Management_122_Course_Reader_-_Rev_J_-_Solutions

Management_122_Course_Reader_-_Rev_J_-_Solutions - 122...

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COURSE READER SOLUTIONS Danny S. Litt Student Name: ___________________________________________ Student ID Number: _______________________________________ Management Accounting Management 122
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DANNY S. LITT MANAGEMENT 122 COURSE READER - REV J - SOLUTIONS Page | 1 Class Problem Superior Manufacturing Company has the following cost and expense data for the year ending December 31, 2009. Raw materials, 1/1/09 $30,000 Insurance, factory $14,000 Raw materials, 12/31/09 20,000 Property taxes, factory building 6,000 Raw materials purchased 220,000 Sales (net) 1,500,000 Indirect materials used 15,000 Delivery expenses 100,000 Work in process, 1/1/09 80,000 Sales commissions 150,000 Work in process, 12/31/09 50,000 Indirect labor 90,000 Finished goods, 1/1/09 110,000 Factory machinery rent 40,000 Finished goods, 12/31/09 120,000 Factory utilities 65,000 Direct labor 350,000 Depreciation, factory building 24,000 Factory manager’s salary 35,000 Administrative expenses 300,000 Requirements 1. Prepare a cost of goods manufactured schedule for Superior Company for 2009. 2. Prepare an income statement for Superior Company for 2009.
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DANNY S. LITT MANAGEMENT 122 COURSE READER - REV J - SOLUTIONS Page | 2 Solution COST OF GOODS MANUFACTURED Raw Materials, 1/1/09 30,000 Plus: Raw Material Purchased 220,000 Raw Material Available 250,000 Less: Ending Raw Materials 20,000 Total Material Used 230,000 Less: Indirect Material Used 15,000 Direct Material Used 215,000 Work in Process, 1/1/09 80,000 Direct Material 215,000 Direct Labor 350,000 Indirect Material 15,000 Indirect Labor 90,000 Factory Manager's Salary 35,000 Factory machinery rent 40,000 Factory utilities 65,000 Depreciation, factory building 24,000 Insurance, Factory 14,000 Property Taxes, factory building 6,000 Work in process, available 934,000 Sales 1,500,000 Less: Ending Work-in-process, 12/31/09 50,000 Cost of goods sold 874,000 Cost of goods manufactured 884,000 Gross Profit 626,000 Finished goods, 1/1/09 110,000 Sales commissions 150,000 Cost of goods manufactured 884,000 Administrative expenses 300,000 Goods available for sale 994,000 Delivery expenses 100,000 Less: Ending finished goods, 12/31/09 120,000 550,000 Cost of goods sold 874,000 Net Income 76,000
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DANNY S. LITT MANAGEMENT 122 COURSE READER - REV J - SOLUTIONS Page | 3 Problem The information below relates to Derby Manufacturing Company's operations for a recent month. (Assume that all raw materials are direct materials.): Purchases of raw materials ........................ $91,000 Direct labor cost ........................................ $122,000 Selling costs (total) .................................... $42,000 Administrative costs (total) ....................... $56,000 Manufacturing overhead costs (total) ........ $340,000 Raw materials inventory, beginning ......... $22,000 Work in process inventory, beginning ...... $27,000 Finished goods inventory, beginning ........ $42,000 Raw materials inventory, ending ............... $7,000 Work in process inventory, ending ........... $35,000 Finished goods inventory, ending ............. $15,000 Requirements What was Derby's cost of goods manufactured for the month? Solution Derby Manufacturing Company Schedule of Cost of Goods Manufactured Direct materials: Beginning raw materials inventory ................ $ 22,000 Add: Purchases of raw materials .................... 91,000 Raw materials available for use ..................... 113,000 Deduct: Ending raw materials inventory ....... 7,000 Raw materials used in production .................. $106,000 Direct labor ........................................................ 122,000 Manufacturing overhead ....................................
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