Describe the flow of product costs for a manufacturer Product costs are first

Describe the flow of product costs for a manufacturer

This preview shows page 5 - 8 out of 9 pages.

10) Describe the flow of product costs for a manufacturer.Product costs are first accumulated in an asset account (Inventory) and then transferred to an expense account (Cost of Goods Sold) when the products are sold.11) Viva, Inc. has provided the following information for the year:Cost of Goods Manufactured$1,261,000Beginning Balance—Finished Goods Inventory99,000Ending Balance—Finished Goods Inventory85,000What is the cost of goods sold? 12) Herrera, Inc., a merchandiser, sells office supplies. The following information summarizes Herrera's operating activities during the year:Utilities Expense$6,000Rent for Store Expense8,000Sales Commissions Expense4,500Net Sales Revenues236,000Cost of goods sold:Beginning Finished Goods Inventory0Cost of goods manufactured141,800Cost of Goods Available for sales141,800Ending Finished Goods Inventory(5,800)Cost of Goods Sold136,000Gross Profit Margin100,000Selling and Administrative Expenses:Sales salaries12,700Delivery costs3,100Advertising8,000Total Selling and Administrative Expenses23,800Operating income76,200Other Income and Expenses0Income Before Income Tax Expense76,200Income Tax Expense0Net Income76,200
Background image
Purchases of Merchandise54,000Merchandise Inventory on January 130,000Merchandise Inventory on December 3120,500Sales Revenue108,000Required: Prepare an income statement for Herrera, Inc. for the year ended December 31, using the format below. Include a proper heading.Herrera, IncIncome StatementYear Ended December 31,Sales Revenue108,000Cost of Goods Sold:Beginning Inventory30,000Purchases54,000Cost of Goods Available for Sale84,000Ending Inventory(20,500)Cost of Goods Sold(63,500)Gross Profit44,500Selling Expenses:Sales Commissions Expense4,500Administrative Expenses:Rent Expense8,000Utilities Expense6,000Total Operating Expenses(18,500)Operating Income26,00013) The fixed costs per unit will ________.14) Tentacle Television Antenna Company provided the following manufacturing costs for the month of June.Direct labor cost$132,000Direct materials cost84,000Equipment depreciation (straight-line)24,000Factory insurance10,000Factory manager's salary10,200Janitor's salary4000Packaging costs18,600Property taxes16,000
Background image
From the above information, calculate Tentacle's total fixed costs.
Background image
Image of page 8

You've reached the end of your free preview.

Want to read all 9 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture