Managerial Accounting Paper

Topics: Expense, Revenue, Variable cost Pages: 11 (1586 words) Published: November 4, 2013

Abstract: This project consists of a compilation of Managerial Accounting principles and concepts that have been learned throughout the ACCT 202 course. The theory learned was put into practice by using direct Accounting Information from the Nike Corporation, as a guideline for our own company, Scooter’s Sneakers. By fulfilling the guidelines for the project, the group was better able to visualize and understand the techniques and reasoning for the information learned from each Chapter taught in class.

Scooter’s Sneakers is a footwear corporation that has recently been created as an extension of Nike Incorporated’s family of manufacturing products. This company focuses on creating comfortable all-purpose sneakers, all with the signature color, design, materials, contouring, and durability. These sneakers are designed to be a classic, so that whenever anyone sees this particular shoe, they associate it with quality, comfort, durability, and effortless chic.

Since it is a relatively new company, Scooter’s hopes to sell 20,000 of these sneakers within the calendar year. Each sneaker will be priced at $80.00, which would bring in a total of $1,600,000.00 at its year end. This project will show the information used and formatting to find the Cost of Goods Manufactured (C.O.G.M.), Manufacturing Overhead, Cost of Goods Sold (C.O.G.S.), Income Statement, quality management approaches, and various costs and expenses incurred for Scooter’s Sneakers.  

Cost of Goods Manufactured:
Scooter keeps its reputation by using only the finest quality materials. Every month, they purchase leather, canvas, cotton, and synthetic leather fabrics, solid rubber, gum rubber, foam pellets, and shoe laces from China and India in order to directly produce these sneakers, solely because the materials are relatively cheaper. Freight in is totaled at 5% of total purchases, which equals to $200. At the end of the year, Scooter’s managers want $5,000 worth of direct materials in stock. It takes four hours of direct labor to completely make one sneaker, working eight hours a day, five days a week. Each employee works for $9.50 an hour, and the company started with 20 employees. Ending work in Process is totaled at $67,690 at year end. In addition to these, plastic wrapping, cardboard boxes, ink, and paper are required for proper packaging and handling. Currently, the plant is operating in a rented building at a monthly rate of $ 1,200, which includes the use of Nike’s old equipment and machinery. Plant managers are hired to supervise employee production and ensure proper usage of equipment; likewise, janitorial staff members are also necessary to ensure that the work place is kept according to safety and health standards. In the storage room, there is a total of $36,000 worth of sneakers for sale at the end of every fiscal year.

Direct Materials:
Fabrics $ 700
Solid Rubber $ 2,000
Gum Rubber $ 1,000
Foam Pellets $ 200
Shoe Laces $ 100
Total: $4,000
Direct Labor:
8 hrs. a day X 5 days= 40 hrs. a week
Weekly Salary =40 hrs. X $9.50 an hr.
= $380.00
Monthly Salary= $380.00 X 4 (four weeks in one month)
Total Salaries Expense:
= Monthly Salary X Number of Employees
=$1,520 X 20
Indirect Materials:
Plastic Wrapping $74
Cardboard Boxes $82
Ink $53
Paper $32__
Total: $241
Indirect Labor:
Plant Manager Wage $ 1,945
Janitorial Staff Wage $ 800_
Total: $2,745

Rent $1,200
Utilities $600

Manufacturing Overhead= Indirect Materials + Indirect Labor + Rent + Utilities
= $241 + $2,745 + $1,200 + $600
Total MOH = $ 4,786
Schedule of Cost of Goods Manufactured
Year Ended December 31, 2014
Beginning Work in Process Inventory$ 0
Direct Material Used:
Beginning direct...
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