Chapter 26-Cost Allocation and Activity-Based
1. Product costing consists of only direct materials and direct labor.
2. The selection of the factory overhead allocation method is important because the
method selected determin
Case 1-2: Kim Fuller
Comments on Questions
An opening question might be, What information does Kim Fuller need to maintain in order to operate
this business? Then, as students begin to identify information needed, the instructor can press for, Who
The explanation of these 11 transactions is:
1. Owners invest $20,000 of equity capital in Acme Consulting.
2. Equipment costing $7,000 is purchased for $5,000 cash and an account payable of $2,000.
3. Supplies inventory costing $1,000 is boug
Case 1- 3: Baron Coburg
Note: This case is unchanged from the Twelfth Edition. It is adapted from an academic note, written by
W.T. Andrews of Guilford College, which appeared in the April 1974 Accounting Review. Parts of
this commentary are adapted from
The missing numbers are:
THE NATURE AND PURPOSE OF ACCOUNTING
BALANCE SHEET AS OF DECEMBER 31, -.
Liabilities and Owners Equity
Case 1-1: Ribbons an Bows, Inc.
Comments on Information Gathered and Carmens Concerns
1. The three month sales total is the sum of the cash sales ($7,400) and credit sales ($320).
2. Cost of sales is derived from the following equation
EXAM 1 Review Summary
Know how to calculate:
Cost of Goods Manufactured
Cost of Goods Available for Sale
Cost of Goods Sold
Pre-determined Manufacturing Overhead Rates and how to allocate
How to Determine if
Chapter 5-Accounting for Merchandising
1. One of the most important differences between a service business and a retail
business is in what is sold.
2. In a merchandise business, sales minus operating expenses equals net i
Chapter 20-Variable Costing For Management
1. In determining cost of goods sold, two alternate costing concepts can be used:
absorption costing and variable costing.
2. In determining cost of goods sold, two alternate costin
Chapter 27-Cost Management for Just-In-Time
1. Just-in-Time (JIT) manufacturing focuses on reducing time, cost, and poor quality in
2. The just-in-time (JIT) philosophy views inventory as a necessary buffer to