Exam_1_071126

Exam_1_071126 - Management 122 Winter 2007 Danny S. Litt...

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Management 122 Winter 2007 Danny S. Litt EXAM 1 Solutions NAME: ________________ I agree to have my grade posted by Student ID Number. ___________________ (Signature) PROBLEM POINTS SCORE 1 30 2 30 3 30 4 30 5 30 6 25 7 25 TOTAL 200
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M ANAGEMENT 122 N AME : __________________________ 1 Problem 1 Given the following information for the Swift Company: SWIFT COMPANY Income Statement For the Month Ended August 31 Sales $450,000 Less operating expenses: Indirect labor cost $12,000 Utilities 15,000 Direct labor cost 70,000 Depreciation, factory equipment 21,000 Raw materials purchased 165,000 Depreciation, sales equipment 18,000 Insurance 4,000 Rent on facilities 50,000 Selling and administrative salaries 32,000 Advertising 75,000 462,000 Net loss ($12,000) Inventory balances: August 1 August 31 Raw materials $8,000 $13,000 Work in process $16,000 $21,000 Finished goods $40,000 $60,000 Rent applied to factory overhead 80% Rent applied to selling and admin. 20% Insurance applied to factory overhead 75% Insurance applied to selling and admin. 25% Utilities applied to factory overhead 60% Utilities applied to selling and admin. 40% Requirements: The company reported a $12,000 loss. Analyze the above information and prepare the cost of goods manufactured and income statement in good form. Did they really lose $12,000?
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M ANAGEMENT 122 N AME : __________________________ 2 Problem 1 Solution: SWIFT COMPANY Schedule of Cost of Goods Manufactured For the Month Ended August 31 Direct materials: Raw materials inventory, August 1 $8,000 Add: Purchases of raw materials 165,000 Raw materials available for use 173,000 Deduct: Raw materials inventory, August 31 13,000 Raw materials used in production $160,000 Direct labor 70,000 Manufacturing overhead: Indirect labor cost 12,000 Utilities 9,000 Depreciation, factory equipment 21,000 Insurance 3,000 Rent on facilities 40,000 Total overhead costs 85,000 Total manufacturing costs 315,000 Add: Work in process inventory, August 1 16,000 331,000 Deduct: Work in process inventory, August 31 21,000 Cost of goods manufactured $310,000 SWIFT COMPANY Income Statement For the Month Ended August 31 Sales $450,000 Less cost of goods sold: Finished goods inventory, August 1 $40,000 Add: Cost of goods manufactured 310,000 Goods available for sale 350,000 Deduct: Finished goods inventory, August 31 60,000 290,000 Gross margin 160,000 Less operating expenses: Utilities 6,000 Depreciation, sales equipment 18,000 Insurance 1,000 Rent on facilities 10,000 Selling and administrative salaries 32,000 Advertising 75,000 142,000 Net operating income $18,000
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M ANAGEMENT 122 N AME : __________________________ 3 Problem 2 Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 400 units. The costs and percentage completion of these units in beginning inventory were: Cost Percent Complete Materials costs . .................. $5,500 50% Conversion costs. ............... $1,700
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Exam_1_071126 - Management 122 Winter 2007 Danny S. Litt...

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