ACC 312 Lecture Notes - Lecture 1: Direct Labor Cost, Finished Good, Earnings Before Interest And Taxes

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18 Oct 2017

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Cost: the sacrifice made, usually measured by the resources given up, to achieve a particular purpose. Expense: the consumption of assets for the purpose of generating revenue. Product cost (inventoriable cost): cost associated with goods for sale until the time period during which the products are sold, at which time the costs become expenses. The expense measured by the cost of the finished goods sold during a period of time. Cost of goods sold = beginning inventory of fg + cost of goods manufactured - Period costs: costs that are expensed during the time period in which they are incurred. Operating expenses: the costs incurred to produce and sell services, such as transportation, repair, financial, or medical services. Gross profit (gross margin): revenues left after deducting cost of sales (cost of goods sold), without considering any other costs of operating the company. Operating income (operating profit): profits from operations, excluding non-operating items such as interest income, interest expense, and taxes.

Related Questions

Statement of Cost of Goods Manufactured for a ManufacturingCompany

A payment of cash (or a commitment to pay cash in the future)for the purpose of generating revenues.Cost data for SanduskyManufacturing Company for the month ended January 31 are asfollows:

Inventories	January 1	January 31
Materials	$175,500	$154,440
Work in process	121,100	106,560
Finished goods	91,260	103,470

Direct labor		$315,900
Materials purchased during January		336,960
Factory overhead incurred during January:
	Indirect labor	33,700
	Machinery depreciation	20,360
	Heat, light, and power	7,020
	Supplies	5,620
	Property taxes	4,910
	Miscellaneous costs	9,130

a. Prepare a cost of goods manufacturedstatement for January.

Sandusky Manufacturing Company
Statement of Cost of Goods Manufactured
For the Month Ended January 31
Indirect laborMachinery depreciationSuppliesWork in processinventory, January 1			$
Direct materials:
Machinery depreciationMaterials inventory, January1SuppliesWork in process inventory, January 31	$
Indirect laborProperty taxesPurchasesWork in process inventory,January 31
Cost of materials available for useLess work in processinventory, January 31SuppliesWork in process inventory, January31	$
Indirect laborMaterials inventory, January 31MiscellaneouscostWork in process inventory, January 31
Cost of direct materials used in productionLess work in processinventory, January 31Materials inventory, January 1Totalmanufacturing costs		$
Direct laborIndirect laborMachinery depreciationSupplies
Factory overhead:
Indirect laborMaterials inventory, January 1Materialsinventory, January 31Purchases	$
Direct laborMachinery depreciationPurchasesWork in processinventory, January 31
Direct laborHeat, light, and powerMaterials inventory, January1Work in process inventory, January 31
Direct laborMaterials inventory, January1PurchasesSupplies
Materials inventory, January 31Property taxesPurchasesWork inprocess inventory, January 31
Direct materialsMiscellaneous costsPurchasesWork in processinventory, January 31
Total factory overhead
Total manufacturing costs incurred during January
Total manufacturing costs			$
Cost of materials available for useDirect materialsMaterialsinventory, January 31Work in process inventory, January 31
Cost of goods manufactured			$

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b. Determine the The cost of finished goodsavailable for sale minus the ending finished goods inventory.costof goods sold for January.

pearhamster523

Lamonda Corp. uses a job order cost system. On April 1, the accounts had balances as shown in the T-accounts below:

The following transactions occurred during April:

(a) Purchased materials on account at a cost of $233,270.
(b) Requisitioned materials at a cost of $111,800, of which $15,200 was for general factory use.
(c) Recorded factory labor of $225,300, of which $43,775 was indirect.
(d) Incurred other costs:

Selling expense $ 35,000
Factory utilities 22,900
Administrative expenses 51,050
Factory rent 11,900
Factory depreciation 19,200

(e) Applied overhead at a rate equal to 135 percent of direct labor cost.
(f) Completed jobs costing $263,450.
(g) Sold jobs costing $323,070.
(h) Recorded sales revenue of $514,000.

Required:
1. & 2. Post the April transactions to the T-accounts and compute the balance in the accounts at the end of April. (Round your answers to 2 decimal places.)

Raw Materials Inventory		Work in Process Inventory
Beg. Bal.	29,500.00	Beg. Bal.	19,000.00


End. Bal.	29,500.00

		End. Bal.	19,000.00

Finished Goods Inventory		Manufacturing Overhead
Beg. Bal.	124,200.00	Beg. Bal.


End. Bal.	124,200.00


		End. Bal.		0.00

Cost of Goods Sold		Sales Revenue
Beg. Bal.		Beg. Bal.


End. Bal.	0.00	End. Bal.		0.00

Selling and Administrative Expenses
Beg. Bal.


End. Bal.	0.00

3-a. Compute over- or underapplied manufacturing overhead. (Round your answer to 2 decimal places.)

Manufacturing Overhead

3-b. If the balance in the Manufacturing Overhead account is closed directly to Cost of Goods Sold, will Cost of Goods Sold increase or decrease?
a.Decrease

b.Increase

4. Prepare Lamondaâs cost of goods manufactured report for April. (Round your answers to 2 decimal places.)

LAMONDA CORP.
Cost of Goods Manufactured Report
For the Month of April




Direct Materials Used



Total Current Manufacturing Costs	$0.00


Cost of Goods Manufactured

5. Prepare Lamondaâs April income statement. Include any adjustment to Cost of Goods Sold needed to dispose of over- or underapplied manufacturing overhead. (Round your answers to 2 decimal places.)

LAMONDA CORP.
Income Statement
For the Month of April

Cost of Goods Sold



Unadjusted Cost of Goods Sold

Adjusted Cost of Goods Sold


Net Income (Loss) from Operations

emeraldelk536

1. ABC generally causes the least amount of cost distortionamong products because indirect costs are allocated to the productsbased on

types of activities used by theproduct.

the extent to which the activitiesare used.

both A and B.

none of the above.

Chicago Steel's operating activities for the year are listedbelow:

Beginning inventory	$1,000,800
Ending inventory	$350,500
Purchases	$750,300
Sales revenue	$1,500,400
Operating expenses	$700,200

What is the cost of goods sold for the year?

$1,751,100

$1,400,600

$750,100

$50,100

The following is selected financial data from Turtle BayManufacturing for the most recent year:

Ending raw materials inventory	$21,200
Ending work in process inventory	$44,900
Ending finished goods inventory	$53,200
Amount of underallocated manufacturing overhead	$5,100
Cost of goods sold for year	$85,500
Cost of raw materials purchased during year	$45,700
Cost of direct materials requisitioned during year	$44,300
Cost of indirect materials requisitioned during year	$7,200
Cost of goods completed during year	$120,200
Manufacturing overhead allocated	$60,400
Manufacturing overhead % of direct labor cost	135%

What is the beginning raw materials inventory?

$27,000

$51,500

$19,800

$5,800

4. Which of the following is not an activity inan ABC system that determines the cost of a manufacturedproduct?

Materials handling

Inspecting

Machining

Accounting

5. Which type of company utilizes managerialaccounting?

Manufacturers

Service

Retailers

All of the above

6. On a traditional income statement, all manufacturing-relatedcosts, whether fixed or variable, are listed

above the gross profit line.

below the operating incomeline.

above the sales line.

above the contribution margin line.

7. In a process costing system, direct labor and manufacturingoverhead are normally

incurred evenly throughout theprocess.

incurred at the end of theprocess.

incurred in full at the beginningof the process.

not recorded.

8. Manufacturing overhead costs for a productinclude

operating expenses.

indirect manufacturing costs.

direct material.

prime costs.

Here are selected basic data for Wilson Company:

Estimated manufacturing overhead	$243,750	Factory utilities	$30,900
Estimated labor hours	35,000	Indirect labor	$22,600
Actual direct labor hours	36,000	Sales commissions	$54,600
Estimated direct labor cost	$325,000	Factory rent	$47,800
Actual direct labor cost	$320,000	Factory property taxes	$28,700
Factory depreciation	$65,600	Indirect materials	$33,300

If the company allocates overhead based on direct labor cost,what are the total actual manufacturing overhead costs?

$173,000

$283,500

$228,900

$260,900

10. ERP stands for

	Enterprise Resource Planning.
	Enclosed Resource Placement.
	Edwin R. Perry, the man thatcreated the first system.
	Entity Replacement Product.

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ACC 312 Lecture Notes - Lecture 1: Direct Labor Cost, Finished Good, Earnings Before Interest And Taxes

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