Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Textbook Question
Chapter 2, Problem 58P
Cost of Goods Manufactured, Income Statement
W. W. Phillips Company produced 4,000 leather recliners during the year. These recliners sell for $400 each. Phillips had 500 recliners in finished goods inventory at the beginning of the year. At the end of the year, there were 700 recliners in finished goods inventory. Phillips’ accounting records provide the following information:
Required:
- 1. Prepare a statement of cost of goods manufactured.
- 2. Compute the average cost of producing one unit of product in the year.
- 3. Prepare an income statement for external users.
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The following income statement was drawn from the records of Adams Company, a merchandising firm:
ADAMS COMPANY
Income Statement
For the Year Ended December 31, Year 1
Sales revenue (7,500 units x $167)
Cost of goods sold (7,500 units x $82)
Gross margin
Sales commissions (5% of sales)
Administrative salaries expense
Advertising expense
Depreciation expense
Shipping and handling expenses (7,500 units x $5)
Net income
Required
$1,252,500
(615,000)
637,500
(62,625)
(88,000)
(40,000)
(49,000)
(37,500)
$360,375
a. Reconstruct the income statement using the contribution margin format.
b. Calculate the magnitude of operating leverage.
c. Use the measure of operating leverage to determine the amount of net income Adams will earn if sales increase by 20 per
Complete this question by entering your answers in the tabs below.
Req A
Req B and C
Reconstruct the income statement using the contribution margin format.
ADAMS COMPANY
Income Statement
For the Year Ended December 31, Year 1
Cost of Goods Sold, Profit margin, and Net Income for a Manufacturing Company
The following information is available for Bandera Manufacturing Company for the month ending January 31:
Cost of goods manufactured
$165,390
Selling expenses
55,250
Administrative expenses
29,210
Sales
351,890
Finished goods inventory, January 1
39,760
Finished goods inventory, January 31
36,240
a. For the month ended January 31, determine Bandera Manufacturing’s cost of goods sold.
Bandera Manufacturing Company
Cost of Goods Sold
January 31
$
$
$
b. For the month ended January 31, determine Bandera Manufacturing’s gross profit.
Bandera Manufacturing Company
Gross Profit
January 31
$
$
c. For the month ended January 31, determine Bandera Manufacturing’s net income.
Bandera Manufacturing Company
Net Income
January 31
$
Operating expenses:
$
Total operating expenses…
Cost of Goods Sold, Profit margin, and Net Income for a Manufacturing Company
The following information is available for Aricanly Manufacturing Company for the month ending January 31:
Cost of goods manufactured
$292,550
Selling expenses
97,720
Administrative expenses
51,660
Sales
622,440
Finished goods inventory, January 1
70,340
Finished goods inventory, January 31
64,110
a. For the month ended January 31, determine Aricanly's cost of goods sold.
Aricanly Manufacturing
Company
Cost of Goods Sold
January 31
Chapter 2 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 2 - Explain the difference between cost and expense.Ch. 2 - What is the difference between accumulating costs...Ch. 2 - What is a cost object? Give some examples.Ch. 2 - What is a direct cost? An indirect cost? Can the...Ch. 2 - What is allocation?Ch. 2 - What is the difference between a product and a...Ch. 2 - Define manufacturing overhead.Ch. 2 - Explain the difference between direct materials...Ch. 2 - Define prime cost and conversion cost. Why cant...Ch. 2 - How does a period cost differ from a product cost?
Ch. 2 - Define selling cost. Give five examples of selling...Ch. 2 - What is the cost of goods manufactured?Ch. 2 - What is the difference between cost of goods...Ch. 2 - What is the difference between the income...Ch. 2 - Why do firms like to calculate a percentage column...Ch. 2 - Accumulating costs means that a. costs must be...Ch. 2 - Product (or manufacturing) costs consist of a....Ch. 2 - Use the following information for Multiple-Choice...Ch. 2 - Prob. 4MCQCh. 2 - The accountant in a factory that produces biscuits...Ch. 2 - Which of the following is an indirect cost? a. The...Ch. 2 - Prob. 7MCQCh. 2 - Kelloggs makes a variety of breakfast cereals....Ch. 2 - Prob. 9MCQCh. 2 - Stone Inc. is a company that purchases goods...Ch. 2 - JackMan Company produces die-cast metal bulldozers...Ch. 2 - Prob. 12MCQCh. 2 - Use the following information for Multiple-Choice...Ch. 2 - Use the following information for Multiple-Choice...Ch. 2 - Use the following information for Multiple- Choice...Ch. 2 - Prob. 16MCQCh. 2 - Use the following information for Multiple-Choice...Ch. 2 - 2-18 Use the following information for Multiple-...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Direct Materials Used in Production Slapshot...Ch. 2 - Cost of Goods Manufactured Slapshot Company makes...Ch. 2 - Cost of Goods Sold Slapshot Company makes ice...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Prob. 26BEACh. 2 - Prob. 27BEBCh. 2 - Prob. 28BEBCh. 2 - Direct Materials Used in Production Morning Smiles...Ch. 2 - 2-30 Cost of Goods Manufactured Morning Smiles...Ch. 2 - Cost of Goods Sold Morning Smiles Coffee Company...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Use the following information for Brief Exercise:...Ch. 2 - Service Organization Income Statement Healing...Ch. 2 - Prob. 35ECh. 2 - Products versus Services, Cost Assignment Holmes...Ch. 2 - Assigning Costs to a Cost Object, Direct and...Ch. 2 - Total and Unit Product Cost Martinez Manufacturing...Ch. 2 - Cost Classification Loring Company incurred the...Ch. 2 - Classifying Cost of Production A factory...Ch. 2 - Use the following information for Exercises 2-41...Ch. 2 - Use the following information for Exercises 2-41...Ch. 2 - Direct Materials Used Hannah Banana Bakers makes...Ch. 2 - Cost of Goods Sold Allyson Ashley makes jet skis....Ch. 2 - Use the following information for Exercises 2-45...Ch. 2 - Use the following information for Exercises 2-45...Ch. 2 - Use the following information for Exercises 2-47...Ch. 2 - Use the following information for Exercises 2-47...Ch. 2 - Use the following information for Exercises 2-47...Ch. 2 - Understanding the Relationship between Cost Flows,...Ch. 2 - Manufacturing, Cost Classification, Product Costs...Ch. 2 - Cost Assignment, Direct Costs Harry Whipple, owner...Ch. 2 - Cost of Direct Materials, Cost of Goods...Ch. 2 - Preparation of Income Statement: Manufacturing...Ch. 2 - Cost of Goods Manufactured, Cost of Goods Sold...Ch. 2 - Cost Identification Following is a list of cost...Ch. 2 - Income Statement, Cost of Services Provided,...Ch. 2 - Cost of Goods Manufactured, Income Statement W. W....Ch. 2 - Cost Definitions Luisa Giovanni is a student at...Ch. 2 - Cost Identification and Analysis, Cost Assignment,...Ch. 2 - Cost Analysis, Income Statement Five to six times...Ch. 2 - Cost Classification, Income Statement Gateway...Ch. 2 - Cost Information and Ethical Behavior, Service...
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