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Chapter 16: 16RQ (page 884)
Describe a service company, and give an example.
Service company provides services to customers, examples are American express, hospitals, etc.
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Making ethical decisions
Sue Peters is the controller at Vroom, a car dealership. Dale Miller recently has been hired as the bookkeeper. Dale wanted to attend a class in Excel spreadsheets, so Sue temporarily took over Dale’s duties, including overseeing a fund used for gas purchases before test drives. Sue found a shortage in the fund and confronted Dale when he returned to work. Dale admitted that he occasionally uses the fund to pay for his own gas. Sue estimated the shortage at $450.
Requirements 2. Would you change your answer if Sue Peters was the one recently hired as controller and Dale Miller was a well-liked, long time employee who indicated he always eventually repaid the fund?
Question:Determining flow of costs through a manufacturer’s inventory accounts
Root Shoe Company makes loafers. During the most recent year, Root incurred total manufacturing costs of \(26,300,000. Of this amount, \)2,000,000 was direct materials used and \(19,800,000 was direct labor. Beginning balances for the year were Direct Materials, \)700,000; Work-in-Process Inventory, \(1,500,000; and Finished Goods Inventory, \)400,000. At the end of the year, balances were Direct Materials, \(800,000; Work-in-Process Inventory, \)1,200,000; and Finished Goods Inventory, $600,000.
Requirements Analyze the inventory accounts to determine:
1. Cost of direct materials purchased during the year.
2. Cost of goods manufactured for the year.
3. Cost of goods sold for the year.
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
a. Salaries of scientists studying ways to speed forest growth.
Understanding today’s business environment
Match the following terms to the appropriate statement. Some terms may be used more than once, and some terms may not be used at all.
E-commerce Just-in-time management (JIT)
Enterprise resource planning (ERP) Total quality management (TQM)
a. A management system that focuses on maintaining lean inventories while producing products as needed by the customer.
b. A philosophy designed to integrate all organizational areas in order to provide customers with superior products and services while meeting organizational objectives.
c. Integrates all of a company’s functions, departments, and data into a single system.
d. Adopted by firms to conduct business on the Internet
Comparing managerial accounting and financial accounting
For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):
d. Reports must follow Generally Accepted Accounting Principles (GAAP).
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