Chapter 16: Q2RQ (page 884)
List six differences between financial accounting and managerial accounting.
Financial accounting provides information for external users and the difference between financial accounting and managerial accounting is prepared.
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Calculating unit cost per service
Marx and Tyler provides hair-cutting services in the local community. In February, the business cut the hair of 190 clients, earned \(4,800 in revenues, and incurred the following operating costs:
Hair Supplies Expense \) 950
Wages Expense 548
Utilities Expense 190
Depreciation Expense—Equipment 60
What was the cost of service to provide one haircut?
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.
Classifying costs Wheels, Inc. manufactures wheels for bicycles, tricycles, and scooters. For each cost given below, determine if the cost is a product cost or a period cost. If the cost is a product cost, further determine if the cost is direct materials (DM), direct labor (DL), or manufacturing overhead (MOH) and then determine if the product cost is a prime cost, conversion cost, or both. If the cost is a period cost, further determine if the cost is a selling expense or administrative expense (Admin). Cost (a) is answered as a guide
Cost Product Period
DM DL MOH Prime Conversion Selling Admin.
a. Metal used for rims
b. Sales salaries
c. Rent on factory
d. Wages of assembly workers
e. Salary of production supervisor
f. Depreciation on office equipment
g. Salary of CEO
h. Delivery expense
Describe a merchandising company, and give an example.
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 Elly Manufacturing Company. Fill in the blanks with the missing words, and replace the Xs with the correct amounts.
Beginning Direct Ending Direct Direct Manufacturing Overhead Total Total Ending Direct Materials Beginning Direct Materials Purchases of Direct Materials \( 27,000 \) X \( X X X (25,000) 180,000 44,000 \) X 56,000 84,000 (20,000) ELLY MANUFACTURING COMPANY
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 \( X \) X 232,000 258,000 X 160,000 98,000 $ 110,000 X X X E
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