Problem 13.22 by DI0rR5B

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									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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