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Chapter 16: Q2RQ (page 884)
List six differences between financial accounting and managerial accounting.
Financial accounting provides information for external users and the difference between financial accounting and managerial accounting is prepared.
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Calculating income and cost per service for a service company
Buddy Grooming provides grooming services for pets. In April, the company earned \(16,300 in revenues and incurred the following operating costs to groom 660 dogs:
Wages Expense \) 4,061
Grooming Supplies Expense 1,675
Building Rent Expense 900
Utilities Expense 305
Depreciation Expense—Equipment 55
Requirements 1. What is Buddy’s operating income for April?
This is the first problem in a sequence of problems for Piedmont Computer Company, a manufacturer of personal computers and tablets. During its first month of manufacturing, Piedmont Computer Company incurred the following manufacturing costs:
Balances: Beginning Ending
Direct Materials \( 10,500 \) 9,700
Work-in-Process Inventory 0 17,000
Finished Goods Inventory 0 31,000
Other information:
Direct materials purchases $ 16,000
Plant janitorial services 500
Sales salaries expense 10,000
Delivery expense 1,600
Sales revenue 1,100,000
Utilities for plant 16,000
Rent on plant 9,000
Customer service hotline costs 19,000
Direct labor 210,000
Prepare a schedule of cost of goods manufactured for Piedmont Computer Company for the month ended January 31, 2020.
Preparing a schedule of cost of goods manufactured Wilson Corp., a lamp manufacturer, provided the following information for the year ended December 31, 2018:
Balances: Beginning Ending
Direct Materials \( 59,000 \) 23,000
Work-in-Process Inventory 109,000 62,000
Finished Goods Inventory 41,000 44,000
Other information:
Depreciation, plant building and equipment $ 16,000
Direct materials purchases 151,000
Insurance on plant 24,000
Sales salaries 47,000
Repairs and maintenance—plant 10,000
Indirect labor 39,000
Direct labor 121,000
Administrative expenses 60,000
Requirements 1. Use the information to prepare a schedule of the cost of goods manufactured.
Preparing an income statement and calculating unit cost for a service company
The Glass Doctors repair chips in car windshields. The company incurred the following operating costs for the month of July 2018:
Salaries and wages \( 10,000
Windshield repair materials 4,100
Depreciation on truck 500
Depreciation on building and equipment 900
Supplies used 450
Utilities 4,550
The Glass Doctors earned \)25,000 in service revenues for the month of July by repairing 250 windshields. All costs shown are considered to be directly related to the repair service.
Requirements
1. Prepare an income statement for the month of July.
2. Compute the cost per unit of repairing one windshield, rounded to the nearest cent.
3. The manager of The Glass Doctors must keep unit operating cost below $80 per windshield in order to get his bonus. Did he meet the goal?
Match the term with the correct definition.
1. A philosophy designed to integrate all organizational areas in order to provide customers with superior products and services while meeting organizational objectives. Requires improving quality and eliminating defects and waste.
2. Use of the Internet for business functions such as sales and customer service. Enables companies to reach customers around the world.
3. Evaluating a company’s performance by its economic, social, and environmental impact.
4. Software system that integrates all of a company’s functions, departments, and data into a single system.
5. A system in which a company produces products just when they are needed to satisfy needs. Suppliers deliver materials when they are needed to begin production, and finished units are completed at the right time for delivery to customers.
a. ERP b. JIT c. E-commerce d. TQM e. Triple bottom line
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