Chapter 16: Q19RQ (page 885)
How does a service company calculate unit cost per service?
The cost per service is computed by dividing the total number of services produced by total costs.
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Question:Determining flow of costs through a manufacturer’s inventory accounts
Root Shoe Company makes loafers. During the most recent year, Root incurred total manufacturing costs of \(26,300,000. Of this amount, \)2,000,000 was direct materials used and \(19,800,000 was direct labor. Beginning balances for the year were Direct Materials, \)700,000; Work-in-Process Inventory, \(1,500,000; and Finished Goods Inventory, \)400,000. At the end of the year, balances were Direct Materials, \(800,000; Work-in-Process Inventory, \)1,200,000; and Finished Goods Inventory, $600,000.
Requirements Analyze the inventory accounts to determine:
1. Cost of direct materials purchased during the year.
2. Cost of goods manufactured for the year.
3. Cost of goods sold for the year.
Computing cost of goods sold, merchandising company
Use the following information for The Windshield Helper, a retail merchandiser of auto windshields, to compute the cost of goods sold:
Web Site Maintenance $ 7,900
Delivery Expense 400
Freight In 2,400
Purchases 47,000
Ending Merchandise Inventory 5,500
Revenues 63,000
Marketing Expenses 10,700
Beginning Merchandise Inventory 8,600
Computing cost of goods manufactured and cost of goods sold
Use the following information for a manufacturer to compute cost of goods manufactured and cost of goods sold:
Balances: Beginning Ending
Direct Materials \( 27,000 \) 28,000
Work-in-Process Inventory 40,000 32,000
Finished Goods Inventory 18,000 25,000
Other information:
Purchases of direct materials $ 73,000
Direct labor 88,000
Manufacturing overhead 43,000
Match the term with the correct definition.
1. A philosophy designed to integrate all organizational areas in order to provide customers with superior products and services while meeting organizational objectives. Requires improving quality and eliminating defects and waste.
2. Use of the Internet for business functions such as sales and customer service. Enables companies to reach customers around the world.
3. Evaluating a company’s performance by its economic, social, and environmental impact.
4. Software system that integrates all of a company’s functions, departments, and data into a single system.
5. A system in which a company produces products just when they are needed to satisfy needs. Suppliers deliver materials when they are needed to begin production, and finished units are completed at the right time for delivery to customers.
a. ERP b. JIT c. E-commerce d. TQM e. Triple bottom line
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
g. Depreciation on the manufacturing plant.
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