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Chapter 16: Q16-5SE-b (page 885)
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
b. Cost of computer software to track WIP Inventory
The cost of the computer software to track WIP inventory will come under the product cost.
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Preparing a schedule of cost of goods manufactured and an income statement for a manufacturing company
Chewy Bones manufactures its own brand of pet chew bones. At the end of December 2018, the accounting records showed the following:
Balances: Beginning Ending
Direct Materials \( 13,400 \) 10,500
Work-in-Process Inventory 0 1,500
Finished Goods Inventory 0 5,400
Other information:
Direct materials purchases $ 39,000
Plant janitorial services 900
Sales salaries 5,100
Delivery costs 1,700
Net sales revenue 115,000
Utilities for plant 1,200
Rent on plant 9,000
Customer service hotline costs 1,600
Direct labor 16,000
Requirements
1. Prepare a schedule of cost of goods manufactured for Chewy Bones for the year ended December 31, 2018.
2. Prepare an income statement for Chewy Bones for the year ended December 31, 2018.
3. How does the format of the income statement for Chewy Bones differ from the income statement of a merchandiser?
4. Chewy Bones manufactured 17,500 units of its product in 2018. Compute the company’s unit product cost for the year, rounded to the nearest cent.
Comparing managerial accounting and financial accounting
For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):
e. Reports audited annually by independent certified public accountants
Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA):
4. Has a focus on the future.
Identifying ethical standards
The Institute of Management Accountants’ Statement of Ethical Professional Practice requires managerial accountants to meet standards regarding competence, confidentiality, integrity, and credibility. Consider the following situations. Which standard(s) is(are) violated in each situation?
b. You see others take home office supplies for personal use. As an intern, you do the same thing, assuming that this is a “perk.”
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
d. Salaries of the company’s top executives.
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