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Chapter 16: Q3RQ (page 884)
Explain the difference between line positions and staff positions.
The manufacturing company which produces good. Staff positions are involved in providing goods or services directly and staff positions support line positions.
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Computing cost of goods manufactured
Use the following inventory data for Caddy Golf Company to compute the cost of goods manufactured for the year:
Direct Materials Used $ 12,000
Manufacturing Overhead 21,000
Work-in-Process Inventory:
Beginning Balance 1,000
Ending Balance 5,000
Direct Labor 9,000
Finished Goods Inventory:
Beginning Balance 18,000
Ending Balance 4,000
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 above data, determine the company type. Identify each company as a service company, merchandising company, or manufacturing company
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.
Describe a merchandising company, and give an example.
How do period costs differ from product costs?
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