Job-Order Costing for Manufacturing and Service Companies

Topics: Costs, Cost, Economics Pages: 3 (523 words) Published: September 14, 2014
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
Purchases1,000,000
Ending balance (200,000)$1,200,000

Direct labor2,100,000
Manufacturing Overhead 600,000 3,900,000
Total4,500,000
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 manufactured4,150,000
Cost of goods available for sale4,850,000
Less ending finished goods 350,0004,500,000
Gross profit1,600,000
Less nonmanufacturing expenses:
Selling expenses400,000
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...
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