Job-Order Costing for Manufacturing and Service Companies
Chapter 2 Selected Solutions
Job-Order Costing for Manufacturing and Service Companies
P2. [LO 3].
a. Terra Cotta Designs
Schedule of Cost of Goods Manufactured
For the Year Ended December 31, 2011
Beginning balance in work in process $ 600,000
Add current manufacturing costs: Direct material: Beginning balance $ 400,000 Purchases 1,000,000 Ending balance (200,000) $1,200,000
Direct labor 2,100,000 Manufacturing Overhead 600,000 3,900,000 Total 4,500,000
Less ending balance in work in process 350,000
Cost of goods manufactured $4,150,000
b. Terra Cotta Designs
Income Statement
For the Year Ended December 31, 2011
Sales $6,100,000
Less cost of goods sold: Beginning finished goods $ 700,000 Add cost of goods manufactured 4,150,000 Cost of goods available for sale 4,850,000 Less ending finished goods 350,000 4,500,000
Gross profit 1,600,000
Less nonmanufacturing expenses: Selling expenses 400,000 General & admin. expenses 850,000 1,250,000
Net income $ 350,000
Case 2-2, LO 7, 9
YSL MARKETING RESEARCH
Summary
Marketing research firm is bidding on a job and is considering various costs.
• Requires calculation of full cost and consideration of incremental costs including opportunity costs.
• Brings up the importance of factors that are difficult to quantify.
Questions to ask students
1. Summarize the situation facing YSL Marketing Research.
2. What is the expected full cost of the Surenex engagement?
3. What is the lowest amount that Connie Bachmann, a partner at YSL, can bill without hurting company profit?
4. What should Connie consider in addition to the amount just calculated?
Discussion
I begin the discussion by asking a student to summarize the situation facing YSL Marketing Research. The company has been asked to conduct a survey for Surenex—a firm that has the potential to be a valued long-run client. However, Surenex is not
Job-Order Costing for Manufacturing and Service Companies
P2. [LO 3].
a. Terra Cotta Designs
Schedule of Cost of Goods Manufactured
For the Year Ended December 31, 2011
Beginning balance in work in process $ 600,000
Add current manufacturing costs: Direct material: Beginning balance $ 400,000 Purchases 1,000,000 Ending balance (200,000) $1,200,000
Direct labor 2,100,000 Manufacturing Overhead 600,000 3,900,000 Total 4,500,000
Less ending balance in work in process 350,000
Cost of goods manufactured $4,150,000
b. Terra Cotta Designs
Income Statement
For the Year Ended December 31, 2011
Sales $6,100,000
Less cost of goods sold: Beginning finished goods $ 700,000 Add cost of goods manufactured 4,150,000 Cost of goods available for sale 4,850,000 Less ending finished goods 350,000 4,500,000
Gross profit 1,600,000
Less nonmanufacturing expenses: Selling expenses 400,000 General & admin. expenses 850,000 1,250,000
Net income $ 350,000
Case 2-2, LO 7, 9
YSL MARKETING RESEARCH
Summary
Marketing research firm is bidding on a job and is considering various costs.
• Requires calculation of full cost and consideration of incremental costs including opportunity costs.
• Brings up the importance of factors that are difficult to quantify.
Questions to ask students
1. Summarize the situation facing YSL Marketing Research.
2. What is the expected full cost of the Surenex engagement?
3. What is the lowest amount that Connie Bachmann, a partner at YSL, can bill without hurting company profit?
4. What should Connie consider in addition to the amount just calculated?
Discussion
I begin the discussion by asking a student to summarize the situation facing YSL Marketing Research. The company has been asked to conduct a survey for Surenex—a firm that has the potential to be a valued long-run client. However, Surenex is not