Chapter 16: Q2RQ (page 859)
Question: What is an annual report? Briefly describe the key parts of the annual report.
Answer
An annual report is all about the financial performance and other activities of an organization in the last preceding years
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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.
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
e. Cost of chemicals to treat the paper.
Classifying period costs and product costs
Langley, Inc. is the manufacturer of lawn care equipment. The company incurs the following costs while manufacturing edgers:
• Handle and shaft of edger
• Motor of edger
• Factory labor for workers assembling edgers
• Lubricant used on bearings in the edger (not traced to the product)
• Glue to hold the housing together
• Plant janitorial wages
• Depreciation on factory equipment
• Rent on plant
• Sales commissions
• Administrative salaries
• Plant utilities
• Shipping costs to deliver finished edgers to customers
Requirements
1. Describe the difference between period costs and product costs.
2. Classify Langley’s costs as period costs or product costs. If the costs are product costs, further classify them as direct materials, direct labor, or manufacturing overhead.
Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA):
5. Summary reports prepared quarterly or annually.
Comparing managerial accounting and financial accounting
For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):
c. Helps in planning and controlling operations
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