Question

Question: The following calendar-year information is taken from the December 31, 2017, adjusted trial balance and other records of Dahlia Company

Advertising expense	\( 19,125	Direct labor	\) 650,750
Depreciation expense—Office equipment	8,750	Indirect labor	60,000
Depreciation expense—Selling equipment	10,000	Miscellaneous production costs	8,500
Depreciation expense—Factory equipment	32,500	Office salaries expense	100,875
Factory supervision	122,500	Raw materials purchases	872,500
Factory supplies used	15,750	Rent expense—Office space	21,125
Factory utilities	36,250	Rent expense—Selling space	25,750
Inventories		Rent expense—Factory building	79,750
Raw materials, December 31, 2016	177,500	Maintenance expense—Factory equipment	27,875
Raw materials, December 31, 2017	168,125	Sales	3,275,000
Work in process, December 31, 2016	15,875	Sales discounts	57,500
Work in process, December 31, 2017	14,000	Sales salaries expense	286,250
Finished goods, December 31, 2016	164,375
Finished goods, December 31, 2017	129,000

Required

1. Each team member is to be responsible for computing one of the following amounts. You are not to duplicate your teammates’ work. Get any necessary amounts from teammates. Each member is to explain the computation to the team in preparation for reporting to class.
   1. Materials used
   2. Factory overhead
   3. Total manufacturing costs
   4. Total cost of work in process
   5. Cost of goods manufactured
2. Check your cost of goods manufactured with the instructor. If it is correct, proceed to part 3.
3. Each team member is to be responsible for computing one of the following amounts. You are not to duplicate your teammates’ work. Get any necessary amounts from teammates. Each member is to explain the computation to the team in preparation for reporting to class.
   1. Net sales
   2. Cost of goods sold
   3. Gross profit
   4. Total operating expenses
   5. Net income or loss before taxes

Short answer

Answer

1. a) The material used is $881,875

b) Factory overhead is $ 383,125

c) Total manufacturing costs is $1,915,750

d) Total goods in the process are $1,931,625

e) Cost of goods manufactured is $1,917,625

2) It is assumed the cost of goods manufactured is the same.

3) a) Net sales are $3,217,500

b) Cost of goods sold is $1,953,000

c) Gross profit is $1,264,500

d) Total operating expense is $471,875

e) Net income before taxes is $792,625

Step-by-step solution

Meaning of Managerial Accounting

Managerial accounting refers to presenting the business analysis to the management so that they can make various business decisions.

(1) Computation of cost  

1. Material used

Particulars	Amount
Beginning material	$177,500
Add: Material purchased	$872,500
Less: End material	($168,125)
Material used	$881,875

1. Factory overhead

Particulars	Amount
Depreciation of factory equipment	$32,500
Factory supervision	$122,500
Factory supplies used	$15,750
Factory utilities	$36,250
Indirect labor	$60,000
Miscellaneous production costs	$8,500
Rent on factory building	$79,750
Maintenance of factory equipment	$27,875
Factory overhead	$383,125

1. Total manufacturing costs

Particulars	Amount
The material used (from a)	$881,875
Direct labor	$650,750
Factory overhead (from b)	$383,125
Total manufacturing costs	$1,915,750

1. Total goods in process

Particulars	Amount
Beginning goods in process inventory.	$15,875
Add: Total manufacturing costs (from c)	$1,915,750
	$1,931,625

1. Cost of goods manufactured

Particulars	Amount
The total cost of goods in the process (from d)	$1,931,625
Less: Ending goods in the process inventory	($14,000)
Cost of goods manufactured	$1,917,625

(2) Checking the cost of goods manufactured with the instructor

It is assumed that the cost of manufactured items, $1,917,625, is the same as that of the instructor.

(3) Computing various cost

1. Net sales

$$\begin{gathered} Net sales=Sales-Salesdiscount \\ =\$3,275,000-\$57,500 \\ =\$3,217,500 \end{gathered}$$

1. Cost of goods sold

Particulars	Amount
Beginning finished goods	$164,375
Add: Cost of goods manufactured (from e)	$1,917,625
Less: Ending finished goods	($129,000)
Cost of goods sold	$1,953,000

1. Gross profit

Particulars	Amount
Net sales (from a)	$3,217,500
Less: Cost of goods sold (from b)	($1,953,000)
Gross Profit	$1,264,500

1. Total operating expenses

Particulars	Amount
Advertising expense	$19,125
Depreciation expense on office equipment	$8,750
Depreciation expense on selling equipment	$10,000
Office salaries expense	$100,875
Rent expense on office space	$21,125
Rent expense on selling space	$25,750
Sales salary expense	$286,250
Total operating expenses	$471,875

1. Net income or loss

Particulars	Amount
Gross Profit	$1,264,500
Less: Total operating expenses	($471,875)
Net Income	$792,625