Chapter 1 A Version Problems
Problem 2A
(a)
Cost Item
Raw materials (1)
Wages for workers (2)
Rent on equipment
Indirect materials (3)
Factory supervisor’s salary
Janitorial costs
Advertising
Depreciation on factory building (4)
Property taxes on factory building (5)
(1)
(2)
(3)
(4)
(5)
Direct
Materials
$111,000
Product Costs
Direct
Manufacturing
Labor
Overhead
$90,000
$ 4,900
7,500
3,000
1,300
$9,500
00_0,000
$111,000
000,000
$90,000
650
750
$18,100
$74 X 1,500 = $111,000.
$12 X 5 X 1,500 = $90,000.
$5 X 1,500 = $7,500.
$7,800/12 = $650.
$9,000/12 = $750.
(b) Total production costs
Direct materials
Direct labor
Manufacturing overhead
Total production cost
Period
Costs
$111,000
90,000
18,100
$219,100
Production cost per system = $219,100/1,500 = $146.07. (rounded)
00,000
$9,500
PROBLEM 1-4A
(a)
CLARKSON COMPANY
Cost of Goods Manufactured Schedule
For the Year Ended June 30, 2014
Work in process, July 1, 2013.............
Direct materials
Raw materials inventory,
July 1, 2013 ..............................
Raw materials purchases ............
Total raw materials available
for use.......................................
Less: Raw materials inventory,
June 30, 2014 ....................
Direct materials used...................
Direct labor ..........................................
Manufacturing overhead
Plant manager’s salary ................
Factory utilities ............................
Indirect labor ................................
Factory machinery depreciation ....
Factory property taxes ................
Factory insurance ........................
Factory repairs .............................
Total manufacturing
overhead ...........................
Total manufacturing costs ..................
Total cost of work in process .............
Less: Work in process, June 30 ........
Cost of goods manufactured ..............
$ 19,800
$ 48,000
96,400
144,400
39,600
$104,800
139,250
58,000
27,600
24,460
16,000
9,600
4,600
1,400
141,660
385,710
405,510
18,600
$386,910
PROBLEM 1-4A (Continued)
(b)
CLARKSON COMPANY
(Partial) Income Statement
For the Year Ended June 30, 2014
Sales revenues
Sales revenue ............................................
Less: Sales discounts ..............................
Net sales .....................................................
Cost of goods sold
Finished goods inventory,
July 1, 2013 ............................................
Cost of goods manufactured ....................
Cost of goods available for sale ...............
Less: Finished goods inventory,
June 30, 2014 .................................
Cost of goods sold .............................
Gross profit ................................................
(c)
$534,000
4,200
$529,800
96,000
386,910
482,910
75,900
407,010
$122,790
CLARKSON COMPANY
(Partial) Balance Sheet
June 30, 2014
Assets
Current assets
Cash............................................................
Accounts receivable ..................................
Inventories
Finished goods...................................
Work in process .................................
Raw materials .....................................
$ 32,000
27,000
$75,900
18,600
39,600
134,100
Total current assets....................
$193,100
PROBLEM 1-5A
(a)
PHILLIPS COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended October 31, 2014
Work in process, October 1 ..............
Direct materials
Raw materials inventory,
October 1 ................................
Raw materials
purchases ...............................
Total raw materials available
for use.....................................
Less: Raw materials inventory,
October 31.......................
Direct materials used.................
Direct labor ........................................
Manufacturing overhead
Factory facility rent ....................
Depreciation on factory
equipment ..............................
Indirect labor ..............................
Factory utilities* .........................
Factory insurance** ...................
Total manufacturing
overhead .........................
Total manufacturing costs ................
Total cost of work in process ...........
Less: Work in process, October 31 ....
Cost of goods manufactured ............
$ 16,000
$ 18,000
264,000
282,000
29,000
$253,000
190,000
60,000
31,000
28,000
9,000
4,800
132,800
575,800
591,800
14,000
$577,800
**$12,000 X 75% = $9,000
**$ 8,000 X 60% = $4,800
PROBLEM 1-5A (Continued)
(b)
PHILLIPS COMPANY
Income Statement
For the Month Ended October 31, 2014
Sales revenue ....................................................
Cost of goods sold
Finished goods inventory, October 1 .......
Cost of goods manufactured ....................
Cost of goods available for sale ...............
Less: Finished goods inventory,
October 31 .....................................
Cost of goods sold .............................
Gross profit........................................................
Operating expenses
Advertising expense ..................................
Selling and administrative salaries ..........
Depreciation expense—sales
equipment ..............................................
Insurance expense** ..................................
Utilities expense* .......................................
Total operating expenses ..................
Net income .........................................................
**$12,000 X 25%
**$ 8,000 X 40%
$780,000
$ 30,000
577,800
607,800
45,000
562,800
217,200
90,000
75,000
45,000
3,200
3,000
216,200
$ 1,000