Chapter 16: 15RQ (page 885)
How do period costs differ from product costs?
The major difference is that period costs are a normal operating expense and product costs are incurred on producing goods.
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What are product costs?
ABC Manufacturing Company has the following data for 2019 (amounts in millions):
Direct Materials, January 1 $ 5
Direct Materials, December 31 7
Work-in-Process Inventory, January 1 12
Work-in-Process Inventory, December 31 16
Finished Goods Inventory, January 1 8
Finished Goods Inventory, December 31 6
Direct Materials Purchased, including Freight In 25
Direct Labor 36
Manufacturing Overhead 17
Prepare the schedule of cost of goods manufactured and the cost of goods sold section of the income statement for the year ended December 31, 2019.
Question:Preparing an income statement and calculating unit cost for a service company
The Windshield Doctors repair chips in car windshields. The company incurred the following operating costs for the month of March 2018:
Salaries and wages \( 12,000
Windshield repair materials 4,600
Depreciation on truck 300
Depreciation on building and equipment 1,200
Supplies used 300
Utilities 460
The Windshield Doctors earned \)23,000 in service revenues for the month of March by repairing 500 windshields. All costs shown are considered to be directly related to the repair service.
Requirements
1. Prepare an income statement for the month of March.
2. Compute the cost per unit of repairing one windshield.
3. The manager of Windshield Doctors must keep unit operating cost below $50 per windshield in order to get his bonus. Did he meet the goal?
Preparing a schedule of cost of goods manufactured and an income statement for a manufacturing company
Certain item descriptions and amounts are missing from the monthly schedule of cost of goods manufactured and income statement of Charlie Manufacturing Company. Fill in the blanks with the missing words, and replace the Xs with the correct amounts.
ing Direct Ending Direct Direct Manufacturing Overhead Total Costs Total Costs Ending Direct Materials Beginning Direct Materials Purchases of Direct Materials \( 26,000 \) X \( X X X (29,000) 177,000 50,000 \) X 51,000 81,000 (26,000) C
Net Sales Revenue Cost of Goods Sold Total Income Cost of Goods Sold: Gross Profit Expenses: Selling Expenses Administrative Expenses Cost of Goods Ending Beginning \( X 232,000 268,000 X 150,000 90,000 \) 118,000 X X X $ X CHARLIE MANUFACTURING COMPANY June 30
Selected data for three companies are given below. All inventory amounts are ending balances and all amounts are in millions.
Company A Company B Company C
Cash \( 6 Wages Expense \) 12 Administrative Expenses $ 4
Net Sales Revenue 48 Equipment 32 Cash 25
Finished Goods Inventory 10 Accounts Receivable 8 Net Sales Revenue 75
Cost of Goods Sold 23 Service Revenue 65 Selling Expenses 8
Selling Expenses 4 Cash 34 Merchandise Inventory 12
Equipment 67 Rent Expense 12 Equipment 55
Work-in-Process Inventory 9 Accounts Receivable 19
Accounts Receivable 14 Cost of Goods Sold 25
Cost of Goods Manufactured 23
Administrative Expenses 7
Raw Materials Inventory 6
Using the data on the previous page, calculate total current assets for each company
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