Get A Copy. More Details Friend Reviews. To see what your friends thought of this book, please sign up. To ask other readers questions about Managerial Accounting 13th Edition , please sign up. Be the first to ask a question about Managerial Accounting 13th Edition. Lists with This Book. This book is not yet featured on Listopia. Add this book to your favorite list ». Community Reviews. Showing Rating details. All Languages. More filters. Cost of goods sold: Finished goods inventory, beginning Deduct: Finished goods inventory, ending..
Selling and administrative expenses: Selling expenses Administrative expenses Because fixed costs do not change in total as the activity level changes, they will decrease on a unit basis as the activity level rises.
Cost Item Factory labor, direct Factory supervision Property taxes, factory building.. Sales commissions Insurance, factory Depreciation, administrative office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory building Administrative office supplies Administrative office salaries Direct materials used Utilities, factory Total costs Problem continued 2.
The average product cost per set would increase if the production drops. This is because the fixed costs would be spread over fewer units, causing the average cost per unit to rise. He might expect a price even higher than this to cover a portion of the administrative costs as well. The brother-in-law probably is thinking of cost as including only direct materials, or, at most, direct materials and direct labor. The term is opportunity cost. The full, regular price of a set might be appropriate here, because the company is operating at full capacity, and this is the amount that must be given up benefit forgone to sell a set to the brother-in-law.
Even though the cost was incurred to start the business, it is a sunk cost. Whether Staci produces pottery or stays in her present job, she will have incurred this cost. Goods available for sale given Deduct: Finished goods inventory, ending Cost of goods sold given Problem continued 4. Because fixed costs do not change in total as the activity level changes, the average cost per unit will decrease as the activity level rises.
Problem 30 minutes 1. A cost that is classified as a period cost will be recognized on the income statement as an expense in the current period. A cost that is classified as a product cost will be recognized on the income statement as an expense i. If some units are unsold at the end of the period, the costs of those unsold units are treated as assets. Therefore, by reclassifying period costs as product costs, the company is able to carry some costs forward in inventories that would have been treated as current expenses.
The decision to postpone expenditures is questionable. It is one thing to postpone expenditures due to a cash bind; it is quite another to postpone expenditures in order to hit a profit target. Postponing these expenditures may have the effect of ultimately increasing future costs and reducing future profits. Postponing maintenance on equipment is particularly questionable. See William J. Bruns, Jr. Such a reclassification would be a violation of the principle of consistency in financial reporting and is a clear attempt to mislead readers of the financial reports.
Hopefully, the auditors would discover any such attempt to manipulate annual earnings and would refuse to issue an unqualified opinion due to the lack of consistency. However, recent accounting scandals may lead to some skepticism about how forceful auditors have been in enforcing tight accounting standards. The cost of leasing the meals-on-wheels van X The cost of incidental supplies such as salt, pepper, napkins, and so on X The cost of gasoline consumed by the meals-onwheels van X The rent on the facility that houses Madison Seniors Care Center, including the meals-onwheels program X The salary of the part-time manager of the meals-on-wheels program X Depreciation on the kitchen equipment used in the meals-on-wheels program X The hourly wages of the caregiver who drives the van and delivers the meals X The costs of complying with health safety regulations in the kitchen X The costs of mailing letters soliciting donations to the meals-on-wheels program Problem 60 minutes 1.
To compute the number of units in the finished goods inventory at the end of the year, we must first compute the number of units sold during the year. Solutions Manual, Chapter 2. Visic Corporation Income Statement Sales Finished goods inventory, ending Selling and administrative expenses Direct materials Case 60 minutes The following cost items are needed before a schedule of cost of goods manufactured can be prepared: Materials used in production: Prime cost Conversion cost Less direct labor cost Manufacturing overhead cost Cost of goods manufactured: Goods available for sale Less finished goods inventory, beginning The easiest way to proceed from this point is to place all known amounts in a partially completed schedule of cost of goods manufactured and a partially completed income statement.
Then fill in the missing amounts by analysis of the available data. Case continued Direct materials: Raw materials inventory, beginning A Raw materials used in production see above B Cost of goods manufactured see above C , Gross margin The procedure outlined above is just one way in which the solution to the case can be approached.
Some may wish to start at the bottom of the income statement with gross margin and work upwards from that point. Also, the solution can be obtained by use of T-accounts. Case 60 minutes 1. Product costs e. Because there were ending inventories, some of the product costs should appear on the balance sheet as assets rather than on the income statement as expenses.
Solar Technology, Inc. Case continued 3. Before an income statement can be prepared, the cost of the 8, batteries in the ending finished goods inventory must be determined.
Deduct: Finished goods inventory, ending. Case continued 4. It is most likely that the insurance contract limits reimbursement for losses to those costs that would normally be considered product costs—in other words, direct materials, direct labor, and manufacturing overhead. Research and Application 1. Dell succeeds because of its operational excellence customer value proposition. The first three tenets focus on operational excellence.
Dell faces numerous business risks as described in pages of the K. Students may mention other risks beyond those specifically mentioned in the K. Here are four risks faced by Dell with suggested control activities:.
Control activities: Maintain a budgeting program that forecasts sales by product line, customer segment, and geographic region. While the budget is not going to be perfectly accurate, a reasonably accurate forecast would help Dell manage investor expectations.
This is of particular concern for Dell because its lean production practices result in minimal inventory levels and because Dell relies on several singlesourced suppliers.
Control activities: Install controls such as physical security, data storage backup sites, firewalls and passwords that protect technology assets. Control activities: Develop a formal review process, supervised by legal counsel, to ensure that Dell complies with governmental regulations.
The audit report also contains two opinions dealing with internal control. These two opinions were required by SOX at the time of this K filing.
This report includes a reference to SOX. SOX requires the CEO and CFO to certify that the K and its accompanying financial statements do not contain any untrue statements and are fairly stated in all material respects. Based solely on the inventories number on the balance sheet, students cannot determine the answer to this question.
Nonetheless, students should be able to readily ascertain that Dell is a manufacturer. Research and Application continued software installation, functional testing, and quality control. Examples of indirect inventoriable costs include the costs to sustain the manufacturing plants that cannot be conveniently traced to specific products.
The utility bills, insurance premiums, plant management salaries, and equipment-related costs, etc. The gross margin in dollars has steadily increased and the gross margin as a percent of sales has remained fairly steady for two reasons. First, the cost of goods sold consists largely of variable costs e. As sales grow, these variable costs increase in total, but as a percentage of sales, they remain fairly stable over time.
Some students may ask about the fixed overhead costs that are incurred to run the plants. Spreading fixed overhead costs over a higher volume of sales would increase the gross margin percentage. Second, pages mention that Dell plans to reduce product costs in four areas: manufacturing costs, warranty costs, design costs, and overhead costs. Using terminology that will be defined in Chapter 12, Dell grows profits by increasing turnover while holding margin reasonably constant.
Research and Application continued 6. It also reduces raw materials inventory because suppliers provide just-intime delivery of the quantities needed to satisfy customer orders. Research and Application continued For financial reporting purposes, costs are classified as either product costs or period costs. Product costs include those costs involved with making or acquiring the product. Period costs include all costs that are not product costs.
The expenses mentioned in the paragraph above are not involved with making the product so they are expensed as incurred. When the focus changes from external reporting to internal decision making, the need to comply with GAAP disappears. Here are four examples of cost objects for Dell including one direct and one indirect cost for each cost object. A direct cost would be the cost of raw material component parts and an indirect cost would be factory utility costs.
A direct cost would be the component parts used to make these products and an indirect cost would be factory insurance costs that are assigned to these products. Garvin, Senior Vice President, Worldwide Procurement and Global Customer Experience see page 11 , given that he oversees worldwide procurement operations.
A direct cost would be a sales representative who is dedicated to serving the government segment and an indirect cost would be research and development costs that are expended on products purchased by more than one customer segment.
Total wages earned Exercise 2A-3 15 minutes 1. It appears that the overtime spent completing the job was simply a matter of how the job happened to be scheduled. Total cost Exercise 2A-4 15 minutes 1. A company could treat the cost of fringe benefits relating to direct labor workers as part of manufacturing overhead.
This approach spreads the cost of such fringe benefits uniformly over all units of output. Alternatively, the company could treat the cost of fringe benefits relating to direct labor workers as additional direct labor cost. This latter approach charges the costs of fringe benefits to specific jobs rather than to all units of output.
Reeve, Jonathan Duchac. Garrison, Eric W. Noreen, Peter C. Note : this is not a text book. Managerial Accounting Concepts and Principles.
Manual on Managerial Accounting 13th Edition by Garrison. Enhance your education with instant download, quick delivery and free sample PDF options. What is the difference between a test bank and a solution manual? Gitman, Chad J.
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