Sell or Process Further
Many manufacturers have the option of selling products at a given point in the production cycle
or continuing to process with the expectation of selling them at a higher price. For example, a
bicycle manufacturer such as Schwinn co
Companies can prepare the closing entries from the worksheet.
As illustrated below, they first prepare the closing entries for the
manufacturing accounts. The closing entries for Olsen Manufacturing are as
Work in Process Inventory (Dec. 31)
Explain the distinguishing features of managerial accounting.
The primary users of managerial accounting reports are internal users, who
are officers, department heads, managers, and supervisors in the company.
Managerial accounting issues internal report
Describe the flow of costs in a job order costing system.
In job order costing, companies first accumulate manufacturing costs in
Raw Materials Inventory, Factory Labor, and Manufacturing Overhead.
They then assign the accumulated costs to
ADO IT! 18-4
Queensland Company makes radios that sell for $29 each. For the coming year, management
expects fixed costs to total $200,090 and variable costs to be $18 per unit.
(a) Compute the break-even point in dollars using the contribution margin (CM
Waves Galore, Inc. manufactures hair curlers and blow-dryers. The handheld hair curler is Waves
Galore's high volume product (80,000 units annually). It is a large barrel, 20-watt, triple-heat
appliance designed to appeal to the teenage market segm
A ccounting Cycle for a Manufacturing Company
The accounting cycle for a manufacturing company is the same as for a
merchandising company when companies use a periodic inventory system.
The journalizing and posting of transactions is the same, except for
P15-1B Lowry Manufacturing uses a job order cost system and applies overhead to production
on the basis of direct labor hours. On January 1, 2010, Job No. 25 was the only job in
process. The costs incurred prior to January 1 on this job were as follows: d
Corbin Manufacturing Company produces blankets. From its accounting records it prepares the
following schedule and financial statements on a yearly basis.
(a) Cost of goods manufactured schedule.
(b) Income statement.
(c) Balance sheet.
The following item
The formula for computing the direct labor budget is to multiply the direct labor cost per hour by
total required direct labor hours.
physical units to be produced.
equivalent units to be produced.
No correct answer is given.
FireOut, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire
extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon
cylinder that holds 2 1/2
Identify the three broad functions of management.
The three functions are planning, directing, and controlling.
Planning requires management to look ahead and to establish objectives.
Directing involves coordinating the diverse activities and human resour
Grass King manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and contribution margin per unit are as
Margin per Unit
Grass King has fixed c
Explain the nature and importance of a job cost sheet.
A job cost sheet is a form used to record the costs chargeable to a specific
job and to determine the total and unit costs of the completed job.
Job cost sheets constitute the subsidiary ledger for th
The manufacturing overhead budget
The manufacturing overhead budget shows the expected
manufacturing overhead costs for the budget period
The budgeted income statement
The budgeted income statement is the important end-product of the
Similar to GAAP, under IFRS companies must
disclose the amount of taxes and interest paid.
Under GAAP, companies disclose this in the notes to
the financial statements.
Under IFRS, some companies disclose this
information in the notes, but others provide
The Value Chain
The value chain refers to all activities associated with providing a product or
For a manufacturer these include research and development, product design,
acquisition of raw materials, production, sales and marketing, delivery,
The content of managerial accounting reports pertains to subunits of the
business, may be very detailed, and may extend beyond the double-entry
The reporting standard is relevance to the decision being made.
No independent audits are re
Theory of Constraints
All companies have certain aspects of their business that create
bottlenecks'constraints that limit the company's potential profitability.
An important aspect of managing the value chain is identifying these
The Theory o
The desired ending inventory is again a key component in the
The direct labor budget
The direct labor budget contains the quantity (hours) and cost of
direct labor necessary to meet production requirements.
IFRS requires that noncash items:
a) be reported in the section to which they relate, that is, a
noncash investing activity would be reported in the
b) be disclosed in the notes to the financial statements.
c) do not need to be reported
Remember that total manufacturing costs are the sum of the product costs
direct materials, direct labor, and manufacturing overhead.
If Northridge Company produces 10,000 pre-hung wood doors the first year,
the total manufacturing costs would be $309,000
In the future, it appears likely that:
a) the income statement and balance sheet will have headings
of operating, investing, and financing, much like the
statement of cash flows.
b) cash and cash equivalents will be combined in a single line