Chapter 14: Q15DQ (page 655)
Besides inventories, what other assets often appear on manufacturers’ balance sheets but not on merchandisers’ balance sheets?
Manufacturing tools, factory buildings, machinery, and patents.
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Refer to the information in Exercise 14-13 to prepare an income statement for Delray Mfg. (a manufacturer). Assume that its cost of goods manufactured is $534,390.
Listed below are costs of providing an airline service. Classify each cost as (a) either variable (V) or fixed (F), and (b) either direct (D) or indirect (I). Consider the cost object to be a flight. Flight attendants and pilots are paid based on hours of flight time.
Cost | a. Variable or Fixed | b. Direct or Indirect |
1. Advertising | ||
2. Beverages and snacks | ||
3. Regional vice president salary | ||
4. Depreciation (straight-line) on ground equipment | ||
5. Fuel and oil used in planes | ||
6. Flight attendant wages | ||
7. Pilot wages | ||
8. Aircraft maintenance manager salary | ||
9. Customer service salaries |
Question: Current assets for two different companies at fiscal year-end 2017 are listed here. One is a manufacturer, Rayzer Skis Mfg., and the other, Sunrise Foods, is a grocery distribution company.
1. Identify which set of numbers relates to the manufacturer and which to the merchandiser.
2. Prepare the current asset section for each company from this information. Discuss why the current asset section for these two companies is different.
Account | Company 1 | Company 2 |
Cash | \(7,000 | \)5,000 |
Raw material inventory | 42,000 | |
Merchandise inventory | 45,000 | - |
Work-in-process inventory | - | 30,000 |
Finished goods inventory | - | 50,000 |
Accounts receivable net | 62,000 | 75,000 |
Prepaid expenses | 1,500 | 900 |
Diez Company produces sporting equipment, including leather footballs. Identify each of the following costs as direct (D) or indirect (I). The cost object is a football produced by Diez.
TechPro offers instructional courses in e-commerce website design. The company holds classes in a building that it owns. Classify each of TechPro’s costs below as (a) variable (V) or fixed (F), and (b) direct (D) or indirect (I). Assume the cost object is an individual class.
a. | b. | a. | b. | ||
1. Depreciation of the classroom building | 4. Travel expenses for salesperson | ||||
2. Monthly Internet connection cost | 5. Depreciation on computers used for classes | ||||
3. Instructional manuals for students | 6. Instructor wage (per class) |
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