Demonstration Problems for Chapter 10

Demonstration Problems for Chapter 10 - Demonstration...

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Demonstration Problems for Chapter 10 Demonstration Problem 10-1 Identifying Product Costs Eiffel Manufacturing Company makes small replicas of major landmarks that it sells to souvenir shops. The company was started on January 1, 2008 when it acquired $60,000 cash from the issue of common stock. During 2008 the company purchased and used raw materials that cost $16,000 cash. It paid wages of $22,000 to workers who made the replicas. Finally, manufacturing overhead costs, including rental fees paid for facilities and equipment, amounted to $12,000 cash. The company started and completed the production of 1,000 replicas during 2008. Required a. Determine the amount of expense Eiffel incurred in 2008 assuming none of the replicas was sold in 2008. b. Record the accounting events associated with making the 1,000 replicas in a financial statements model like the one shown below. The event pertaining to the issue of common stock is recorded in the model as an example.
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