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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What are the three categories of manufacturing costs?
Manufacturing activities of a company are described in the . This schedule summarizes the types and amounts of costs incurred in its manufacturing.
Describe the relations among the income statement, the schedule of cost of goods manufactured, and a detailed listing of factory overhead costs.
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 |
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.
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