Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2008
Work in process inventory, June 1$5,000
Raw materials inventory, June 1$9,000
Raw materials purchases54,000
Total raw materials available for use63,000
Less: Raw materials inventory, June 3013,100
Direct materials used49,900
Miscellaneous factory costs1,500
Total manufacturing overhead19,900
Total manufacturing costs126,800
Total cost of work in process131,800
Less: Work in process inventory, June 307,000
Cost of goods manufactured124,800
(Partial) Balance Sheet
June 30, 2008
Work in process7,000
| | Product Costs| | |
| | Direct| | Direct| | Manufacturing| | Period| Cost Item| | Materials| | Labor| | Overhead| | Costs| Rent on factory equipment| | | | | | $ 7,000| | | Insurance on factory building| | | | | | 1,500| | | Raw materials| | $75,000| | | | | | | Utility costs for factory| | | | | | 900| | | Supplies for general office| | | | | | | | $300| Wages for assembly line workers| | | | $43,000| | | | | Depreciation on office equipment| | | | | | | | 800| Miscellaneous materials| | | | | | 1,100| | | Factory manager’s salary| | | | | | 5,700| | | Property taxes on factory building| | | | | | 400| | | Advertising for helmets| | | | | | | | 14,000| Sales commissions| | | | | | | | 7,000| Depreciation on factory building| | | | | | 1,500| | | | | $75,000| | $43,000| | $18,100| | $22,100|
(b) Total production costs
Total production cost$136,100
Production cost per helmet = $136,100/10,000 = $13.61.
(a) The stakeholders in this situation are:
• The users of Robbin Industries’ financial statements.
• Wayne Terrago, controller.
• The vice-president of finance.
• The president of Robbin Industries.
(b) The ethical issues in this situation pertain to the adherence to sound and acceptable accounting principles. Intentional violation of generally accepted accounting principles in order to satisfy a practical short-term personal or company need and thus create misleading financial statements would be unethical. Selecting one acceptable method of accounting and reporting among other acceptable methods is not necessarily unethical.
(c) Ethically, the management of Robbin Industries should be trying to report the financial condition and results of operations as fairly as possible;...