Chapter 14: Q18DQ (page 655)
What are the three categories of manufacturing costs?
Material, labor,and overhead.
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Using the data from Problem 14-2A and the following additional inventory information for Leone Company, complete the requirements below. Assume income tax expense is \(233,725 for the year.
Inventories | |
Raw material, December 31, 2016 | \)166,850 |
Raw materials, December 31, 2017 | 182,000 |
Work in process, December 31, 2016 | 15,700 |
Work in process, December 31, 2017 | 19,380 |
Finished goods, December 31, 2016 | 167,350 |
Finished goods, December 31, 2017 | 136,490 |
Required
1. Prepare the company’s 2017 schedule of cost of goods manufactured.
2. Prepare the company’s 2017 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.
Analysis Component
3. Compute the (a) inventory turnover, defined as cost of goods sold divided by average inventory, and (b) days’ sales in inventory, defined as 365 times ending inventory divided by cost of goods sold, for both its raw materials inventory and its finished goods inventory. (To compute turnover and days’ sales in inventory for raw materials, use raw materials used rather than cost of goods sold.) Discuss some possible reasons for differences between these ratios for the two types of inventories. Round answers to one decimal place.
Beck Manufacturing reports the account information below for 2017. Using this information:
1. Prepare the schedule of cost of goods manufactured for the year.
2. Compute cost of goods sold for the year.
Raw Materials Inventory
Begin. inv. 10,000
Purchases 45,000
Avail. for use 55,000
End. inv. 8,500 DM used 46,500
Work in Process Inventory
Begin. inv. 14,000
DM used 46,500
Direct labor 27,500
Overhead 55,000 Avail. for mfg. 143,000
End. inv. 12,000 Cost of goods mfg. 131,000
Finished Goods Inventory
Begin. inv. 16,000
Cost of goods mfg. 131,000
Avail. for sale 147,000 Cost of goods sold 129,000
End. inv. 18,000
In its recent annual report and related Corporate Responsibility Report, Hyatt provides information on company performance on several dimensions. Indicate whether the following items below best fit into the financial (label your answer “Profit”), social (label your answer “People”), or environmental (label your answer “Planet”) aspects of triple bottom line reporting.
1.Sales revenue totaled \(4.4 billion.
2. Increased women in management positions by 8%.
3. Reduced water consumption at its hotels.
4. Invested in career programs in Brazil.
5. Operating cash flows totaled \)473 million.
6. Earned awards for best LGBT workplace.
7. 84% of hotels recycle at least one waste stream.
8. Invested in reading programs for young students.
9. Focused on maximizing long-term shareholder value.
Explain how business activities and inventories for a manufacturing company, a merchandising company, and a service company differ.
How do an income statement and a balance sheet for a manufacturing company and a merchandising company differ?
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