Complete the following activities from theFinancial & Managerial Accounting textbook:
BE16.9 –
Star Repairs Co. does all the repair work for a medium-sized manufacturer of handheld computer
games. The games are sent directly to Star, and after the games are repaired, Star bills the game
manufacturer for cost plus a 20 percent markup. In the month of February, purchases of parts
(replacement parts) by Star amounted to $97,000, the beginning inventory of parts was $38,500,
and the ending inventory of parts was $15,250. Payments to repair technicians during the month of
February totaled $52,500. Overhead incurred was $121,000.
a. What was the cost of materials used for repair work during the month of February?
b. What was the prime cost for February?
c. What was the conversion cost for February?
d. What was the total repair cost for February?
E16.1
E16.2
E16.3
E16.6
Listed below are eight technical accounting terms introduced or emphasized in this chapter:
LO16-1 through LO16-5
EXERCISE 16.1
Accounting Terminology
Work in Process Inventory Cost of finished goods manufactured
Conversion costs Cost of Goods Sold
Period costs Management accounting
Product costs Manufacturing overhead
Each of the following statements may (or may not) describe one of these technical terms. For each
statement, indicate the accounting term described, or answer “None” if the statement does not correctly
describe any of the terms.
a. The preparation and use of accounting information designed to assist managers in planning and
controlling the operations of a business.
b. All manufacturing costs other than direct materials used and direct labor.
c. Direct materials and direct labor used in manufacturing a product.
d. A manufacturing cost that can be traced conveniently and directly to manufactured units of
product.
e. The account debited at the time that the Manufacturing Overhead account is credited.
f. The amount transferred from the Work in Process Inventory account to the Finished Goods
Inventory account.
g. Costs that are debited directly to expense accounts when the costs are incurred.
Into which of the three elements of manufacturing cost would each of the following be classified?
a. Tubing used in manufacturing bicycles.
b. Wages paid by an automobile manufacturer to employees who test-drive completed automobiles.
c. Property taxes on machinery.
d. Gold bullion used by a jewelry manufacturer.
e. Wages of assembly-line workers who package frozen food.
f. Salary of plant superintendent.
g. Electricity used in factory operations.
h. Salary of a nurse in a factory first-aid station.
Indicate whether each of the following should be considered a product cost or a period cost. If
you identify the item as a product cost, also indicate whether it is a direct or an indirect cost. For
example, the answer to item 0 is “indirect product cost.” Begin with item a.
0. Property taxes on factory building.
a. Cost of disposal of hazardous waste materials to a chemical plant.
b. Amounts paid by a mobile home manufacturer to a subcontractor who installs plumbing in each
mobile home.
c. Depreciation on sales showroom fixtures.
d. Salaries of security guards in an administrative office building.
EXERCISE 16.2
Basic Types of
Manufacturing Costs
LO16-2
EXERCISE 16.3
Product Costs
and Period Costs
LO16-3, LO16-5
744 Chapter 16 Management Accounting
e. Salaries of factory security guards.
f. Salaries of office workers in the credit department.
g. Depreciation on the raw materials warehouse.
h. Income taxes on a profitable manufacturing company.
The Ryde and Rowe Inc. had the following account balances as of January 1:
EXERCISE 16.6
Flow of Costs through
Manufacturing Accounts
LO16-3 through LO16-5
Direct Materials Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 89,200
Work in Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,400
Finished Goods Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253,600
Manufacturing Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –0–
During the month of January, all of the following occurred:
1. Direct labor costs were $442,000 for 18,000 hours worked.
2. Direct materials costing $335,750 and indirect materials costing $13,500 were purchased.
3. Sales commissions of $216,500 were earned by the sales force.
4. $326,000 worth of direct materials were used in production.
5. Advertising costs of $36,300 were incurred.
6. Factory supervisors earned salaries of $22,000.
7. Indirect labor costs for the month were $23,000.
8. Monthly depreciation on factory equipment was $24,500.
Exercises 745
9. Utilities expense of $17,800 was incurred in the factory.
10. Equipment with manufacturing costs of $970,100 were transferred to finished goods.
11. Monthly insurance costs for the factory were $4,200.
12. $5,000 in property taxes on the factory were incurred and paid.
13. Equipment with manufacturing costs of $1,089,000 were sold for $1,550,000.
Instructions
a. If Ryde and Rowe assigns manufacturing overhead of $84,400, what will be the balances in
the Direct Materials, Work in Process, and Finished Goods Inventory accounts at the end of
January?
b. As of January 31, what will be the balance in the Manufacturing Overhead account?
c. What was Ryde and Rowe’s operating income for January?
Why Work with Us
Top Quality and Well-Researched Papers
We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.
Professional and Experienced Academic Writers
We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.
Free Unlimited Revisions
If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.
Prompt Delivery and 100% Money-Back-Guarantee
All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.
Original & Confidential
We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.
24/7 Customer Support
Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Our Services
No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.
Essays
No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.
Admissions
Admission Essays & Business Writing Help
An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.
Reviews
Editing Support
Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.
Reviews
Revision Support
If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.