ACC M118 Lecture Notes - Lecture 5: Gross Margin, Earnings Before Interest And Taxes, Security Guard

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7 Dec 2020

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Direct materials cost cost of any materials that are an integral part of the finished product. Reflect a significant portion of the total cost of the product. Direct labour cost the wages of employees who are integral to the finished product. Reflect significant portion of the total cost of product. Indirect labour; examples: security guard, cleaning people. Factory overhead cost costs other than the direct materials cost and direct labour cost that are incurred in the manufacturing process are combined and classified. May include: heat and light for factory, power to run the machines, salaries for supervisors, factory caretaking wages, equipment repair and maintenance, property taxes on factory buildings. Raw materials inventory direct and indirect materials that have not entered the manufacturing process. Work in process inventory direct materials, direct labour and factory oh cost that have entered the process but not completed. Finished goods inventory completed products that have not been sold.

Related Questions

Yolo Windows, a manufacturer of windows for commercial buildings, reports the following account information for last year (all costs are in thousands of dollars):


Information on January 1 (Beginning):
Direct materials inventory	$	89
Work-in-process inventory		118
Finished goods inventory		1,610
Information for the year:
Administrative costs	$	3,630
Direct labor		12,200
Direct materials purchases		8,220
Factory and machine depreciation		11,730
Factory supervision		747
Factory utilities		947
Indirect factory labor		2,940
Indirect materials and supplies		678
Marketing costs		1,510
Property taxes on factory		277
Sales revenue		45,500
Information on December 31 (Ending):
Direct materials inventory	$	99
Work-in-process inventory		140
Finished goods inventory		1,430

Required:

Prepare an income statement with a supporting cost of goods sold statement. (Enter your answers in thousands of dollars (i.e., 234,000 should be entered as 234).)

YOLO WINDOWS
Income Statement
For the Year Ended December 31
($000)

?		?
?		?
?		?
?	?
?	?
?	?
Total marketing and administration cost
?		?

YOLO WINDOWS

Statements of Cost of Good Sold

For the Year Ended December 31

($000)

?			?
Manufacturing cost:
Direct Material:	?
?	?
?	?
?	?
?	?
?		?
?		?
Manufacturing overhead:
?	?
?	?
?	?
?	?
?	?
?	?
?	?
?	?
Total Manufacturing overhead		0
Total manufacturing costs			?
Total cost of work in process during the year			?
?			?
Cost of goods manufactured during the year			?
?			?
?			?
?			?
cost of goods sold			?

bronzecockroach220

Case 3-49

Avid Assemblers uses normal job-order costing to assign costs toproducts. The company assembles and packages 25 different productsaccording to customer specifications. Products are worked on inbatches of 20 to 40 units. Each batch is given a job number. OnOctober 1, the company had the following balances:

Raw materials		$9,800
Work in process		65,847
Finished goods		30,640

Work in process consisted of the following jobs:

	Job 22	Job 24	Job 25
Direct materials	$6,200	$5,190	$4,800
Direct labour	10,500	9,210	9,500
Applied overhead	7,350	6,447	6,650
Total	$24,050	$20,847	$20,950
Number of units	20	40	30

Finished goods consisted of Job 23, with the following costs:

		Job 23
Direct materials		$8,200
Direct labour		13,200
Applied overhead		9,240
Total		$30,640
Number of units		50

Shown below are the direct cost data related to jobs started inOctober:

	Job 26	Job 27	Job 28	Total
Direct materials	$5,180	$5,600	$4,200	$14,980
Direct labour	11,200	9,340	5,910	26,450
Number of units	20	30	20

Other information:

Direct materials and direct labour added tobeginning work in process in October were as follows:

	Job 22	Job 24	Job 25	Total
Direct materials	$1,150	$610	$1,500	$3,260
Direct labour	3,000	4,500	5,500	$13,000

Overhead is applied at a predetermined rate basedon the direct labour cost.

Actual expenses for October were as follows:

Supervisory salaries	$6,000	Supplies (factory)	$2,100
Factory rent	5,000	Selling expenses	8,500
Depreciation (machines)	5,000	Property tax and insurance	2,250
Indirect labour	4,000	CPP, EI, and other benefits*	4,200

* 80% of employer contributions and benefits relate to factorypersonnel.

Purchases of direct materials (raw materials)during October amounted to $28,500. Indirect materials (supplies)are handled in a separate account.

Only Job Nos. 27 and 28 are still in process atclosing on October 31. Finished goods consisted only of Job No. 25at month end.

Avid writes off any under- and over-applied overhead to Cost ofGoods Sold in the month in which it is incurred.

Requirements:

a.Calculate Predetermined overhead rate

b.Calculate Unit cost of job 24 in October

c.Calulate the Oct 31 Balances for the following account:

Raw Materials, Work in Process, Finished Goods

d.What is the cost of goods manufactured?

e. Determine the under- or over- paid in October

Prepare the journal entry to dispose of this amount.

byzantiumprairie-dog733

1.A key difference between managerial and financial accounting is that

Managerial is only historical data and financial is only future data

Managerial users are typically internal and financial users typically external

Managerial is highly regulated and financial is not

Financial uses much more economic data than managerial
--------------------
2.An example of a period cost in accounting would be

		Materials to make a product
		A factory supervisorÃ¢ s wages
		Brochures used to sell the product
		Depreciation of manufacturing equipment

---------------------

3.Major inventory accounts in a manufacturing environment typically include all of the following except

Raw materials

Work in progress

Office supplies

Finished goods

------------------------

4.When a business is able to simultaneously reduce inventory holding costs and increase customer satisfaction by making products available exactly when a customer wants them, it is likely using

Seasonal control

Just in time inventory management

Factors of production planning

Supply chain distribution
----------------

5.An example of a direct product cost would be

		Prepaid rent of the retail store
		Health insurance costs for sales teams
		Product parts
		The factory janitorial staffÃ¢ s wages

6.An example of manufacturing overhead (indirect product costs) may be all of the following except

		Equipment depreciation
		Plant electric costs
		Materials to make a product
		A factory supervisorÃ¢ s wages

tanferret348

ACC M118 Lecture Notes - Lecture 5: Gross Margin, Earnings Before Interest And Taxes, Security Guard

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