Exam 2: Cost Terms,concepts,and Classifications

The following data (in thousands of dollars)have been taken from the accounting records of Larsen Corporation for the year just ended: Sales \ 860 Purchases of raw materials* \ 150 Direct labour \ 110 Manufacturing overhead \ 210 Administrative expenses \ 130 Selling expenses \ 180 Raw materials inventory, beginning* \ 40 Raw materials inventory, ending* \ 80 Work in process inventory, beginning \ 20 Work in process inventory, ending \ 80 Finished goods inventory, beginning \ 80 Finished goods inventory, ending \ 150 Required: (a.)Prepare a schedule of cost of goods manufactured in good form. (b.)Compute the cost of goods sold. (c.)Using data from your answers above as needed,prepare an income statement in good form.

The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the year just ended. Sales \ 990 Raw materials inventory, beginning \ 40 Raw materials inventory, ending \ 70 Purchases of raw materials \ 120 Direct labour \ 200 Manufacturing overhead \ 230 Administrative expenses \ 150 Selling expenses \ 140 Work-in-process inventory, beginning \ 70 Work-in-process inventory, ending \ 50 Finished goods inventory, beginning \ 120 Finished goods inventory, ending \ 160 -What was the cost (in thousands of dollars)of the raw materials used in production during the year?

Geneva Steel Corporation produces large sheets of heavy gauge steel. The company showed the following amounts relating to its production for the year just completed: Direct materials used in production \ 110,000 Direct labour cost for the year \ 55,000 Work in process, beginning \ 22,000 Finished goods, beginning \ 45,000 Cost of goods available for sale \ 288,000 Cost of goods sold \ 238,000 Work in process, ending \ 16,000 -What was the balance of the finished goods inventory at the end of the year?

Which of the following would be considered a product cost for external financial reporting purposes?

Delta Merchandising,Inc.,has provided the following information for the year just ended: Net sales \ 128,500 Beginning inventory \ 24,000 Purchases \ 80,000 Gross margin \ 38,550 What was the ending inventory for the company at year-end?

Gabel Inc.is a merchandising company.Last month,the company's merchandise purchases totalled $63,000.The company's beginning merchandise inventory was $13,000,and its ending merchandise inventory was $15,000.What was the company's cost of goods sold for the month?

What is the outcome if the cost of goods sold is greater than the cost of goods manufactured?

What does conversion cost consist of?

What would be the classification of the transportation costs incurred by a manufacturing company to ship its product to its customers?

The following information was provided by Wilson Company for the year just ended: Beginning finished goods inventory \ 150,750 Ending finished goods inventory \ 140,475 Sales \ 475,000 Gross margin \ 150,000 What was the cost of goods manufactured for the year?

Prime costs consist of:

Advertising costs are considered product costs for external financial reports since they are incurred in order to promote specific products.

Lake Company recorded the following data for the month of January 20xx: Inventories January 1, 20xx January 31, 20xx Direct Material \ 24,000 \ 23,000 Work in Process 18,000 15,000 Finished Goods 22,000 27,000 Additional Data: Net Sales Revenue \ 325,000 Direct Labour Costs 40,000 Indirect Labour Costs 45,000 Sales Commissions 15,000 Administrative Expenses 18,000 Direct Materials Purchased during January 30,000 Depreciation, factory 10,000 Factory Maintenance and Supplies 8,000 Utilities, (80\% factory, 20\% office) 25,000 General Office Salaries 12,000 a)Compute the amount of direct materials used in January. b)List and total the Manufacturing Overhead costs for the month of January. c)Compute the Cost of Goods Manufactured. Note: It may be helpful to prepare a Cost of Goods Manufactured statement in rough form but it is not required. You may use short forms in your answers for DM, DL etc.

The accounts for a manufacturing company for an accounting period are listed below.Find the unknown amounts indicated by question marks. Sales \ 39,000 Cost of goods sold ? Purchases of direct materials \ 11,000 Direct labour \ 5,000 Finished goods inventory, beginning \ 5,000 Work in process, beginning \ 800 Work in process, ending \ 3,000 Gross margin \ 11,700 Finished goods inventory, ending ? Accounts payable, beginning \ 4,000 Accounts payable, ending \ 2,800 Direct materials inventory, beginning \ 1,000 Direct materials inventory, ending \ 3,000 Indirect labour \ 2,000 Indirect materials used \ 4,000 Utilities expense, factory \ 3,000 Depreciation on factory equipment \ 7,000

Last month,when 10,000 units of a product were manufactured,the cost per unit was $60.At this level of activity,variable costs were 50% of total unit costs.If 10,500 units are manufactured next month and cost behaviour patterns remain unchanged,how will costs be affected?

Which of the following costs is often important in decision making,but is omitted from conventional accounting records?

You have the following data: Cost of goods sold \ 70 Direct labour \ 20 Direct materials \ 15 Cost of goods manufactured \ 80 Work-in-process ending \ 10 Finished goods ending \ 15 Manufacturing overhead \ 30 Which of the following represents the beginning work-in-process inventory?

If the ending inventory of finished goods is understated,net income will be overstated.

Manufacturing overhead is one of the three elements of manufacturing costs.Unlike direct materials and direct labour costs,assigning manufacturing overhead cost to products can be a very difficult task. Required: Do you agree with this aspect of manufacturing overhead? Why or why not?

In external financial reports,factory utilities costs may be included in an asset account on the balance sheet at the end of the period.