ACCT 1220 Chapter 3: ACCT 1220 Chapter : 39783174_1_Chapter 3 - Notes .PDF

CASE 5A -- GLASERHEALTH PRODUCTS:

Glaser Health Products of Ranier Falls,Georgia, is organized functionally into three divisions:Operations, Sales, and Administrative. Purchasing, receiving,materials and production control, manufacturing, factory personnel,inventory stores, and shipping activities are under the control ofthe vice-president for operations, George Gottlieb. Advertising,market research, and sales are the responsibility of thevice-president for sales, Jake Bogan. Accounting, budgeting, thefirm's computer center, and general office management are delegatedto the corporate controller (Administrative), Charlie Kaplan. Thefollowing cost categories are found in the company as a whole: (a)Depreciation on factory equipment. (b) Depreciation on officeequipment. (c) Depreciation on factory building. (d) Advertisingmanager's salary. (e) Assembly foreman's salary. (f) Salespersons'salaries. (g) Salespersons' travel expenses. (h) Supplies for theMachining Department. (i) Advertising supplies used. (j)Electricity for the Assembly Department. (k) Lost materials (scrap)in a Machining Department. (l) Directlabor in the Assembly Department. (m) Supplies for the salesoffice. (n) Sales commissions. (o) Packing supplies. (p) Cost ofhiring new employees. (q) Payroll fringe benefits for workers inthe Shipping Department. (r) Supplies for Production Scheduling.(s) Cost of repairing parts improperly manufactured in theMachining Department. (t) Paint for the Assembly Department. (u)Heat, light, and power for the factory. (v) Leasing of computerequipment for the Accounting Department. <?xml:namespace prefix= o ns = "urn:schemas-microsoft-com:office:office" />

Question: Identify each of the costswith the appropriate division: Operations, Sales, andAdministrative & Identify each of the costs with one of thefollowing: (a) Unit-level activities. (b) Product-level activities.(C) Batch-level activities. (d) Facility-level activities. Create achart to classify.

Rock Slide is a distributor that assembles power units. Using the material presented in Schedules A and Schedule B:

(1) Determine Rock Slide’s cost of goods sold and the ending inventory using the inventory costing methods of FIFO, LIFO, and Weighted Averages;

(2) Determine Rock Slide’s gross profit (margin) using the inventory costing methods of

FIFO, LIFO and Weighted Averages;

S c h e d u l e A A s s e m b l y o f P o w e r U n i t s Rock Slide

Schedule B

Sales of Power Units Rock Slide

(a) Depreciation on factory equipment.

(b) Depreciation on office equipment.

(c) Depreciation on factory building.

(d) Advertising manager's salary.

(e) Assembly foreman's salary.

(f) Salespersons' salaries.

(g) Salespersons' travel expenses.

(h) Supplies for the Machining Department.

(i) Advertising supplies used.

(j) Electricity for the Assembly Department.

(k) Lost materials (scrap) in a Machining Department.

(l) Direct labor in the Assembly Department.

(m) Supplies for the sales office.

(n) Sales commissions.

(o) Packing supplies.

(p) Cost of hiring new employees.

(q) Payroll fringe benefits for workers in the ShippingDepartment.

(r) Supplies for Production Scheduling.

(s) Cost of repairing parts improperly manufactured in theMachining Department.

(t) Paint for the Assembly Department.

(u) Heat, light, and power for the factory.

(v) Leasing of computer equipment for the AccountingDepartment.

Specify an appropriate cost driver for tracing costs associatedwith the various levels of activities to the next cost objective orproducts, whichever is appropriate