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Activity No. 2: Problem 1

This document contains two problems related to preparing financial statements for manufacturing companies. Problem 1 asks to prepare a cost sheet and income statement for Piedmont Corporation for 2011, given revenues of $600 million. Problem 2 provides cost data for Foxwood Company, a metal and woodcutting manufacturer, and asks to prepare an income statement with a cost of goods manufactured schedule, classify costs as direct/indirect and variable/fixed, and compute direct material and plant leasing costs per unit for their 2011 production level of 900,000 units and projected 2012 production level of 1,000,000 units.

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Charice Anne Villamarin
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87 views1 page

Activity No. 2: Problem 1

This document contains two problems related to preparing financial statements for manufacturing companies. Problem 1 asks to prepare a cost sheet and income statement for Piedmont Corporation for 2011, given revenues of $600 million. Problem 2 provides cost data for Foxwood Company, a metal and woodcutting manufacturer, and asks to prepare an income statement with a cost of goods manufactured schedule, classify costs as direct/indirect and variable/fixed, and compute direct material and plant leasing costs per unit for their 2011 production level of 900,000 units and projected 2012 production level of 1,000,000 units.

Uploaded by

Charice Anne Villamarin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ACTIVITY NO.

Problem 1:

Required:
1) Prepare a cost sheet/cost statement for Piedmont Corporation
2) Revenues for 2011 were $600 million. Prepare the income statement for 2011.

Problem 2:
Foxwood Company is a metal- and woodcutting manufacturer, selling products to the home construction market.
Consider the following data for 2011:

Required:
1. Prepare an income statement with a separate supporting schedule of cost of goods Required manufactured. For
all manufacturing items, classify costs as direct costs or indirect costs and indicate by V or F whether each is
basically a variable cost or a fixed cost (when the cost object is a product unit). If in doubt, decide on the basis of
whether the total cost will change substantially over a wide range of units produced.

2. Suppose that both the direct material costs and the plant-leasing costs are for the production of 900,000 units.
What is the direct material cost of each unit produced? What is the plant-leasing cost per unit? Assume that the
plant-leasing cost is a fixed cost.
3. Suppose Foxwood Company manufactures 1,000,000 units next year. Repeat the computation in requirement 2
for direct materials and plant-leasing costs. Assume the implied cost-behavior patterns persist.

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