ACTG 1P11 Lecture Notes - Lecture 13: Gross Margin, Perpetual Inventory, Profit Margin
72 views4 pages
1 Feb 2016
School
Department
Course
Professor
Document Summary
Merchandising companies that purchase and sell directly to consumers are called retailers. Merchandising companies that sell to retailers are known as wholesalers. Companies that produce goods for sale to wholesalers (or others) are called manufacturers. Three categories by manufacturing companies: raw materials, work in process, and. Operating cycle the time it takes to go from cash to cash in producing revenues is usually longer for a merchandising company than it is for a service company. Raw materials are the basic goods and materials that are on hand and will be used in production but have not yet been sent into production. Work in process is that portion of inventory on which production has started but is. Finished goods inventory is manufactured items that are completed and ready for finished goods not yet complete sale. Expenses for a merchandising company are divided into two categories: cost of goods sold, operating expenses.
Get access
Grade+
$40 USD/m
Billed monthly
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers
Related Documents
Related Questions
Zachary Modems, Inc. acquired a subsidiary named Anywhere, Inc. (AI). AI manufactures a wireless modem that enables users to access the Internet through cell phones. The following trial balance was drawn from the accounts of the subsidiary:
| Cash | $ | 184,600 | ||||||
| Raw materials inventory | 3,680 | |||||||
| Work in process inventory | 5,530 | |||||||
| Finished goods inventory | 6,450 | |||||||
| Common stock | $ | 119,060 | ||||||
| Retained earnings | 81,200 | |||||||
| Totals | $ | 200,260 | $ | 200,260 | ||||
The subsidiary completed the following transactions during 2017:
1. Paid $55,380 cash for direct raw materials.
2. Transferred $46,160 of direct raw materials to work in process.
3. Paid production employees $73,860 cash.
4. Applied $48,910 of manufacturing overhead costs to work in process.
5. Completed work on products that cost $150,410.
6. Sold products that cost $131,950 for $167,950 cash. Record the recognition of revenue in a row labeled 6a and the cost of goods sold in a row labeled 6b.
7. Paid $18,450 cash for selling and administrative expenses.
8. Actual overhead costs paid in cash amounted to $50,710.
9. Closed the Manufacturing Overhead account. The amount of over- or underapplied overhead was insignificant (immaterial).
10. Made a $4,580 cash distribution to the owners
REQUIRED
A. Prepare a schedule of cost of goods manufactured and sold.
| |||||||||||||||||||||||||||||||||||||||
| Pirkl Corporation has providedthe following data for the month of March: |
| Inventories | Beginning | Ending | ||
| Raw materials | $ | 24,000 | $ | 39,000 |
| Work in process | $ | 13,000 | $ | 20,000 |
| Finished goods | $ | 46,000 | $ | 35,000 |
Additional Information:
| Raw materialspurchases | $ | 78,000 |
| Direct laborcost | $ | 84,000 |
| Manufacturingoverhead cost incurred | $ | 43,000 |
| Indirect materialsincluded in manufacturing overhead cost incurred | $ | 6,400 |
| Manufacturingoverhead cost applied to work in process | $ | 44,600 |
| Required: | |
| Prepare a Schedule ofCost of Goods Manufactured and a Schedule of Cost of Goods Sold.(Input all amounts as positive values. Omit the "$" sign inyour response.) |
| Schedule of Cost of Goods Manufactured | ||
| Directmaterials: | ||
| (Click to select)Beginning work inprocess inventoryBeginning finished goods inventoryEnding rawmaterials inventoryBeginning materials inventoryEnding work inprocess inventory | $ | |
| (Click to select)DeductAdd : (Clickto select)Ending work in process inventoryBeginning work in processinventoryFinished goods inventory, beginningPurchases of rawmaterialsRaw materials inventory, ending | ||
| Raw materials available for use | ||
| (Click to select)DeductAdd : (Clickto select)Ending work in process inventoryPurchases of rawmaterialsBeginning materials inventoryEnding raw materialsinventoryBeginning work in process inventory | ||
| Raw materials used in production | ||
| (Click to select)DeductAdd : (Clickto select)Beginning work in process inventoryindirect materialsincluded in manufacturing overhead incurredRaw materials inventory,endingEnding work in process inventoryRaw materials inventory,beginning | ||
| (Click toselect)Direct laborDirect materialsIndirect materialsIndirectlaborPurchase of raw materials | $ | |
| (Click to select)Rawmaterials inventory, endingEnding work in process inventoryRawmaterials inventory, beginningDirect laborPurchases of rawmaterials | ||
| (Click toselect)Manufacturing overhead applied to work in processinventoryBeginning work in process inventoryPurchases of rawmaterialsRaw materials inventory, beginningRaw materials inventory,ending | ||
| Total manufacturingcosts | ||
| (Click toselect)AddDeduct : (Click to select)Raw materials inventory,beginningRaw materials inventory, endingPurchases of rawmaterialsEnding work in process inventoryBeginning work in processinventory | ||
| (Click toselect)DeductAdd : (Click to select)Beginning work in processinventoryRaw materials inventory, beginningRaw materials inventory,endingPurchases of raw materialsEnding work in processinventory | ||
| Cost of goodsmanufactured | $ | |
| Schedule of Cost of Goods Sold | |
| (Click toselect)Cost of goods manufacturedCost of goods available forsaleFinished goods inventory, endingOverapplied overheadFinishedgoods inventory, beginning | $ |
| (Click toselect)DeductAdd : (Click to select)Unadjusted cost of goodssoldOverapplied overheadCost of goods manufacturedCost of goodsavailable for saleUnderapplied overhead | |
| (Click toselect)Unadjusted cost of goods soldCost of goods available forsaleCost of goods manufacturedFinished goods inventory,beginningFinished goods inventory, ending | |
| (Click toselect)AddDeduct : (Click to select)Overapplied overheadCost ofgoods manufacturedEnding finished goods inventoryUnderappliedoverheadCost of goods available for sale | |
| (Click toselect)Finished goods inventory, beginningUnderappliedoverheadFinished goods inventory, endingUnadjusted cost of goodssoldCost of goods manufactured | |
| (Click toselect)AddDeduct : (Click to select)Overapplied overheadCost ofgoods manufacturedUnderapplied overheadFinished goods inventory,endingCost of goods available for sale | |
| Adjusted cost ofgoods sold | $ |
