Chapter 16: 18RQ (page 885)
How does a manufacturing company calculate unit product cost?
The unit product cost is calculated using the formulae which is the cost of goods manufactured and divided by the total units produced
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Explain the difference between line positions and staff positions.
Identifying ethical standards
The Institute of Management Accountants’ Statement of Ethical Professional Practice requires managerial accountants to meet standards regarding competence, confidentiality, integrity, and credibility. Consider the following situations. Which standard(s) is(are) violated in each situation?
b. You see others take home office supplies for personal use. As an intern, you do the same thing, assuming that this is a “perk.”
List the four IMA standards of ethical practice, and briefly describe each.
Preparing an income statement and calculating unit cost for a merchandising company
Dillon Young owns Dillon’s Pets, a small retail shop selling pet supplies. On December 31, 2018, the accounting records for Dillon’s Pets showed the following:
Merchandise Inventory on December 31, 2018 $ 10,500
Merchandise Inventory on January 1, 2018 16,000
Net Sales Revenue 56,000
Utilities Expense for the shop 3,200
Rent for the shop 4,100
Sales Commissions 2,750
Purchases of Merchandise Inventory 25,000
Requirements
1. Prepare an income statement for Dillon’s Pets for the year ended December 31, 2018.
2. Dillon’s Pets sold 5,550 units. Determine the unit cost of the merchandise sold, rounded to the nearest cent.
What are the three manufacturing costs for a manufacturing company? Describe each.
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