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Chapter 2

Chapter 2 in class questions_solution_only.pdf

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Department
Accounting
Course
ACCTG424
Professor
Trish Stringer
Semester
Fall

Description
#2.1 Classification of costs, manufacturing sector Required Cost Items D or I V or F A. Cost of tires used on Geos B. Salary of public relations manager for The Car Company plant C. Annual awards dinner for Coras’ suppliers D. Salary of engineer who monitors design changes on Geos E. Freight costs of Coras engines shipped from Japan, to Edmonton F. Electricity costs for The Car Company plant (single bill covers entire plant) G. Wages paid to temporary assembly-line workers hired in periods of high production (paid on an hourly basis) H. Annual fire-insurance policy cost for The Car Company plant Cost object: Type of car assembled (Coras or Geos) Cost variability: With respect to changes in the number of cars assembled There may be some debate over classifications of individual items. Debate about cost variability is more likely. Cost Item D or I V or F A D V B I F C D F D D F E D V F I V or F or M G D V H I F #2.2 Income statement and schedule of cost of goods manufactured Required 1 Powell Corporation Schedule of Cost of Goods Manufactured For the Year Ended December 31, 2013 (in millions) Direct materials costs: Beginning inventory, Jan. 1, 2013 $ 15 Purchases of direct materials 390 Cost of direct materials available for use 405 Ending inventory, Dec. 31, 2013 20 Direct materials used $385 Direct manufacturing labour costs 120 Indirect manufacturing costs: Indirect manufacturing labour 60 Plant supplies used 12 Plant utilities 36 Amortization—plant, building, and equipment 96 Plant supervisory salaries 6 Miscellaneous plant overhead 42 252 Manufacturing costs incurred during 2013 757 Add beginning work in process inventory, Jan. 1, 2013 10 Total manufacturing costs to account for 767 Deduct ending work in process, Dec. 31, 2013 5 Cost of goods manufactured $762 Powell Corporation Income Statement For the Year Ended December 31, 2013 (in millions) Revenue $1,140 Cost of goods sold: Beginning finished goods, Jan. 1, 2013 $ 70 Cost of goods manufactured (below)
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