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ACG 2071 Lecture Notes - Lecture 4: Income Statement, Sunk Costs

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School
University of Florida
Department
Accounting
Course
ACG 2071
Professor
Schadewald

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Document Summary

Income statement: service company: no inventory or cogs, all costs are period costs, operating income, equals revenues minus operating expenses, also, known as ebit (earnings before interest and taxes) Income statement: merchandiser: cogs is major expense, methods for computing cogs, perpetual: time of sale, periodic: end of period, after physical inventory. Beginning inventory + purchases = cost of goods available for sale. Cost of goods available for sale ending inventory = cost of goods sold. Income statement: manufacturer: similar to merchandiser income. Dm used + dl used + moh applied. Beginning work in process inventory + manufacturing costs incurred = total manufacturing costs. Total manufacturing costs ending work in process inventory = cogs manufacturing this year. Cogs = bi + cog manufactured - ei. Sg&a: differential costs, pertain to future, vary among alternative. Irrelevant costs: do not vary among alternatives, ex sunk costs (historical costs) Do not use average cost to predict total cost at a different output level.

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Related Questions

The information below representsthe beginning and ending inventory amounts along with theproduction and sales for the month in umbrella units

Beginning Inventory: 0 Umbrellas

Production: 80,000 Umbrellas

Sales: 60,000 Umbrellas

Ending Inventory: 20,000 Umbrellas

The Hampshire Company manufactures umbrellas that sell for$12.50 each. In 2014, the company made and sold 60,000 umbrellas.The company had fixed manufacturing costs of $216,000. It also hadfixed costs for administration of $79,525. The per-unit costs ofeach umbrella are as follows:

Using the information

Prepare a variable costing income statement.

Prepare an absorption costing income statement.

Direct Materials: $3.00

Direct Labor: $1.50

Variable Manufacturing Overhead:$0.40

Variable Selling Expenses: $1.10

Requirement 1
Hampshire Company
Variable Costing IncomeStatement
Units $
Sales X $ $
Variable Cost of Goods Sold:
Beginning Inventory $
Direct Materials X $ $
Direct Labor X $ $
Manufacturing Overhead X $ $
Total Variable Costs $
Cost of Good Available for Sale $
Deduct Ending Inventory X $ $
Variable Costs of GoodsSold $
Variable Selling Costs X $ $ $
Contribution Margin $
Fixed Costs:
Fixed Manufacturing Costs $
Fixed Administrative Costs $
Operating Income $
Requirement 2
Hampshire Company
Absorption Costing IncomeStatement
Units $
Sales X $ $
Variable Cost of Goods Sold:
Beginning Inventory $
Direct Materials X $ $
Direct Labor X $ $
Manufacturing Overhead X $ $
Total Variable Costs $
Allocated Fixed Manufacturing Costs X $ $
Cost of Good Available for Sale $
Deduct Ending Inventory X $ $
Costs of GoodsSold $
Gross Margin $
Fixed Costs:
Variable Selling Costs X $ $
Fixed Administrative Costs $
Operating Income $

Determine the missing amounts in each of the following independent cases. Case A Case B Case C $240,000 7,500 15,000 Sales Beginning inventory, raw material Ending inventory, raw material Purchases of raw material Direct material used Direct labor Manufacturing overhead Total manufacturing costs Beginning inventory, work in process Ending inventory, work in process Cost of goods manufactured Beginning inventory, finished goods Cost of goods available for sale Ending inventory, finished goods Cost of goods sold Gross margin Selling and administrative expenses Income before taxes Income tax expense Net income 60,000 180,000 200,000 140,000 255,000 285,000 300,000 62,500 80,000 170,000 500,000 1,040,000 1,035,000 60,000 105,000 70,000 2,500 1,050,000 100,000 175,000 120,000 185,000 12,500 1,090,000 510,000 990,000 510,000 225,000 300,000 80,000 45,000 135,000 27,500

 

 

The following balances are from the accounts of CrabtreeMachining Company:

January 1 (Beginning) December 31 (Ending)
Direct materials inventory $ 98,500 $ 110,700
Work-in-process inventory 107,200 105,100
Finished goods inventory 43,100 46,400

Direct materials purchased during the year amount to $513,400,and the cost of goods sold for the year was $1,870,000.

Required:

Prepare a cost of goods sold statement.

CRABTREE MACHINING COMPANY
Cost of Goods Sold Statement
For the Year Ended December 31
Beginning work-in-process inventory $107,200
Manufacturing costs:
Direct materials:
Beginning inventory $98,500
Purchases 513,400
Materials available $611,900
Less: Ending inventory 110,700
Direct materials used $501,200
Other manufacturing costs
Total manufacturing costs 501,200
Total costs ofwork-in-process $608,400
Less: Ending work-in-process 105,100
Cost of goods manufactured $503,300
Beginning finished goods inventory 43,100
Finished goods available forsale $546,400
Less: Ending finished goods inventory 46,400
Cost of goods sold $500,000

************I HAVE FIGURED OUT EVERY NUMBER BESIDES THE OTHERMANUFACTURING COST!!!! HOW DO I FIGURE OUT THATNUMBER???????????????????? ONCE I FIGURE OUT THAT NUMBER IT WILLCHANGE THE OTHER NUMBERS, SO THE PROBLEM WILL BE CORRECT.