  13.1  13.2  14.1  14.2  15.1   15.2
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