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Natalia44
May 29, 2009, 07:09 AM
I am extremely disappointed the book does not do a sufficient job of providing formulas for calculations for Chapters 16-18, I am totally stuck as a few of my classmates so I am trying to find solutions to solving these problems and asking for some guidance.

Thank you if you can help...


Exercise 16.4: Flow of Costs through Manufacturing Accounts L.O. 4

The following information was taken from the accounting records of Reliable Tool Corporation:
Work in process inventory, beginning of the year $35,000
Cost of direct materials used 244,000
Direct labor cost applied to production 149,000
Cost of finished goods manufactured 691,600

Overhead is applied to production at $300,000. Compute the amount of the work in process inventory on hand at year-end.
Ex. 16.4 Work in process inventory, beginning of the year $35,000
Manufacturing costs applied to production:
Direct materials used $ 244,00
Direct labor $149,000
Manufacturing overhead $300,000

Total manufacturing costs $693000

Total cost of all goods in process during the year $ 728000
Less: Cost of finished goods manufactured $ __________? Could not get this

Work in process inventory, end of the year $ ___________?could not get this



Need some help with the above last two entry... actually I need the formulas.

Exercise 16.5: Preparing a Schedule of the Cost of Finished Goods Manufactured L.O. 6

The accounting records of NuTronics, Inc. include the following information for the year ended December 31, 2007.
Dec. 31 Jan. 1
Inventory of materials $24,000 $20,000
Inventory of work in process 8,000 12,000
Inventory of finished goods 90,000 80,000

Direct materials used 227,000
Direct labor 135,000
Selling expenses 170,000
General and administrative expenses 140,000

Overhead is assigned to production at $192,000.

1. Prepare a schedule of the cost of finished goods manufactured. (Not all of the data given above are used in this schedule.)

2. Assume that the company manufactures a single product and that 20,000 units were completed during the year. What is the average per-unit cost of manufacturing this product?

Need some help with question b. No matter how may way I do this it's wrong

Ex. 16.5 a. NuTronics, Inc.
Schedule of the Cost of Finished Goods Manufactured
For the Year Ended December 31, 2007
Work in process, January 1, 2007 $12,000
Manufacturing costs assigned to production:
Direct materials used $ 227000
Direct labor $ 135000
Manufacturing overhead $192,000

Total manufacturing costs

Total cost of all goods in process during the year $ 566000
Less: Work in process inventory, December 31, 2007 $ 8,000

Cost of finished goods manufactured $ 558000

b. $_____ per unit ($ _____ ) cost of finished goods manufactured, divided by 20,000
Here I am using the total variable costs /cost of units + % is this not correct?

morgaine300
May 29, 2009, 12:53 PM
I am extremely disappointed the book does not do a sufficient job of providing formulas for calculations

The book isn't going to provide "formulas" because the problem is about your understanding of the flow through the accounts. It helps if you stop thinking of everything as "formulas.". You would have been taught how to do this clear back when you learned t accounts and how to balance an account, because that's what this is really about - but you have to understand the flow of the accounts in order to do that. At least for the first exercise (which is all I've glanced at so far), everything you need is just right there and all you have to do is balance the account. It isn't any different than telling you that you received $500 of cash, wrote a check for $200, now what's the ending balance.

So it's understanding the flow and process and what the vocabulary and such means more than anything else.



Exercise 16.4: Flow of Costs through Manufacturing Accounts L.O. 4

See... "flow of costs", not "formula."


Overhead is applied to production at $300,000. Compute the amount of the work in process inventory on hand at year-end.
Ex. 16.4 Work in process inventory, beginning of the year $35,000
Manufacturing costs applied to production:
Direct materials used $ 244,00
Direct labor $149,000
Manufacturing overhead $300,000

Total manufacturing costs $693000

Total cost of all goods in process during the year $ 728000
Less: Cost of finished goods manufactured $ __________? Could not get this

Work in process inventory, end of the year $ ___________?could not get this

I'm having a hard time decyphering what you have done and what was given. As for the cost of finished goods manufactured, it's right there in the problem.

The Work in Process account is where costs are gathered while a product is being made but not yet finished. It consists of three costs and you need to make sure these are memorized: direct materials, direct labor, and overhead. Make sure all three costs get into that account. To balance the account, you also have to add beginning inventory. "Total manufacturing costs" can be two different things depending on how the book uses the term. From the way this is set up, looks like that means costs added during this year, i.e. not including the beginning balance (which is from last year). And that "total costs of goods in process during the year" meaning including the beginning inventory.

When the goods are finished, they are removed from the WIP account and moved over to Finished Goods. So nothing that is finished should remain in the account. What remains in the account as ending balance is what is still in process. So you have the total of everything that was in the account (beginning balance plus 3 costs added), and you have how much got finished (given) -- so how much is left? That's your "formula." In other words, you've done everything except finish balancing the account.


Ex. 16.5 a. NuTronics, Inc.
Schedule of the Cost of Finished Goods Manufactured
For the Year Ended December 31, 2007
Work in process, January 1, 2007 $12,000
Manufacturing costs assigned to production:
Direct materials used $ 227000
Direct labor $ 135000
Manufacturing overhead $192,000

Total manufacturing costs

Total cost of all goods in process during the year $ 566000
Less: Work in process inventory, December 31, 2007 $ 8,000

Cost of finished goods manufactured $ 558000

I'm assuming this is your work? (It would be very nice if you'd clearly distinguish what was given in the problem and which part is your work.) You basically already have the final answer of the finished goods, which is correct. You've left the total manufacturing costs blank, but it's just like the other problem: the total of what was added to that account.

As for the "schedule" -- I don't know what your book means by that. Books call stuff what they want. If it's the same thing as what I'd call a COGM report, then it's kind of a long thing. You'd really need to find an example in your book to see what it is they want. If it's the report I'm familiar with, it also includes stuff about the materials account. It basically would show where you got your 558,000 in the WIP account... showing the beginning balance, the 3 costs added, subtract the ending balance, and there's your 558,000. Essentially what you just did.

But usually it includes where the materials came from, which is the materials account details. In the problem it was given, but on the report you'd have a section showing it in the same kind of manner: beginning balance, plus purchases, subtract out ending balance, and there's your amount that moved into WIP. You'd have to figure out how much was purchased. The account increased by 4000 and 227,000 came out. So 4000 more went in than came out. So how much was purchased and went in?

Again, you'll have to look for an example in your book to see exactly what they want on this schedule and how they have it set up. The set up of some schedule is not rules.



2. Assume that the company manufactures a single product and that 20,000 units were completed during the year. What is the average per-unit cost of manufacturing this product?

b. $_____ per unit ($ _____ ) cost of finished goods manufactured, divided by 20,000
Here I am using the total variable costs /cost of units + % is this not correct?

You're making this one WAY more complicated than it is. In fact, you're off in another chapter. There isn't any way to determine variable costs from this, it's irrelevant, and I don't see what percent is involved. They just want to know how much is the cost per unit. You have $558,000 of costs for the finished goods, and you finished 20,000 units. How much is that per unit? If you spent $15 on 4 gallons of milk, how much did you spend per gallon? Same thing - that's all they're asking.