Ch 2 solutions

Ch 2 solutions - (5 min.) S 2-1 X-Treme is a merchandiser,...

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(5 min.) S 2-1 X-Treme is a merchandiser , because it has a single inventory account. Y-Not? is a service company, because it has no inventory. Zesto is a manufacturer , because it has three kinds of inventory: Raw Materials Inventory, Work in Process Inventory, and Finished Goods Inventory. (10 min.) S 2-3 RESEARCH & DEVELOPMENT (R&D) – performing research on new Web page capabilities, developing new security or privacy software, or developing additional services for customers. DESIGN – designing computer software to provide customers with information, stock selection tools, and to efficiently process transactions. PRODUCTION – labor of employees who maintain computer hardware, software, and databases; depreciation on servers. MARKETING – cost of Web and newspaper ads. DISTRIBUTION – cost to deliver stock transaction confirmations and stock certificates. CUSTOMER SERVICE – providing customer hotline and e-mail services to respond to questions. E*TRADE might decide to spend more money on R & D (in-depth research) and design (of better software) to provide more online instruction to new customers, thus reducing customer service costs. Student examples will vary. (10 min.) S 2-6 a. direct; trace b. indirect; allocate c. direct; trace d. indirect; allocate e. direct; trace f. indirect; allocate g. direct; trace h. direct; trace (5-10 min.) S 2-8 1 Chapter 2 Building Blocks of Managerial Accounting
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a. Inventoriable cost b. Inventoriable cost c. Period cost d. Period cost e. Inventoriable cost* f. Inventoriable cost g. Period cost h. Inventoriable cost i. Period cost *Since the software is for tracking inventory, the cost would be associated with production. It would therefore likely be classified as part of manufacturing overhead, an inventoriable cost. However, some companies might consider the software an administrative cost, which would be a period cost. (5-10 min.) S 2-10 COST Period Cost or Inventoriable Product Cost? If an Inventoriable Product Cost: Is it DM, DL, or MOH? 1. Cost of milk purchased from dairy farmers Product DM 2. Lubricants used in running bottling machines Product MOH 3. Depreciation on refrigerated trucks used to collect raw milk from dairy farms Product MOH (part of the cost of acquiring DM) 4. Property tax on dairy processing plant Product MOH 5. Television advertisements for DairyPlains’ products Period 6. Gasoline used to operate refrigerated trucks used to deliver finished dairy products to grocery stores Period (distribution element of value chain) 7. Company president’s annual bonus Period 8. Plastic gallon containers in which milk is packaged
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This note was uploaded on 10/08/2011 for the course ACCT 101 taught by Professor Kang during the Spring '08 term at S.F. State.

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Ch 2 solutions - (5 min.) S 2-1 X-Treme is a merchandiser,...

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