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Chapter 16: 5TI (page 879)
ABC Cleaning Company cleaned 45 offices and incurred costs of $2,340. What was the cost to clean each office?
The cost incurred to clean each office is $52.
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How does a service company calculate unit cost per service?
Preparing an income statement and calculating unit cost for a merchandising company
Dillon Young owns Dillon’s Pets, a small retail shop selling pet supplies. On December 31, 2018, the accounting records for Dillon’s Pets showed the following:
Merchandise Inventory on December 31, 2018 $ 10,500
Merchandise Inventory on January 1, 2018 16,000
Net Sales Revenue 56,000
Utilities Expense for the shop 3,200
Rent for the shop 4,100
Sales Commissions 2,750
Purchases of Merchandise Inventory 25,000
Requirements
1. Prepare an income statement for Dillon’s Pets for the year ended December 31, 2018.
2. Dillon’s Pets sold 5,550 units. Determine the unit cost of the merchandise sold, rounded to the nearest cent.
List the three inventory accounts used by manufacturing companies, and describe each.
Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA):
3. Is not required to follow GAAP.
Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA): 1. Helps creditors make lending decisions
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