Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 1, Problem 1.1BYP
To determine
Cost of Raw Material: The cost of the material which is not used for the work in process till yet is considered as the cost of raw material.
To Calculate: The cost of raw material, work in process and finished goods.
To determine
Cost of Work in
To Calculate: The work in process.
To determine
Cost of Finished Goods: The cost of the material which has been converted into finished goods or the goods ready to sell in the open market is known as the cost of finished goods.
To Compute: The ending balance of finished goods inventory.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On June 30, 2016, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations:
Raw materials
$ 62,000
Work in process
0
Finished goods
119,000
The inventory on January 1, 2016 consisted of the following:
Raw materials
$ 30,000
Work in process
100,000
Finished goods
140,000
$270,000
A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months of 2016 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $80,000, and manufacturing overhead was historically applied at 50% of direct labor.
A tornado touched down and destroyed most of a company's facilities. However, the controller and the cost
accountant were able to recover a small part of manufacturing cost data for the current and prior month. They
need records in order to file an insurance claim.
This is the data they were able to recover:
Direct Labor Cost $250,000
Purchase of Raw Materials $365,000
Raw Materials used for the month S350,000
Sales for the month $1,240,000
Gross Profit Ratio 40% of sales
Cost of goods available for sale $770,000
Manufacturing overhead was 60% of direct labor
Inventories at the end of the prior month: Finished Goods $38,000; Work in Process $25,000; and Raw
Materials $19,000.
Instructions:
Calculate the amount of cost in the Raw Materials, Work in Process, and Finished Goods Inventory (in
other words, the ending balance in these accounts) for the current month (when the tornado took place)
using the information above.
What analysis or conclusions can you make from the data?
Can the…
You are the cost accountant for Fashions, Inc. On July 31, 2002, a fire destroyed part of your company's office building factory. Inventories were totally destroyed, and many of the accountant records were damaged or destroyed by the fire. You have been given the responsibility for recovering enough cost data to file an insurance claim. You were able to recover the following.
Cost of goods available for sale for July amounted to $395,000, sales totaled $625,000, and gross profit sales was 40%. in addition, raw materials used in July amounted to 175,000. and raw materials purchased totaled $172,500. Direct labor cost for July was $125,000.
Based on past results, you know that manufacturing overhead is 60% of direct labor cost. You are able to retrieve a copy of the June Balance sheet, and it indicates that inventories of June 30 were as follows:
Work in process inventory, $11,000
Finished Goods inventory $18,000
Raw Materials $9,500
You must determine the amount of your…
Chapter 1 Solutions
Managerial Accounting: Tools for Business Decision Making
Ch. 1 - Prob. 1QCh. 1 - Distinguish between managerial and financial...Ch. 1 - How do the content of reports and the verification...Ch. 1 - Prob. 4QCh. 1 - Decision-making is managements most important...Ch. 1 - Explain the primary difference between line...Ch. 1 - Prob. 7QCh. 1 - Prob. 8QCh. 1 - How are manufacturing costs classified?Ch. 1 - Mel Finney claims that the distinction between...
Ch. 1 - Tina Burke is confused about the differences...Ch. 1 - Identify the differences in the cost of goods sold...Ch. 1 - The determination of the cost of goods...Ch. 1 - Sealy Company has beginning raw materials...Ch. 1 - Tate Inc. has beginning work in process 26,000,...Ch. 1 - Using the data in Question 15, what are (a) the...Ch. 1 - In what order should manufacturing inventories be...Ch. 1 - How does the output of manufacturing operations...Ch. 1 - Discuss whether the product costing techniques...Ch. 1 - What is the value chain? Describe, in sequence,...Ch. 1 - What is an enterprise resource planning (HRP)...Ch. 1 - Why is product quality important for companies...Ch. 1 - Explain what is meant by balanced in the balanced...Ch. 1 - In what ways can the budgeting process create...Ch. 1 - What new rules were enacted under the...Ch. 1 - What is activity-based costing, and what are its...Ch. 1 - Distinguish between managerial and financial...Ch. 1 - Prob. 1.2BECh. 1 - Determine whether each of the following costs...Ch. 1 - Prob. 1.4BECh. 1 - Identify whether each of the following costs...Ch. 1 - Presented below are Rook Companys monthly...Ch. 1 - Francum Company has the following data: direct...Ch. 1 - In alphabetical order below are current asset...Ch. 1 - Presented below are incomplete manufacturing cost...Ch. 1 - Use the same data from BE1-9 above and the data...Ch. 1 - Prob. 1.11BECh. 1 - Prob. 1.1DICh. 1 - Identify managerial cost classifications. (LO 2),...Ch. 1 - The following information is available for Tomlin...Ch. 1 - Match the descriptions that follow with the...Ch. 1 - Justin Bleeber has prepared the following list of...Ch. 1 - Presented below is a list of costs and expenses...Ch. 1 - Trak Corporation incurred the following costs...Ch. 1 - Determine the total amount of various types of...Ch. 1 - Gala Company is a manufacturer of laptop...Ch. 1 - Prob. 1.6ECh. 1 - National Express reports the following costs and...Ch. 1 - Lopez Corporation incurred the following costs...Ch. 1 - An incomplete cost of goods manufactured schedule...Ch. 1 - Manufacturing cost data for Copa Company are...Ch. 1 - Incomplete manufacturing cost data for Horizon...Ch. 1 - Cepeda Corporation has the following cost records...Ch. 1 - Keisha Tombert, the bookkeeper for Washington...Ch. 1 - The following information is available for Aikman...Ch. 1 - University Company produces collegiate apparel....Ch. 1 - An analysis of the accounts of Roberts Company...Ch. 1 - McQueen Motor Company manufactures automobiles....Ch. 1 - The following is a list of terms related to...Ch. 1 - Prob. 1.1APCh. 1 - Bell Company, a manufacturer of audio systems,...Ch. 1 - Incomplete manufacturing costs, expenses, and...Ch. 1 - Prepare a cost of goods manufactured schedule, a...Ch. 1 - Empire Company is a manufacturer of smart phones....Ch. 1 - Prob. 1.1WPCh. 1 - Prob. 1.1BYPCh. 1 - Tenrack is a fairly large manufacturing company...Ch. 1 - Prob. 1.4BYPCh. 1 - The primary purpose of managerial accounting is to...Ch. 1 - As noted in this chapter, because of global...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The following is a list of costs incurred by several manufacturing companies: a. Annual picnic for plant employees and their families b. Cost of fabric used by clothing manufacturer c. Cost of plastic for a toy manufacturer d. Cost of sewing machine needles used by a shirt manufacturer e. Cost of television commercials f. Depreciation of copying machines used by the Marketing Department g. Depreciation of microcomputers used in the factory to coordinate and monitor the production schedules h. Depreciation of office building i. Depreciation of robotic equipment used to assemble a product j. Electricity used to operate factory machinery k. Factory janitorial supplies I. Fees charged by collection agency on past-due customer accounts m. Fees paid to lawn service for office grounds n. Maintenance costs for factory equipment o. Oil lubricants for factory plant and equipment p. Pens, paper, and other supplies used by the Accounting Department q. Repair costs for factory equipment r. Rent for a warehouse used to store work in process and finished products s. Salary of a physical therapist who treats plant employees t. Salary of the manager of a manufacturing plant u. Telephone charges by corporate office v. Travel costs of marketing executives to annual sales meeting w. Wages of a machine operator on the production line x. Wages of production quality control personnel Instructions Classify each of the preceding costs as a product cost or period cost. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. Use the following tabular headings for preparing your answer, placing an X in the appropriate column:arrow_forwardGigaBite Company's computer system recently crashed, erasing much of the company's financial data. The following accounting information was discovered soon afterwards on the Chief Financial Officer's back-up computer data. Cost of Goods Sold $ 384,000 Work-in-Process Inventory, Beginning 31,000 Work-in-Process Inventory, Ending 41,200 Selling and Administrative Expense 51,800 Finished Goods Inventory, Ending 15,600 Finished Goods Inventory, Beginning ? Direct Materials Purchased 175,400 Factory Overhead Applied 118,000 Operating Income 24,200 Direct Materials Inventory, Beginning 19,200 Direct Materials Inventory, Ending 6,200 Cost of Goods Manufactured 344,000 Direct Labor 58,000 The Chief Financial Officer of GigaBite Company has asked you to recalculate the following accounts and report to him by week's end. What should be the amount of direct materials available for use? Multiple Choice $118,000. $188,400. $194,600.…arrow_forwardGigaBite Company's computer system recently crashed, erasing much of the company's financial data. The following accounting information was discovered soon afterwards on the Chief Financial Officer's back-up computer data. Cost of Goods Sold $ 384,000 Work-in-Process Inventory, Beginning 31,000 Work-in-Process Inventory, Ending 41,200 Selling and Administrative Expense 51,800 Finished Goods Inventory, Ending 15,600 Finished Goods Inventory, Beginning ? Direct Materials Purchased 175,400 Factory Overhead Applied 118,000 Operating Income 24,200 Direct Materials Inventory, Beginning 19,200 Direct Materials Inventory, Ending 6,200 Cost of Goods Manufactured 344,000 Direct Labor 58,000 The Chief Financial Officer of GigaBite Company has asked you to recalculate the following accounts and report to him by week's end. What should be the amount of direct materials available for use?arrow_forward
- On June 30, 2019, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations: Raw materials $ 62,000 Work in process 0 Finished goods 119,000 The inventory on January 1, 2019, consisted of the following: Raw materials $ 30,000 Work in process 100,000 Finished goods 140,000 $270,000 A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months of 2019 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $80,000, and manufacturing overhead was historically applied at 50% of direct labor. Required: Compute the value of the work-in-process inventory lost at June 30, 2019.arrow_forwardSolve the given problem: (Show your complete solution) A mentally deranged employee, Mr. Arson, put a torch to a factory on February 20, 2018. The resulting fire completely destroyed the plant and its contents. Fortunately, certain accounting records were kept in another building. They revealed the following for the period December 31, 2017 to February 20, 2018: Prime cost, P301,000 Gross Profit, P100,000 or 20% of sales Cost of Goods Available for Sale, P460,000 Direct Materials purchased, P170,000 Work in process, December 31, 2017, P34,000 Direct materials, December 31, 2017, P16,000 Finished Goods, December 31, 2017, P30,000 Factory overhead, 40% of conversion cost Direct Labor, P180,000 The insurance company wants to know the approximate cost of the inventories as a basis for negotiating a settlement. Compute for the following: 1. Direct Materials Inventory, 2/20/2018 2. Work in Process Inventory, 2/20/2018 3. Finished Goods Inventory, 2/20/2018 4. Total Manufacturing Cost 5.…arrow_forwardOn April 12, after the close of business, Singh & Sons had a devastating fire that destroyed the company's work-in-process and finished-goods inventories. Fortunately, all raw materials escaped damage because materials owned by the firm were stored in another warehouse. The following information is available: Sales revenue through April 12 Income before taxes through April 12 Direct labor through April 12 Cost of goods available for sale, April 12 Work-in-process inventory, January 11 Finished-goods inventory, January 1 Gross margin $330,000 68,000 120,000 275,000 21,000 37,000 Cost of finished-goods inventory Cost of work-in-process inventory 30% of sales The firm's accountants determined that the cost of direct materials used normally averages 25 percent of prime costs (.e., direct material + direct labor). In addition, manufacturing overhead is 50 percent of the firm's total production costs. Required: Singh & Sons is in the process of negotiating a settlement with its insurance…arrow_forward
- On November 30, 2022, there was a fire in the factory of Able Manufacturing Limited, where you work as the controller. The work in process inventory was completely destroyed, but both the materials and finished goods inventories were undamaged. Able uses normal job-order costing and its fiscal year end is December 31. Selected information for the periods ended October 31, 2022, and November 30, 2022, follows: October 31, 2022 November 30, 2022 Supplies (including both direct and indirect materials) $ 79,250 $ 73,250 Work in process inventory 58,875 ? Finished goods inventory 60,000 63,000 Cost of goods sold (year to date) 576,000 656,000 Accounts payable (relates to materials purchased only) 17,960 53,540 Manufacturing overhead incurred (year to date) 129,500 163,300 Manufacturing overhead applied 128,700 ? Other information for November 2022: Cash payments to…arrow_forwardThe Star Paper Division of Royal Industries is located near Los Angeles. A major expansion of the division’s only plant was completed in April 2007. The expansion consisted of an addition to the existing building, additions to the production-line machinery, and the replacement of obsolete and fully depreciated equipment that was no longer efficient or cost effective.On May 1, 2007, George Harris became manager of Star. Harris had a meeting with Marie Fortner, vice president of operations for Royal, who explained to Harris that the company measured the performance of divisions and division managers on the basis of return on gross assets (ROA). When Harris asked if othermeasures were used in conjunction with ROA, Fortner replied, ‘‘Royal’s top management prefers to use a single performance measure. Star should do well this year now that it has expanded and replaced all of that old equipment. You should have no problem exceeding the division’s historical rate. I’ll check with you at the…arrow_forwardSmooth Sounds manufactures and sells a new line of MP3 players. Unfortunately, Smooth Sounds suffered serious fire damage at its home office. As a result, the accounting records for October were partially destroyed-and completely jumbled. Smooth Sounds has hired you to help figure out the missing pieces of the accounting puzzle. Assume that Smooth Sounds' raw materials inventory contains only direct materials. Work in process inventory, October 31 $1,500 Finished goods inventory, October 1 4,300 Direct labor in October 3,000 Purchases of direct materials in October 9,000 Work in process inventory, October 1 0 Revenues in October 27,000 Gross profit in October 12,000 Direct materials used in October 8,000 Raw materials inventory, October 31 3,000 Manufacturing overhead in October 6,300 Manufacturing costs Cost of goods manufactured in October Cost of goods sold in October Beginning direct materials inventory Ending…arrow_forward
- A distraught employee, Fang W. Arson, put a torch to manufacturing plant on a blustery February 26. The resulting blaze destroyed the plant and its contents. Fortunately, certain accounting records were kept in another building. They reveal the following for the period from January 1, 2017 to February 26, 2017. 6,00,000 Direct materials 26/2/2017 Revenues Indirect manufacturing costs 60 % of conversion costs 56,000 320,000 Work in process 1/1/2017 25% Finished goods 1/1/2017 34,000 40,000 Prime costs Gross margin percentage based on revenues 120,000 Direct materials 1/1/2017 4,60,000 Direct materials consumed 20,000 Cost of goods available for sale Required: Prepare the statement of cost of goods sold.arrow_forwardOn June 30, 2011, a tornado damaged Jensen Corporations warehouse and factory destroying the work-in-process inventory. Neither the raw materials nor finished goods inventories were damaged. A physical inventory is taken after the tornado revealed the following valuations: Raw materials $ 87,000 Work-in-process 0 Finished goods 151,000 $238,000 The inventory of January 1, 2011, consisted of the following: Raw materials $ 41,000 Work-in-process 128,000 Finished goods 173,000 $342,000 A review of the books and records disclosed that the gross profit margin historically approximated 28% of sales. The sales total for the first six months of 2011 was $405,000. Raw material purchases totaled $150,000. Direct labor costs for this period were $112,000, and manufacturing overhead has historically been applied at 50% of direct labor. Required: Compute the value of the work-in-process inventory lost on June 30, 2011. Show supporting computations.arrow_forwardCase Study Muscat Tubes Manufacturing LLC is a manufacturer of television picture tubes. The company must keep various types of materials on hand for the manufacturing process. The store manager is having difficulty keeping track of all the inventory. When compared to last year, the amount of material lost has increased, which is a source of concern for the store manager. He wishes to employ an effective tool for controlling material loss. While exploring, he came across the concept of ABC analysis, which is used by many MNCS around the world. Because he has no background in costing, he is unable to grasp the concept. He asked you to explain the following because you are the company's cost accounting executive: BIs. d. Steps involved in classification of ABC analysis.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,