ACC 241 Study Guide - Quiz Guide: Variable Cost, Financial Statement, Gross Margin

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viridianalligator183

30 Oct 2014

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Sarbanes-oxley act (sox) - requires companies to esiablish, assess, and regularly report on their internal controls over financial reporting. Advertising, management and staff, office supplies, depreciation) variable cost- changes in total in direct proportion to a change in the level of activity. (ex. Consequently, they do not affect future costs and cannot be changed by any curent or future action. l2. period costs: all costs that are not product costs. These costs are identified with the period of time in which they are incurred rather than with the units of purchased or produced goods. Direct material used + direct labor + manufacturing overhead(lndirect materials, indirect labor, Ilepreclation, utifitles, other manufacturlng overhead) + beglnning workin- process inventory - endlng work-in-process inventory = cost of goods. C of g s: equalto the product cost identified with the goods sold: equalto its manufacturing costs of direct material, direct labor, and manufacturing overhead. Beginning finished goods inventory + cost of goods manufactured -

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Weighted Average Process Costing:
Minot Processing Company manufactures one product on acontinuous basis in two departments, Processing and Finishing. Allmaterials are added at the beginning of work on the product in theProcessing Department. During December 2009, the following eventsoccurred in the Processing Department:
Units started	16,000 units
Units completed and transferred to Finishing Department	15,000 units

Costs assigned to processing:Raw materials (one unit of rawmaterials for each unit of product started)	$142,900.00
Manufacturing supplies used	18,000
Direct labor costs incurred	51,000
Supervisors' salaries	12,000
Other production labor costs	14,000
Depreciation on equipment	6,000
Other production costs	18,000

Additional information follows:
Minot uses weighted average costing and applies manufacturingoverhead to Work-in-Process at the rate of 100 percent of directlabor cost.
Ending inventory in the Processing Department consists of 3,000units that are one-third converted.
Beginning inventory contained 2,000 units, one-half converted,with a cost of $34,500 ($24,500 for materials and $10,000 forconversion).
(a) Prepare a cost of production report for theProcessing Department for December.
Minot Processing Company: Processing Department Cost of Production Report For the Month Ending December 31, 2009
Summary of units in process:
Beginning
Units started
In process
Completed
Ending
Equivalent units in process:		Materials	Conversion	Total
Units completed
Plus equivalent units in ending inventory
Equivalent units in process
Total cost to be accounted for and cost per equivalent unit in process:
Beginning work-in-process		$	$	$
Current costs
Total cost in process		$	$	$
Equivalent units in process		+	+
Cost per equivalent unit in process		$	$	$
Accounting for total costs:
Transferred out				$
Ending work-in-process:
Materials			$
Conversion
Total cost accounted for				$
(b) Prepare an analysis of all changes inWork-in-Process.
Work-in-process:
Beginning			$
Current manufacturing costs:
Direct materials		$
Direct labor
Applied overhead
Total			$
Cost of goods manufactured
Ending			$

tealbuffalo667

As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.:

Cash	$103,800
Accounts Receivable	181,700
Finished Goods	38,200
Work in Process	25,400
Materials	41,800
Prepaid Expenses	3,100
Plant and Equipment	538,700
Accumulated DepreciationâPlant and Equipment		$231,600
Accounts Payable		136,900
Common Stock, $10 par		350,000
Retained Earnings		214,200
	$932,700	$932,700

Factory output and sales for 20Y9 are expected to total 25,000 units of product, which are to be sold at $110 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year.

Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows:

	Estimated Costs and Expenses
	Fixed (Total for Year)	Variable (Per Unit Sold)
Cost of goods manufactured and sold:
Direct materials	_	$28
Direct labor	_	8.5
Factory overhead:
Depreciation of plant and equipment	$25,000	_
Other factory overhead	7,800	5
Selling expenses:
Sales salaries and commissions	89,800	14
Advertising	75,000	_
Miscellaneous selling expense	6,500	2
Administrative expenses:
Office and officers salaries	59,000	7
Supplies	3,000	1
Miscellaneous administrative expense	1,600	1.5

Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of $242,200 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of $1 per share are expected to be declared and paid in March, June, September, and December on 35,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $145,000 cash in May.

Required:

1. Prepare a budgeted income statement for 20Y9.

Regina Soap Co.
Budgeted Income Statement
For the Year Ending December 31, 20Y9
Sales			$
Cost of goods sold:
Direct materials		$
Direct labor
Factory overhead
Cost of goods sold
Gross profit			$
Operating expenses:
Selling expenses:
Sales salaries and commissions	$
Advertising
Miscellaneous selling expense
Total selling expenses		$
Administrative expenses:
Office and officers salaries	$
Supplies
Miscellaneous administrative expense
Total administrative expenses
Total operating expenses
Income before income tax			$
Income tax expense
Net income			$

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Use information from the expected sales, cost of goods, and selling and administrative expenses.

Learning Objective 4, Learning Objective 5.

2. Prepare a budgeted balance sheet as of December 31, 20Y9.

Regina Soap Co. Budgeted Balance Sheet December 31, 20Y9
Assets
Current assets:
Cash
Accounts receivable
Inventories:
Finished goods
Work in process
Materials
Prepaid expenses
Total current assets
Property, plant, and equipment:
Plant and equipment
Accumulated depreciation
Total property, plant, and equipment
Total assets
Liabilities
Current liabilities:
Accounts payable
Stockholders' Equity
Common stock
Retained earnings
Total stockholdersâ equity
Total liabilities and stockholdersâ equity

orchidguinea-pig768

Scholastic Brass Corporation manufactures brass musical instruments for use by high school students. The company uses a normal costing system, in which manufacturing overhead is applied on the basis of direct-labor hours. The companyâs budget for the current year included the following predictions.

Budgeted total manufacturing overhead ..........................................................................................................$426,300

Budgeted total direct-labor hours (based on practical capacity) .....................................................................20,300

During March, the firm worked on the following two production jobs: Job number T81, consisting of 76 trombones Job number C40, consisting of 110 cornetsThe events of March are described as follows:

a. One thousand square feet of rolled brass sheet metal were purchased on account for $5,000.

b. Four hundred pounds of brass tubing were purchased on account for $4,000.

c. The following requisitions were submitted on March 5: Direct labor: Job number T81, 800 hours at $20 per hour Direct labor: Job number C40, 900 hours at $20 per hour Indirect labor: General factory cleanup, $4,000 Indirect labor: Factory supervisory salaries, $9,000 Requisition number 112: 250 square feet of brass sheet metal at $5 per square foot (for job number T81) Requisition number 113: 1,000 pounds of brass tubing, at $10 per pound (for job number C40) Requisition number 114: 10 gallons of valve lubricant, at $10 per gallonAll brass used in production is treated as direct material. Valve lubricant is an indirect material.

d. An analysis of labor time cards revealed the following labor usage for March.

Direct labor: Job number T81, 800 hours at $20 per hour

Direct labor: Job number C40, 900 hours at $20 per hour Indirect labor:

General factory cleanup, $4,000 Indirect labor:

Factory supervisory salaries, $9,000

e. Depreciation of the factory building and equipment during March amounted to $12,000.

f. Rent paid in cash for warehouse space used during March was $1,200.

g. Utility costs incurred during March amounted to $2,100. The invoices for these costs were received, but the bills were not paid in March.

h. March property taxes on the factory were paid in cash, $2,400.

i. The insurance cost covering factory operations for the month of March was $3,100. The insurance policy had been prepaid.

j. The costs of salaries and fringe benefits for sales and administrative personnel paid in cash during March amounted to $8,000.

k. Depreciation on administrative office equipment and space amounted to $4,000.

l. Other selling and administrative expenses paid in cash during March amounted to $1,000.

m. Job number T81 was completed on March 20.

n. Half of the trombones in job number T81 were sold on account during March for $700 each.

The March 1 balances in selected accounts are as follows:

Cash ...................................................................................................................................................................$?? 10,000

Accounts Receivable .........................................................................................................................................21,000

Prepaid Insurance .............................................................................................................................................5,000

Raw-Material Inventory .....................................................................................................................................149,000

Manufacturing Supplies Inventory ....................................................................................................................500

Work-in-Process Inventory ................................................................................................................................91,000

Finished-Goods Inventory .................................................................................................................................220,000

Accumulated Depreciation: Buildings and Equipment .....................................................................................102,000

Accounts Payable ..............................................................................................................................................13,000

Wages Payable ..................................................................................................................................................8,000

Required:

1. Calculate the companyâs predetermined overhead rate for the year.

2. Prepare journal entries to record the events of March.

3. Set up T-accounts, and post the journal entries made in requirement (2).

4. Calculate the overapplied or underapplied overhead for March. Prepare a journal entry to close this balance into Cost of Goods Sold.

5. Prepare a schedule of cost of goods manufactured for March.

6. Prepare a schedule of cost of goods sold for March.

7. Prepare an income statement for March.

jadejackal930

ACC 241 Study Guide - Quiz Guide: Variable Cost, Financial Statement, Gross Margin

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