Monday, March 29th, 1999
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Lecture notes:

4. They are both responsible for summarizing and reporting information for interested parties.

6. Financial accounting is for those outside an organization, used double-entry accounting, and must adhere to generally accepted guidelines. Management accounting is for those within the company (managers), is more flexible in its accounting systems, and has no set guidelines.

8. Pricing and delivery dates, production operations, saleability and profitability, budgets, information about production planning and scheduling, product-line management and development, cash management, capital expenditures, product quality levels, customer satisfaction, selling, distribution, information for external reporting and computing taxes.

17. Manufacturing companies make the product, and merchandising companies purchase products ready for sale. Therefore, manufacturing companies have to account for the cost of materials and products in progress as well as finished goods.

Exercises

SDE4

1.

Difference
	Pounds	Percentage
Machine #1:
Week 1	0	0%
Week 2	18,000	49.6%
Week 3	36,000	100.4%
Week 4	46,800	131.3%
Machine #2:
Week 1	25,020	137.6%
Week 2	21,546	119.3%
Week 3	- 10,962	- 60.4%
Week 4	- 108	- 0.6%

2. Machine #1.
3. Production errors.

2. Direct materials, direct labor, indirect manufacturing

8. It is a manufacturing cost that cannot be classified as direct materials or direct labor.

10. Materials: materials, parts, and supplies on hand
Work In Process: products being produced
Finished Goods: all completed but unsold products

12. Product costs can be inventoried and period costs cannot.

16. COGS = Beginning Finished Goods + COGM - End Finished Goods

17. Yes, although service companies have no materials costs, they do still have other costs in order to provide the service.

Short Exercises

6.

Net Sales							900,000
		Beg Fin Goods	45,000
		+ COGM	+ 585,000
		- End Fin Goods	- 60,000
		COGS	570,000		- 570,000
Gross Margin					330,000
Operating Expenses					- 270,000
Income from Operations					60,000
	Less Interest				- 5,000
	Income Before Taxes				55,000
	Less Taxes				- 18,700
Net Income					36,300

5.

1)	Period costs:	a,b,f,g,l,m,n,t
	Product costs:	c,d,e,h,i,j,k,o,p,q,r,s
2)	Direct costs:	c,e,h,i,p,q,s
	Indirect costs:	a,b,d,f,g,j,k,l,m,n,o,r,t

7.

Beginning WIP	54,250
+ Direct Materials	+ 137,500
+ Direct Labor	+ 29,750
+ Factory Overhead	+ 38,350
- End WIP	- 48,400
COGM	211,450

A2.

1)	Department 85 = 5.45
	Department 82 = 1.41
2)	Total Cost = 6.86
3)	Yes, because the selling cost exceeds the manufacturing cost per unit.

2. A job order cost system is a product costing system used by companies that make large, unique, or special order products.

4. It assigns a representative portion of all types of manufacturing costs to individual products.

6. Develop overhead costs and estimates and develop allocation basis estimates.

12. You must make a journal entry adjusting all accounts affected.

2.

1)	Process cost
2)	Job order
3)	Job order
4)	Process cost
5)	Process cost
6)	Job order

4.

1)	7.6
2)	7.683

5.

1)	$1,145,000
2)	12.72
3)	16A4:	31,673
	21C2:	66,398
	17A3:	54,314
		152,385

6. Job order --> products and costs --> balance sheet --> COGS --> income statement --> period costs --> accounting records --> direct materials, labor, and overhead --> job order --> etc.

10.

	A-25		A-27		B-14
Direct materials	27,500	32,100		42,000
Direct labor	19,300	22,700		31,500
Factory overhead	23,160	27,240		37,800
Total cost	69,960	82,040		111,300
Unit cost	99.94	105.86		75.10

11.

A1.

1)	Factory Overhead Costs, 19X9:
	Indirect labor				30,589
	Emp. Bin.				37,180
	Manufacturing Supplies				20,328
	Utilities				20,286
	Jan. Services				13,310
	Depreciation				25,560
	Misc.				9717.5
	Total Overhead				166,330.5
	Overhead Rate				2.416
2)	Job No.		Overhead Applied
	2214		29,717
	2215		34,307
	2216		23,667
	2217		32,858
	2218		27,301
	2219		19,570
	Total		167,430
3)	COGS			485.5
		Factory Overhead Control				485.5

A4. The answer is in the packet.

Chapter 26 Homework

2.

Cut /stitch = $36

Trim / pac = $24

Design = $19

3

Traditional = 1122

Act-based = 827