Chapter 16: Q4RQ (page 884)
Explain the differences between planning, directing, and controlling.
The planning setting up of a goal, directing is working towards the goal, and controlling is checking whether the work is done as per the planning.
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Calculating cost of goods sold for merchandising and manufacturing companies
Below are data for two companies:
Company 1 Company 2
Beginning balances:
Merchandise Inventory \( 11,600
Finished Goods Inventory \) 15,400
Ending balances:
Merchandise Inventory 12,400
Finished Goods Inventory 11,300
Net Purchases 152,500
Cost of Goods Manufactured 214,500
Requirements
1. Define the three business types: service, merchandising, and manufacturing.
2. Based on the data given for the two companies, determine the business type of each one.
3. Calculate the cost of goods sold for each company
Computing cost of goods manufactured
Consider the following partially completed schedules of cost of goods manufactured. Compute the missing amounts.
Banner, Inc. Larry’s Bakery Sports Gear
Beginning Work-in-Process Inventory \( (a) \) 40,800 \( 2,200
Direct Materials Used 14,400 35,900 (g)
Direct Labor 10,300 20,100 1,900
Manufacturing Overhead (b) 10,000 900
Total Manufacturing Costs Incurred during the Year 45,200 (d) (h)
Total Manufacturing Costs to Account for 55,400 (e) 8,300
Ending Work-in-Process Inventory (c) (25,500) (2,600)
Cost of Goods Manufactured \) 50,500 \( (f) \) (i)
What are the three manufacturing costs for a manufacturing company? Describe each.
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
Question:Calculating income and cost per unit for a merchandising company
Conway Brush Company sells standard hair brushes. The following information summarizes Conway’s operating activities for 2018:
Selling and Administrative Expenses $ 47,058
Purchases 85,800
Net Sales Revenue 151,800
Merchandise Inventory, January 1, 2018 7,920
Merchandise Inventory, December 31, 2018 11,748
Requirements
1. Calculate the operating income for 2018.
2. Conway sold 6,600 brushes in 2018. Compute the unit cost for one brush.
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