Chapter 02 - Lil-HA The following cost and inventory data...

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Unformatted text preview: Lil-HA The following cost and inventory data for the just completed year are taken from the accounting records of Eocles Company: ‘ GestSi‘.incu'rred: Advertisinggegkpenfse.. ,. ; . v. , . . . . . . . . $100,000“ , Direei'l'aborcos"! . , . . . . . .' . . . .. r j,$90,000 , EtirehaSes of raw materials, . .I.‘ . 4 .j. ., . . . . . 2 $132,000 Rent, factory building , . . , , ; .;. . . $80,000 findireotlab'or. . .' . . L . ». .. $56,300:, Sales commissions,“ . . . . . . . . . . , . . . . . . 5 $35,000 ’ v Utilities, factory] . ,.. . . . A . . .' .... .;;. . .v .I. . $9,000 Maintenance, factory equipment ; . . .' . . . .. $24,000 3 ’ Supplies, factory. . .v . L . . . .‘ . .. " , ' $700 Depreciatioh, office.eqUipment‘. 2. . .. ; . . . I ' , $8,000 Depreciation,factoryequiprfient. .. . . . . . .. . $40,000": inventories: , ,V v N V Flaw materials . . . . .‘ ’ ' $8,000; $10,000, Work in'process . v. . . . :. $5,000 - “$20,000” Finished goods .. . . . -. ., .. 139700001- ' ' , $25,000, v:5Required:. v 1. V Prepare a-schedule of cost of goods manufactured. __ V V 2. Prepare the cost of goods sold section of Eocles Company’s income statement for the‘yean Eocles Company Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning ........... .. $ 8,000 Add: Purchases of raw materials ............... .. 132,000 ' Raw materials available for use ................. .. 140,000 Deduct: Raw materials inventory, ending..... 10,000 Raw materials used in production ............. .. $130,000 Direct labor ......................... ..................... .. - 90,000 Manufacturing overhead: Rent, factory building ............................... .. 80,000 Indirect labor ........................................... .. 56,300 Utilities, factory ........................................ .. 9,000 Maintenance, factory equipment ............... .. 24,000 Supplies, factory ...................................... .. 700 Depreciation, factory equipment ............... .. 40,000. Total manufacturing overhead costs .......... .. 210,000 Total manufacturing costs ...................... 430,000 Add: Work in process, beginning ................. .. 5,000 435,000 Deduct: Work in process, ending ................. .. - 20,000 Cost of goods manufactured ........................ .. M 2. The cost of goods sold section would be: Finished goods inventory, beginning ............ .. $ 70,000 Add: Cost of goods manufactured ................ .. 1 415,000 Goods available for sale .............................. .. 485,000 Deduct: finished goods inventory, ending .... .. ' 25,000 Cost of goods sold .................................. M EZ—IZA Ryser Company was organized on May 1. On that date the company purchased 35,000 plastic em— blems, each with a peel-off adhesive backing. The front of the emblems contained the company’s name, accompanied by an attractive logo. Each emblem cost Ryser Company $2. During May, 31,000 emblems were drawn from the Raw Materials inventory account. Of these, 1,000 were taken by the sales manager to an important sales meeting with prospective customers and handed out as an advertising gimmick. The remaining emblems drawn from inventory were affixed to units of the company’s product that were being manufactured during May. Of the units of product hav- ing emblems affixed during May, 90% were completed and transferred from Work in Process to Fin— ished Goods. Of the units completed during the month, 75% were sold and shipped to customers. Re uired; 1. q Determine the cost of emblems that would be in each of the following accounts at May 31: a. Raw-Materials. 17. Work in Process. c. Finished Goods. d. Cost of Goods Sold. e. Advertising Expense. ‘ 2. Specify whether each of the above accounts would appear on the balance sheet or on the income statement at May 31. ' 1.a. Emblems purchased .................................................. .. 35,000 Emblems drawn from inventory .................................. .. m Emblems remaining in inventory ................................ .. 4,000 Cost per emblem ....................................................... .. x $2 Cost in Raw Materials Inventory at May 31 ................. .. M b. Emblems used in production (31,000 — 1,000) ............ .. 30,000 Unlls completed and transferred to Flnished Goods (90% x 30,000) .................... ..' .......................... 27.000 Units stlll in Work in Process at May 31 ...................... .. 3,000 Cost per emblem ....................................................... .. x $2 Cost in Work in Process Inventory at May 31 .............. .. LM c. Units completed and transferred to Finished Goods (above) .................................................................. .. 27,000 Units sold during the month (75% x 27,000) ............. .. 20,250 Units still In Finished Goods at May 31 ........................ .. 6,750 Cost per emblem ....................................................... .. x $2 Cost in Finished Goods Inventory at May 31 ...... ..' ....... .. M d. Units sold during the month (above) .......................... .. 20,250 Cost per emblem ....................................................... .. X $2 Cost in Cost of Goods Sold at May 31 ................... .... .. $30,500 e. Emblems used in advertising ...................................... .. 1,000 Cost per emblem ........................................................ .. x $2 Cost in Advertising Expense at May 31 ....................... .. w 2. Raw Materials Inventory—balance sheet Work in Process Inventory—balance sheet Flnished Goods Inventory—balance sheet Cost of Goods Sold—income statement Advertising Expense—income statement PlasA ‘SchedulégofTCQSi-of-'Goods_Manuf turédi'zv-Ei- ‘ _ ,irect’mate‘rials. . . . . . . $71000 ' _ $9,000. $6,000 $8,000 - ‘ Direofjlabor . _. . . . . . . . . . . -.$2.000'_ '$4‘,000~' ?' _- $3,000 ~Manuiactdringoverhéad,...'.:;LIL-1325102000 r 7 $7,000, $21,000 Totalmanufabturin'gco'sfs:..;..7..'.‘.._.'L.-'Q'.--V_ ' ‘_ T?- _,$,25,000 ~$1:8’;000; ‘ - , ? Beginning-workinprocessinve2 ....... .. ' 4? _.$1e,;00_0 $2,,00_ '77 ,‘Endingwo'rkin process-inventory .- . . . $4,000. «$3,500: ‘ *9 - $2000- 'cosioigoodsmanoiaoiured ' $123000 :5 .7 $1-‘0;000-- $31,500 _ '_'l:ncome'Stratemyent ' ' "Sales; . . . . . --$2j_5,000. $40,000 __ $30,000 $50,000 Beginningfini’shed goodse'inventory .- a A - - - I $610009 ‘7' ‘ ' $7900 ' ' $9900 I cost ergoo_d3;m'anufaotured . _. . ., . '. . ., . V. _ I . ? 'I$V136,000 1303,1300 - G90d5.,aygiliable"iors_ale . . . . . . . .; . . . . .‘_ ;-.- _‘ l '2; f ' ?« J . i. ', 1 '7 .- ' Endinglfinisfhéd good-s inVen‘QV-ZY. . . J. .; I ..$9;0‘.00, $4.000 7, i$7,0_00_ ‘Cost‘iOi'gobds_\Sold a 1,. . . . . . . . . L. . . .' .1, J - L? 1 “$262500, $18,000 _ . _ (Gitessmvairgii), . . . . , . . . . . . ; . ?-1. 7‘ fl?- " ‘ selling andz'édmin‘istrétinglexbénseS;.. .r $6,000? - *7. - 7‘. $190900 ' -; 'Netfiperaiiné;income; . . . _ . . . . . . ; Z $. 9 5 $5500? - $3,090 '3’ 3 r ‘ . Case 1 Case 2 Direct materials ..................................... .. $ 7,000 $ 9,000 $625500 35%?ng Direct labor ........................................... .. 2,000 4,000 5,000 * 3000 Manufacturing overhead ........................ .. 10,000 12,000 * 71,000 211,000 Total manufacturing costs ..................... .. 19,000 * 25,000 18 000 32 000 * Ilgieginning vzork in pr0cess inventory ...... .. 3,000 * 1,000 2,000 1,500 * n mg wor in process invento ........... .. (4, ( , ( ,1 ( ,1 Cost of goods manufactured ........... .. M3133) gig) * fl) * fig) Sales .................................................... .. $25,0 0 $ , i , 5 , Beginning finished goods inventory ........ .. 6,080 42 * 3g 5g 300 Cost of goods manufactured .................. .. 18,000 22,500 * 16,000 31',ng Goods available for sale ......................... .. 24,000 * 30 500 * 23 000 * 4O 500 * Ending finished goods inventory ............ .. 9,000 4:000 5:000 * 7:003 Cost of goods sold ................................ .. 15,000 * 26,500 18,000 33,500 * Gross margin ..... .......................... .. 10,000 * 13,500 * 12 000 * 16 500 * Selling and administrative expenSes ....... .. 6,000 8,000 * 9:000 * 1 I, Net operating income ............................ .. $4,090 * §=5i5fl g 3,000 g Q0200: * *Missing data in the problem. ...
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Chapter 02 - Lil-HA The following cost and inventory data...

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