DOWNLOAD FULL SOLUTIONS MANUAL FOR MANAGERIAL ACCOUNTING 3RD EDITION BY BRAUN AND TIETZ Link download full Solutions Manual: https://testbankservice.com/download/solutionsmanual-for-managerial-accounting-3rd-edition-by-braun-and-tietz/ Link download full Test Bank: https://testbankservice.com/download/test-bank-formanagerial-accounting-3rd-edition-by-braun-and-tietz/
Chapter 2 Building Blocks of Managerial Accounting Quick Check Questions Answers: QC2-1. b QC2-2. b
QC2-3. a QC2-4. b
QC2-5. c QC2-6. b
QC2-7. b QC2-8. d
QC2-9. b QC2-10. c
Short Exercises (5 min.) S 2-1 ABC Co. is a manufacturer, because it has three kinds of inventory: Raw Materials Inventory, Work in Process Inventory, and Finished Goods Inventory. DEF Co. is a merchandiser, because it has a single inventory account. GHI Co. is a service company, because it has no inventory.
(10 min.) S 2-2 a.
Direct materials are stored in raw materials inventory.
Kmart is a merchandising company.
Manufacturers sell from their stock of finished goods inventory.
Labor costs usually account for the highest percentage of service companiesâ€™ costs.
Partially completed units are kept in the work in process inventory.
Service companies generally have no inventory.
Intel is a manufacturing company.
Merchandisersâ€™ inventory consists of the cost of merchandise and freight in.
Manufacturing companies carry three types of inventories: raw materials inventory, work in process inventory, and finished goods inventory.
H&R Block is a service company.
Two types of merchandising companies include retailers and wholesalers.
(5-10 min.) S 2-3 a. b. c. d. e. f. g. h. i. j.
Production Customer service Distribution Research and Development (R&D) Marketing Research and Development (R&D) Production Design Distribution Production
a. b. c. d. e. f. g. h.
direct; trace indirect; allocate direct; trace direct; trace direct; trace indirect; allocate direct; trace indirect; allocate
(10 min.) S 2-4
(5-10 min.) S 2-5 a. b. c. d. e. f. g. h. i.
Inventoriable product cost Inventoriable product cost Period cost Period cost Inventoriable product cost Inventoriable product cost Period cost Inventoriable product cost Period cost
(5-10 min.) S 2-6 COST a. Wages and benefits paid to assembly-line workers in the manufacturing plant b. Repairs and maintenance on factory equipment c. Lease payment on administrative headquarters d. Salaries paid to quality control inspectors in the plant e. Property insurance â€“ 40% of building is used for sales and administration; 60% of building is used for manufacturing f. Standard packaging materials used to package individual units of product for sale (e.g., cereal boxes in which cereal is packaged) g. Depreciation on automated production equipment h. Telephone bills relating to customer service call center
Period Cost or Inventoriable Product Cost?
If an Inventoriable Product Cost: Is it DM, DL, or MOH?
Product Product Period Product
40% Period; 60% Product
Product Product Period
(5-10 min.) S 2-7 COST 1. Company president’s annual bonus 2. Plastic gallon containers in which milk is packaged 3. Depreciation on marketing department’s computers
4. Wages and salaries paid to machine operators at dairy processing plant 5. Research and Development on improving milk pasteurization process 6. Cost of milk purchased from dairy farmers 7. Lubricants used in running bottling machines 8. Depreciation on refrigerated trucks used to collect raw milk from dairy farms 9. Property tax on dairy processing plant 10. Television advertisements for DairyPlains’ products 11. Gasoline used to operate refrigerated trucks used to deliver finished dairy products to grocery stores
Period Cost or Inventoriable Product Cost? Period Product Period (marketing element of value chain) Product Period (R&D element of value chain) Product Product
Product Product Period Period (distribution element of value chain)
If an Inventoriable Product Cost: Is it DM, DL, or MOH? DM
DM MOH MOH (part of the cost of acquiring DM) MOH
(5 min.) S 2-8 Frame Pro’s Total Manufacturing Overhead Computation Manufacturing overhead: Glue for picture frames* Plant depreciation expense Plant supervisor’s salary Plant janitor’s salary Oil for manufacturing equipment Total manufacturing overhead
450 8,100 3,300 1,500 110 $ 13,460
*Assuming that it is not cost-effective to trace the low-cost glue to individual frames. The following explanation is provided for instructional purposes, but it is not required. Depreciation on company cars used by the sales force is a marketing expense, interest expense is a financing expense, and the company president’s salary is an administrative expense. None of these expenses is incurred in the manufacturing plant, so they are not part of manufacturing overhead. The wood for frames is a direct material, not part of manufacturing overhead.
(5 min.) S 2-9 Retailer Cost of Goods Sold Computation Cost of goods sold: Beginning inventory Purchases Import duties Freight-in Cost of goods available for sale Ending inventory Cost of goods sold
$ 4,200 $42,000 1,100 3,600
46,700 50,900 (5,400) $45,500
Gossamer Secrets Income Statement Sales revenue Cost of goods sold: Beginning inventory Purchases Cost of goods available Ending inventory Cost of goods sold Gross profit Operating expenses Operating income
$ 3,350,000 23,975,000 27,325,000 (4,315,000) (23,010,000) 16,290,000 (6,150,000) $ 10,140,000
(5 min.) S 2-11 Allterrain Computation of Direct Materials Used Direct materials used: Beginning raw materials inventory Purchases of direct materials Import duties Freight-in Direct materials available for use Ending raw materials inventory Direct materials used
$ 3,900 $15,600 900 600
17,100 21,000 (2,000) $19,000
(5 min.) S 2
Robinson Manufacturing Schedule of Cost of Goods Manufactured Beginning work in process inventory Add: Direct materials used Direct labor Manufacturing overhead Total manufacturing costs incurred during period Total manufacturing costs to account for Less: Ending work in process inventory Cost of goods manufactured
$523,000 215,000 774,500 1,512,000 1,590,500 (84,000) $ 1,506,500
(10 min.) S 2-13 Relevant quantitative information might include: Difference in benefits Difference in costs of food Difference in salaries Difference in costs of transportation Difference in costs of housing Relevant qualitative information might include: Difference in job description Difference in lifestyle Difference in future career development opportunities Proximity to family and friends Difference in weather Relevant information always pertains to the future and differs between alternatives. Student responses may vary.
(10 min.) S 2-14 a)
variable in most cases. In some cases, consumers are charged a flat monthly fee for water hook-up (fixed portion of the bill), plus a fee for the amount of water used (variable portion of the bill). In such cases, the monthly water bill would be a mixed cost.
fixed or variable, depending on the cell phone plan. Plans that offer a set monthly fee for virtually unlimited minutes are fixed because the cost stays constant over a wide range of minutes. Plans that charge a specified rate per minute are variable.
usually variable; fixed in some cities offering unlimited use with monthly passes.
Exercises (Group A) (10 min.) E 2-15A a.
Wholesalers buy products in build from producers, mark them up, and resell them to retailers.
Most for-profit organizations can be described as being in one (or more) of three categories: merchandising, service, and manufacturing.
Honda Motors converts raw materials inventory into finished products.
Inventory (merchandise) for a company such as Staples includes all of the costs necessary to purchase products and get them onto the store shelves.
Landâ€™s End, Sears Roebuck & Co., and LL Bean are all examples of merchandising companies.
An insurance company, a health care provider, and a bank are all examples of service companies.
Work in process inventory is composed of goods partially through the manufacturing process (not finished yet).
Manufacturing companies report three types of inventory on a balance sheet.
Service companies typically do not have an inventory account.
(10-15 min.) E 2-16A Reqs. 1 and 2 Radio Shack Cost Classification
R&D Research on selling satellite radio service Purchases of merchandise Rearranging store layout Newspaper advertisements Depreciation expense on delivery trucks Payment to consultant for advice on location of new store Freight-in Salespersonsâ€™ salaries Customer complaint department Total
$ 600 $39,000 $700 $5,800
2,100 3,700 4,300
(continued) E 2-16A Req. 3 The total inventoriable product costs are $42,700.
(15 min.) E 2-17A Reqs. 1, 2, and 3 Samsung Electronics Cost Classification Production
R&D Salaries of salespeople Depreciation on plant and equipment Exterior case for phone Scientists’ salaries Delivery expense Chip set Rearrange production process Assembly-line workers’ wages Technical support hotline 1-800 (toll-free) line for customer orders Total costs
Manufacturing Overhead Marketing Distribution
$70 $6 $11 $ 8 $62
$ 1 $12 $ 3 $11
Req. 4 Total inventoriable product costs: Direct materials……………………………………… Direct labor…………………………………………… Manufacturing overhead…………………………… Total inventoriable product cost…………………. Req. 5 The total prime cost is: Direct materials……………………………………… Direct labor……………………………………………
Req. 6 The total conversion cost is: Direct labor…………………………………………… Manufacturing overhead……………………………
5 $ 10
$ 68 12 70 $150
$ 68 12 $ 80
$ 12 70 $ 82
(5-10 min.) E 2-18A a. b. c. d. e. f.
R&D Purchasing Marketing Distributing Customer service Design
(5-10 min.) E 2-19A
Cost a. Manager of Juniors department b. Cost of Juniors clothing c. Cost of radio advertising for the store d. Cost of bags used to package customer purchases at the main registers for the store e. Juniors department sales clerks f. Electricity for the building g. Depreciation of the building h. Cost of hangers used to display the clothing in the store i. The Medina Kohl’s store manager’s salary j. Juniors clothing buyers’ salaries (these buyers buy for all Juniors departments of Kohl’s stores) k. Cost of costume jewelry on the mannequins in the Juniors department l. Cost of security staff at the Medina store
Direct or Indirect cost? Direct Direct Indirect Indirect Direct Indirect Indirect Indirect Indirect Indirect Direct Indirect
(10 min.) E 2-20A a.
Company-paid fringe benefits may include health insurance, retirement plan contributions, payroll taxes, and paid vacations.
Conversion costs are the costs of transforming direct materials into finished goods.
Direct material plus direct labor equals prime costs.
The allocation process results into a less precise cost figure being assigned to the cost objects .
Total costs include the costs of all resources used throughout the value chain.
Inventoriable product costs are initially treated as assets on the balance sheet.
Steel, tires, engines, upholstery, carpet, and dashboard instruments are used in the assembly of a car. Since the manufacturer can trace the cost of these materials (including freight-in and import duties) to specific units or batches of vehicles, they are considered direct costs of the vehicles.
h. Indirect costs cannot be directly traced to a(n) cost object . i.
Costs that can be traced directly to a(n) cost object are called direct costs .
When manufacturing companies sell their finished products, the costs of those finished products are removed from inventory and expensed as cost of goods sold .
Period costs include R&D, marketing, distribution, and customer service costs.
GAAP requires companies to use only inventoriable product costs for external financial reporting.
(15-20 min.) E 2-21A Req. 1 DM a. b.
c. d. e.
i. j. k.
Depreciation on forklifts Property tax on corporate marketing offices Cost of warranty repairs Factory janitors’ wages Cost of designing new plant layout Machine operators’ health insurance Airplane seats Depreciation on administrative offices Assembly workers’ wages Plant utilities Production supervisors’ salaries Jet engines Machine lubricants TOTAL
Other MOH $60
$30 $220 $10
$40 $270 $70
$670 $110 $160 $1,100 $1,370
Total manufacturing overhead costs
= IL + IM + Other MOH = $170 + 20 + 170 = $360
Total inventoriable product costs
= DL + DM + MOH = $710 + 1,370 + 360 = $2,440
Total prime costs
= DL + DM = $710 + 1,370 = $2,080
Total conversion costs
= DL + MOH = $710 + 360 = $1,070
Total period costs
(10 min.) E 2-22A Knights Current Assets Current assets: Cash Accounts receivable Inventories: Raw materials inventory Work in process inventory Finished goods inventory Total inventories Prepaid expenses Total current assets
$ 15,300 79,000 $9,800 42,000 59,000 110,800 6,100 $211,200
Knights must be a manufacturer, because it has three kinds of inventory: raw materials, work in process, and finished goods.
(10-15 min.) E 2-23A
Pampered Pets Income Statement For Last Year Sales revenue Cost of goods sold: Beginning inventory Purchases and freight-in* Cost of goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses: Web site expenses Marketing expenses Freight-out expenses Total operating expenses Operating income *purchases of $639,000 + freight-in of $19,900 = $658,900
$ 1,010,000 $ 16,800 658,900 675,700 (13,700) (662,000) 348,000 $ 55,000 33,000 28,000 (116,000) $ 232,000
(5-10 min.) E 2-24A Sharpland Industries Cost of Goods Calculation Beginning work in process inventory Add: Direct materials used Beginning raw materials inventory Plus: Purchases of direct materials Direct materials available for use Less: Ending raw materials inventory Direct materials used Direct labor Manufacturing overhead Total manufacturing costs incurred during the period Total manufacturing costs to account for Less: Ending work in process inventory Cost of goods manufactured
$ 22,000 $ 14,000 58,000 72,000 (17,000) $ 55,000 132,000 164,000 351,000 373,000 (18,000) $355,000
(15-20 min.) E 2-25A Quality Aquatic Company Cost of Goods Calculation Beginning work in process inventory Add:Direct materials used: Beginning raw materials inventory Purchases of direct materials Available for use Ending raw materials inventory Direct materials used Direct labor Manufacturing overhead: Indirect labor Insurance on plant Depreciation - plant building and equipment Repairs and maintenance â€“ plant Total manufacturing costs incurred during the year Total manufacturing costs to account for Less: Ending work in process inventory Cost of goods manufactured
$ 36,000 $ 29,000 73,000 102,000 (31,000) $71,000 89,000 $ 42,000 10,500 13,000 4,000
69,500 229,500 265,500 (30,000) $235,500
(continued) E 2-25A Quality Aquatic Company Schedule of Cost of Goods Sold Beginning finished goods inventory Cost of goods manufactured* Cost of goods available for sale Ending finished goods inventory Cost of goods sold
$ 22,000 235,500 257,500 (28,000) $229,500
*From schedule of cost of goods manufactured.
(continues E 2-25A) (15-20 min.) E 2-26A Quality Aquatic Company Income Statement For Last Year Sales revenue (32,000 Ă— $12) Cost of goods sold: Beginning finished goods inventory Cost of goods manufactured (E 2-25A) Cost of goods available for sale Ending finished goods inventory Cost of goods sold Gross profit Operating expenses: Marketing expenses General and administrative expenses Operating income
$462,000 $ 22,000 235,500 257,500 (28,000) 229,500 232,500 $ 83,000 26,500
109,500 $ 123,000
Students may simply use the $229,500 cost of goods sold computation from E 2-25A, rather than repeating the details of the computation here.
(25 min.) E 2-27A Instructional note: This is a fairly challenging exercise that requires students to work backwards through financial statement elements. a. Revenues Cost of goods sold Gross profit
$27,300 15,000 $12,700
b. To determine beginning raw materials inventory, start with the materials used computation and work backwards:
Beginning raw materials inventory Purchases of direct materials Available for use Ending raw materials inventory Direct materials used
$ 2,000 9,200 11,000 (3,300) $ 8,000
Published on Mar 14, 2018
Published on Mar 14, 2018
Link download full: https://testbankservice.com/download/solutions-manual-for-managerial-accounting-3rd-edition-by-braun-and-tietz/