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An Introduction To Cost Terms and Purposes Homework 2-42, 46 2-42 Income Statement and Schedule of Cost of Goods Manufactured. Chan's Manufacturing

Chapter 2

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245 views3 pages

An Introduction To Cost Terms and Purposes Homework 2-42, 46 2-42 Income Statement and Schedule of Cost of Goods Manufactured. Chan's Manufacturing

Chapter 2

Uploaded by

Cheuk Wai YEUNG
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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CHAPTER 2

AN INTRODUCTION TO COST TERMS AND PURPOSES

Homework：2-42, 46
2-42 Income statement and schedule of cost of goods manufactured. Chan’s manufacturing
costing system uses a three-part classification of direct materials, direct manufacturing labor, and
manufacturing overhead costs. The following items (in millions) pertain to Chan Corporation:

For Specific Date For Year 2020


Work-in-process inventory, $15 Plant utilities $ 9
Jan. 1, 2020
Direct materials inventory, 10 Indirect manufacturing labor 24
Dec. 31, 2020
Finished-goods inventory, 20 Depreciation—plant and 5
Dec. 31, 2020 equipment
Accounts payable, Dec. 31, 28 Revenues 352
2020
Accounts receivable, Jan. 1, 51 Miscellaneous manufacturing 12
2020 overhead
Work-in-process inventory, 8 Marketing, distribution, and 92
Dec. 31, 2020 customer-service costs
Finished-goods inventory, 40 Direct materials purchased 83
Jan 1, 2020
Accounts receivable, Dec. 37 Direct manufacturing labor 48
31, 2020
Accounts payable, Jan. 1, 42 Plant supplies used 3
2020
Direct materials inventory, 31 Property taxes on plant 7
Jan. 1, 2020

Required:
Prepare an income statement and a supporting schedule of cost of goods manufactured.

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2-46 Comprehensive problem on unit costs, product costs. A UK-based company Office
Equipment manufactures and sells metal shelving. It began operations on January 1, 2020. Costs
incurred for 2020 are as follows (V stands for variable; F stands for fixed):

Direct materials used £149,500 V


Direct manufacturing labor costs 34,500 V
Plant energy costs 6,000 V
Indirect manufacturing labor costs 12,000 V
Indirect manufacturing labor costs 17,000 F
Other indirect manufacturing costs 7,000 V
Other indirect manufacturing costs 27,000 F
Marketing, distribution, and customer-service costs 126,000 V
Marketing, distribution, and customer-service costs 47,000 F
Administrative costs 58,000 F

Variable manufacturing costs are variable with respect to units produced. Variable marketing,
distribution, and customer-service costs are variable with respect to units sold.
Inventory data are as follows:
Beginning: January 1, 20120 Ending: December 31, 2020
Direct materials 0 lb 2,300 lbs
Work in process 0 units 0 units
Finished goods 0 units ? units

Production in 2020 was 115,000 units. Two pounds of direct materials are used to make one unit
of finished product.
Revenues in 2020 were £540,000. The selling price per unit and the purchase price per pound of
direct materials were stable throughout the year. The company’s ending inventory of finished
goods is carried at the average unit manufacturing cost for 2020. On December 31, 2020,
finished-goods inventory was £15,400.

Required:
1. Calculate direct materials inventory, total cost, December 31, 2020.
2. Calculate finished-goods inventory, total units, December 31, 2020.
3. Calculate selling price in 2020.
4. Calculate operating income for 2020.

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