ACCOUNTING: What the Numbers Mean, 9e Chapter 13 Problem 13.22 Name: Enter Name General Spreadsheet Instructions: Step 1: Review General Spreadsheet Instructions Complete the problem requirements by entering appropriate Step 2: Review dollar amounts or Problem 13.22 formulas in "shaded" Worksheet worksheet cells Step 3: Complete Analysis Worksheet Step 4: Respond to "What the Numbers Mean" Worksheet ACCOUNTING: What the Numbers Mean, 9e Chapter 13 Problem 13.22 Name: Enter Name Problem Description: Big Thunder Company incurred the following costs during April: Raw material purchased $ 99,225 Direct labor ($15.00 per hour) 123,750 Manufacturing overhead (actual) 203,175 Selling expenses 67,050 Administrative expenses 33,075 Interest expense 11,490 Manufacturing overhead is applied on a basis of $37.50 per direct labor hour. Assume that overapplied or underapplied is transferred to cost of goods sold only an the end of the year. During the month, 7,500 units of the product were manufactured and 7,950 units of product were sold. On April 1 and April 30, Big Thunder Co. carried the following inventory balances: 1-Apr 30-Apr Raw Materials $ 41,160 $ 37,590 Work in Process 111,720 119,640 Finished Goods 88,000 56,320 Instructions: Please proceed to the "Analysis" worksheet and complete the basic problem requirements. Complete the problem requirements by entering appropriate amounts or formulas in shaded worksheet cells: a. Complete the flow of manufacturing costs analysis b. Prepare a Statement of Cost of Goods Manufactured for the month of April c. Calculate the average cost per unit of product manufactured d. Prepare a Schedule of Cost of Goods Sold e. Prepare a traditional (absorption) Income Statement for Big Thunder Co. for the month of April. Assume that sales for the month were $722,925 and the company's effective income tax rate was 40% After completing the "Analysis" worksheet, please proceed to the "What the Numbers Mean" worksheet and respond to the additional problem requirements. ACCOUNTING: What the Numbers Mean, 9e Chapter 13 Problem 13.22 Name: Enter Name Flow of Costs Analysis: Raw Material Work in Process Finished Goods BI: BI: RM Pur: - RM Used - - CGM - - CGS DL Cost EI: OH Applied - EI: Manufacturing OH Cost of Goods Sold Actual OH OH Applied - Overhead Rate per DLH: Under Over x Direct Labor Hours: Applied OH Applied OH Complete the Modeling: Big Thunder Company Statement of Cost of Goods Manufactured Big Thunder Company Raw Materials: Inventory, April 1 Purchases during April Raw material available for use Less: Inventory, April 30 Cost of raw material used Direct labor cost incurred Manufacturing overhead applied Total manufacturing costs, April Add: Work-in-process, April 1 Less: Work-in-process, April 30 Cost of goods manufactured, April Cost per unit, April Units Produced: Schedule of Cost of Goods Sold Finished Goods, April 1 Cost of goods manufactured Cost of goods available for sale Less: Finished goods, April 30 Cost of Goods Sold Big Thunder Company Income Statement For the Month of April Sales Units Sold: Cost of goods sold Gross profit Selling and administrative expenses Operating income Interest expense Income before taxes Income tax expense Net income ACCOUNTING: What the Numbers Mean, 9e Chapter 13 Problem 13.22 Name: Enter Name What does it mean? Question 1: Calculate the difference between cost of goods manufactured and cost of goods sold. How will this amount be reported in the financial statements? Difference = What does it mean? Question 2: Suppose that only 7,050 units of product were sold during April. What changes would you observe in the Statement of Cost of Goods Manufactured, the Schedule of Cost of Goods Sold, and the Income Statement? What does it mean? Question 3: Manufacturing overhead for April is overapplied by $6,200. Give an example that would explain how this result is possible. Assume the $6,200 represented the final total for the year, would the income statement and balance sheet be correct? What would you do with the overapplied overhead?
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