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Chapter 16: Q1TI_2 (page 865)
Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA):
2. Helps in planning and controlling operations.
Planning means choosing the goal and setting up the steps and the correct answer is managerial accounting.
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Selected data for three companies are given below. All inventory amounts are ending balances and all amounts are in millions.
Company A Company B Company C
Cash \( 6 Wages Expense \) 12 Administrative Expenses $ 4
Net Sales Revenue 48 Equipment 32 Cash 25
Finished Goods Inventory 10 Accounts Receivable 8 Net Sales Revenue 75
Cost of Goods Sold 23 Service Revenue 65 Selling Expenses 8
Selling Expenses 4 Cash 34 Merchandise Inventory 12
Equipment 67 Rent Expense 12 Equipment 55
Work-in-Process Inventory 9 Accounts Receivable 19
Accounts Receivable 14 Cost of Goods Sold 25
Cost of Goods Manufactured 23
Administrative Expenses 7
Raw Materials Inventory 6
Identifying differences between service, merchandising, and manufacturing companies Using the data on the previous page, calculate operating income for each company.
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.
Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost.
8. Property taxes on the factory
Computing cost of goods sold, manufacturing company
Use the following information to calculate the cost of goods sold for The Ellis Company for the month of June:
Finished Goods Inventory:
Beginning Balance $ 30,000
Ending Balance 10,000
Cost of Goods Manufactured 165,000
Explain the difference between line positions and staff positions.
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