excellent Brandi, start.
Rod Walsh
Points
Points
Homework Available Earned
E1-7
3.00
3.00
BYP1-7
3.00
2.94
Late penalty
Total >>>>>>>>>>>>>>>>> .94
5
I prefer all homework, including essays to be done using Excel, even when I provide guidance in Word.
EXERCISE 1-7
Total raw materials available for use:
Direct materials used
Add: Raw materials inventory (12/31)
Total raw materials available for use
$190,000
7,500
$197,500
Raw materials inventory (1/1):
Direct materials used
Add: Raw materials inventory (12/31)
Less: Raw materials purchases
Raw materials inventory
$190,000
7,500
158,000
$39,500
Total cost of work in process:
Cost of goods manufactured
Add: Work in process (12/31)
Total cost of work in process
$530,000
81,000
$611,000
Total manufacturing costs:
Total cost of work in process
Less: Work in process (1/1)
Total manufacturing costs
$611,000
210,000
$401,000
Direct labor:
Total manufacturing costs
Less: Total overhead
Direct materials used
Direct labor
$401,000
122,000
190,000
$89,000
You may use the above guides to compute the answers you need to complete the COGS Schedule.
Only the COGS schedule below needs to be completed and turned in for E1-7.
Notice the formatting, including use of dollar signs, alignment of amounts and use of commas; as
well as the complete centered heading.
MADLOCK MANUFACTURING COMPANY
Cost of Goods Manufactured Schedule
For the Year Ended December 31, 2005
Work in process (1/1)
Direct materials
Raw materials inventory (1/1)
Add: Raw materials purchases
Total raw materials available for use
Less: raw materials inventory (12/31)
Direct materials used
Direct labor
Manufacturing overhead
Indirect labor
Factory Depreciation
Factory utilities
Total overhead
Total manufacturing costs
Total cost of work in process
Less: Work in process (12/31)
Cost of goods manufactured
$210,000
$39,500
158,000
197,500
7,500
Yes
Yes
$190,000
89,000
Yes
$18,000
36,000
68,000
122,000
401,000
611,000
81,000
$530,000
Yes
Yes
BYP 1-7 (Ethics Case)
This an is essay question with 3 parts - you should be able to answer it in 150 - 200 words.
(a) Who are the stakeholders in this situation?
The stakeholders in this situation are users of Robbin Industries financial statements such as
creditors and stockholders, Wayne Terrago, the vice president of finance, and the president
of Robbin Industries.
Good
(b) What are the ethical issues involved in this situation?
Some of the ethical issue involved in this situation is the intentional misstatement of financial
statements and violation of generally accepted accounting principals. I think that the controller,
Wayne Terrago, is correct and the advertising expense should be reported as an expense of
the current period. Recording the advertising expense as inventory so that attention would
not be brought to the expense would be misstating the financials. If the advertising campaign
benefits the company for longer than the current year, then I would say that it could possibly be
recorded as a prepaid expesne then expensed over the next period but it should not be recorded
as inventory.
Very good, but keep GAAP in mind. It's not just our personal ethical standards, but
a system of rules and standards all in business are expected to follow.
Intentional violation of generally accepted accounting principles
(GAAP) in order to satisfy a practical short-term personal or company need and thus
create misleading financial statements would be unethical. Selecting one acceptable
method of accounting and reporting among other acceptable methods is not necessarily
unethical.
(c) What would you do if you were Wayne Terrago?
If I was Wayne Terrago, I think I would try and talk to the president alone and convince him to
report the advertising expense correctly. I would explain to him by hiding the expense that
our company would be commiting financial fraud. I would also tell the president that if the
expense is not recorded correctly that I won't certify that the company maintains adequate
internal controls and accurate financial reports.
Good