Chapter 14: Q1`DQ (page 654)
Describe the managerial accountant’s role in business planning, control, and decision making.
A managerial accountant analyzes sales figures and costs, identifies past trends, and predicts future trends.
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Nestlé reports beginning raw materials inventory of 3,815 and ending raw materials inventory of 3,499 (both numbers in millions of Swiss francs). Assume Nestlé purchased 13,860 and used 14,176 (both amounts in millions of Swiss francs) in raw materials during the year. Compute raw materials inventory turnover and the number of days’ sales in raw materials inventory.
Question: Identify whether each description most likely applies to managerial (M) or financial (F) accounting.
Question: The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Best Bikes.
Advertising expenses | $20,250 | Miscellaneous production costs | 8,440 |
Depreciation expenses – office equipment | 8,440 | Office salaries expenses | 70,875 |
Depreciation expenses – selling equipment | 10,125 | Raw material purchases | 894,375 |
Depreciation – Factory equipment | 35,400 | Rent expenses – office space | 23,625 |
Factory supervision | 121,500 | Rent expenses – selling space | 27,000 |
Factory supplies used | 6,060 | Rent expenses – Factory building | 93,500 |
Factory Utilities | 37,500 | Maintenance expenses – factory equipment | 30,375 |
Direct labor | 562,500 | Sales | 4,942,625 |
Indirect labor | 59,000 | Sales salaries expenses | 295,300 |
Required
1. Classify each cost as either a product or period cost.
2. Classify each product cost as either direct materials, direct labor, or factory overhead.
3. Classify each period cost as either selling expenses or general and administrative expenses.
Listed here are the total costs associated with the 2017 production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for \(500 each.
| COSTS | Variable or fixed | Product or period | ||
Variable | Variable | Fixed | Product | Period |
1. Plastic for casting - \)17,000 | ||||
2. Wages of assembly workers - \(82,000 | ||||
3. Property taxes on factory—\)5,000 | ||||
4. Accounting staff salaries—\(35,000 | ||||
5. Drum stands (1,000 stands purchased)—\)26,000 | ||||
6. Rent cost of equipment for sales staff—\(10,000 | ||||
7. Upper management salaries—\)125,000 | ||||
8. Annual flat fee for factory maintenance service—\(10,000 | ||||
9. Sales commissions—\)15 per unit | ||||
10. Machinery depreciation, straight-line—$40,000 | ||||
Required
1. Classify each cost and its amount as (a) either variable or fixed and (b) either product or period. (The first cost is completed as an example.)
2. Compute the manufacturing cost per drum set.
Analysis Component
3. Assume that 1,200 drum sets are produced in the next year. What do you predict will be the total cost of plastic for the casings and the per unit cost of the plastic for the casings? Explain.
4. Assume that 1,200 drum sets are produced in the next year. What do you predict will be the total cost of property taxes and the per unit cost of the property taxes? Explain.
Compute cost of goods sold for 2017 using the following information.
Finished goods inventory, Dec. 31, 2016 . . . . . . . . . . . . . . . . . $345,000
Work in process inventory, Dec. 31, 2016 . . . . . . . . . . . . . . . . 83,500
Work in process inventory, Dec. 31, 2017 . . . . . . . . . . . . . . . . 72,300
Cost of goods manufactured, 2017 . . . . . . . . . . . . . . . . . . . . . . 918,700
Finished goods inventory, Dec. 31, 2017 . . . . . . . . . . . . . . . . . 283,600
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