ACC 406 Lecture Notes - Lecture 5: Accounts Receivable, Finished Good, Income Statement

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purplejellyfish519

5 Mar 2021

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For manufacturing firms, unit costs are essential for Cogs is often most significant cost used to determine. To use cogs, determine how many units on hand (the inventory) and cost per unit. From an operational perspective, unit costs are critical to . Determining the long-term feasibility of a business strategy. Important internal decisions that rely on unit cost information are . Companies can be divided into two 2 major types, based on if their g/s are unique or not. Job-order costing: firms operating in job-order industries to produce a wide variety of g/s that are pretty distinct and unique from each other. These companies are required to use a job-order accounting system. Unit cost = total job costs units produced for that job. Dm and dl are pretty easy to trace to individual jobs. Overhead (problem with this is that overhead costs aren"t the same throughout the year) Standard cost of dm standard cost of dl.

Related Questions

PROBLEM 6-20 Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in Net Operating Income [L06-1, L06-2, L06-3] High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: 10,000 8,000 $75 Beginning inventory .......... Units produced ..... Units sold ...................................... Selling price per unit .............................. Selling and administrative expenses: Variable per unit ... Fixed (per month)..... Manufacturing costs: Direct materials cost per unit ....................... Direct labor cost per unit ......................... Variable manufacturing overhead cost per unit ........ Fixed manufacturing overhead cost (per month) ....... S6 $200,000 $20 $100,000 Management is anxious to see how profitable the new camp cot will be and has asked that an income statement be prepared for May. Required: 1. Assume that the company uses absorption costing. a. Determine the unit product cost. b. Prepare an income statement for May. 2. Assume that the company uses variable costing. a. Determine the unit product cost. b. Prepare a contribution format income statement for May. 3. Explain the reason for any difference in the ending inventory balances under the two costing methods and the impact of this difference on reported net operating income.

[The following information applies to the questions displayed below.]Far North Telecom, Ltd., of Ontario, has organized a new division to manufacture and sell specialty cellular telephones. The division's monthly costs are shown below: Manufacturing costs: Variable costs per unit: Direct materials$89 Variable manufacturing overhead$4 Fixed manufacturing overhead costs (total)$243,600 Selling and administrative costs: Variable12% of sales Fixed (total)$155,000 Far North Telecom regards all of its workers as full-time employees and the company has a long-standing no layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labor costs in its fixed manufacturing overhead. The cellular phones sell for $290 each. During September, the first month of operations, the following activity was recorded: Units produced4,200 Units sold3,400 rev: 02-09-2011 3.value:2.00 points Requirement 1:(a)Compute the unit product cost under Absorption costing. (Omit the "$" sign in your response.) Unit product cost$ (b)Compute the unit product cost under Variable costing. (Omit the "$" sign in your response.) Unit product cost$ rev: 02-09-2011check my workeBook Links (4)references 4.value:2.00 points Requirement 2:Prepare an absorption costing income statement for September. (Input all amounts as positive values. Omit the "$" sign in your response.) $ $ rev: 02-09-2011check my workeBook Links (4)references 5.value:2.00 points Requirement 3:Prepare a contribution format income statement for September using variable costing. (Input all amounts as positive values except net operating loss which should be indicated by a minus sign. Omit the "$" sign in your response.) $ Variable expenses: $ Fixed expenses: $ rev: 02-09-2011check my workeBook Links (4)references 6.value:2.00 points Requirement 4:Assume that the company must obtain additional financing in order to continue operations. As a member of top management, would you prefer to rely on the statement in (2) above or in (3) above when meeting with a group of prospective investors? rev: 02-09-2011 Absorption costing statement Variable costing statementcheck my workeBook Links (4)references 7.value:2.00 points Requirement 5:Reconcile the absorption costing and variable costing net operating incomes in requirement 2 and 3 above. (Negative amounts should be indicated by a minus sign. Omit the "$" sign in your response.) $ : Fixed manufacturing overhead cost deferred $

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In absorption costing, fixed manufacturing overhead is expensed________.

A) when all the other non-manufacturing fixed costs areexpensed

B) when the product is sold

C) at the end of the period in which it is paid

D) when the units are produced

50) Volplex, Inc. produces paper and office supplies and usesthe just-in-time inventory system. Currently, the company is usingvariable costing. Which of the following is true of the effect ofcosting systems on the financial results of Volplex?

A) Its operating income will besignificantly higher if the company uses absorption costing insteadof variable costing.

B) Its operating income will besignificantly lower if the company uses absorption costing insteadof variable costing.

C) Its operating income will vary alittle if the company uses absorption costing instead of variablecosting.

D) Its operating income will benegative if the company uses absorption costing instead of variablecosting.

51) For which of the following decisions is absorption costingmost appropriate?

A) decisions related to using the sales mix to maximizeprofitability

B) decisions related to controlling short-term costs

C) decisions related to setting sales prices in the long run

D) decisions related to increasing contribution margin

61) The direct materials budget is prepared using informationfrom the ________ budget.

A) cash

B) master

C) capital expenditure

D) production

64) The budgeted income statement________.

A) reports cash paid for purchases of direct materials

B) includes amounts from the sales, cost of goods sold, cash,and capital expenditures budgets

C) is accrual-based

D) does not include depreciation expense

68) Which of the following best describes a standard?

A) a sales price, cost, or quantity that is expected undernormal conditions

B) costs incurred to produce a product

C) budgeted amount for total product cost

D) actual sales price, cost, or quantity

69) A company is setting its direct materials and direct laborstandards for its leading product. Direct material costs from thesupplier are $9 per square foot, net of purchase discount.Freight-in amounts to $0.30 per square foot. Basic wages of theassembly line personnel are $19 per hour. Payroll taxes areapproximately 23% of wages. How much is the direct labor coststandard per hour? (Round your answer to the nearest cent.)

A) $4.37

B) $19.00

C) $23.37

D) $32.37

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ACC 406 Lecture Notes - Lecture 5: Accounts Receivable, Finished Good, Income Statement

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