Introduction to Management Accounting

Chapter 1 Introduction to Management Accounting Short Exercises (5-10 min.) S 1-1 FA 1. Helps investors make investment decisions MA 2. Provides detailed reports on parts of the company MA 3. Helps in planning and controlling operations MA 4. Reports can influence employee behavior FA 5. Reports must follow Generally Accepted Accounting Principles (GAAP) FA 6. Reports audited annually by independent certified public accountants (10 min.) S 1-2 e 1. Providing high-quality, reliable products/services for a reasonable price in a timely manner f 2. Paying taxes in a timely manner d 3. Providing a safe, productive work environment a    4. Generating a profit b 5. Repaying principal plus interest in a timely manner (10 min.) S 1-3 d   1. A philosophy of delighting customers by providing them with superior products and services. Requires improving quality and eliminating defects and waste. c   2. Use of the Internet for such business functions as sales and customer service. Enables companies to reach thousands of customers around the world. a   3. Software systems that integrate all of a company’s worldwide functions, departments, and data into a single system. b   4. A system in which a company produces just in time to satisfy needs. Suppliers deliver materials just in time to begin production, and finished units are completed just in time for delivery to customers. (5-10 min.) S 1-4 Revenue from haircuts $4,900 Hair supplies expense 700 Building rent expense 1,400 Utilities 100 Depreciation on equipment 60 Total operating expenses $2,260 Net Operating Income $2,640 Unit cost of one haircut = total operating costs ÷ total number of haircuts $2,260 ÷ 220 haircuts = $10.27 per haircut (5 min.) S 1-5 The Glass Pro Cost of Goods Sold Computation Cost of goods sold: Beginning inventory $ 8,200 Purchases $41,000 Freight in 2,800 43,800 Cost of goods available for sale 52,000 Ending inventory (5,000) Cost of goods sold $47,000 (5-10 min.) S 1-6 Rustic Gear Fit Apparel Sales $102,000 (d) $203,200 Cost of goods sold Beginning inventory (a) 11,800 31,000 Purchases and freight in 51,000 (e) 60,000 Cost of goods available for sale (b) 62,800 91,000 Ending inventory 1,800 1,800 Cost of goods sold 61,000 (f) 89,200 Gross margin $ 41,000 $114,000 Selling and administrative expenses (c) 30,000 83,000 Operating income $ 11,000 (g) $ 31,000 a. $11,800 (Cost of goods available for sale, $62,800 [see b. below] minus purchases, $51,000) b. $62,800 (Cost of goods sold, $61,000, plus ending inventory, $1,800) c. $30,000 (Gross margin, $41,000, minus operating income, $11,000) (continued) S 1-6 d. $203,200 (Gross margin, $114,000, plus cost of goods sold, $89,200 [see f. below]) e. $60,000 (Cost of goods available for sale, $91,000, minus beginning inventory, $31,000) f. $89,200 (Cost of goods available for sale, $91,000, minus ending inventory, $1,800) g. $31,000 (Gross margin, $114,000, minus selling and administrative expenses, $83,000) Suggested approach: Solve in the following order: (b), (a), and (c). Then (e), (f), (d), and (g). (5 min.) S 1-7 Man 1. Cost of goods manufactured S, Mer, Man 2. The CEO’s salary Mer, Man 3. Cost of goods sold S, Mer, Man 4. Building rent expense S, Mer, Man 5. Customer service expense (5 min.) S 1-8 101 Cookies Computation of Direct Materials Used Direct materials used: Beginning materials inventory $ 4,200 Purchases of direct materials $6,700 Freight-in 100 6,800 Available for use 11,000 Ending materials inventory (1,600) Direct materials used $ 9,400 (5-10 min.) S 1-9 2 a. Artists’ wages 4 b. Wages of warehouse workers 1 c. Paper 5 d. Depreciation on equipment 4 e. Manufacturing plant manager’s salary 5 f. Property taxes on manufacturing plant 3 g. Glue for envelopes (5-10 min.) S 1-10 Reqs. 1 and 2 List of manufacturing overhead items and amounts: Glue for frames $ 400 Plant depreciation expense 6,500 Plant foreman’s salary 3,000 Plant janitor’s wages 1,100 Oil for manufacturing equipment 150 Sun Pro Company Total Manufacturing Overhead Computation Manufacturing overhead: Glue for frames $ 400 Plant depreciation expense 6,500 Plant foreman’s salary 3,000 Plant janitor’s wages 1,100 Oil for manufacturing equipment 150 Total manufacturing overhead $11,150 Items excluded and why: (1) glue for frames (it is not cost-effective to trace the low-cost glue to individual glasses), (2) depreciation on company cars (marketing expense), (3) interest expense (financing expense), (4) company president’s salary (administrative expense), and (5) lenses (direct materials) (5 min.) S 1-11 Max-Fli Golf Company Schedule of Cost of Goods Manufactured Year Ended December 31, 2010 Beginning work in process inventory $ 6,000 Add: Direct materials used 15,000 Direct labor 7,000 Manufacturing overhead 18,000 Total manufacturing costs incurred during year 40,000 Total manufacturing costs to account for 46,000 Less: Ending work in process inventory (3,000) Cost of goods manufactured $43,000 (5-10 min.) S 1-12 a. Period cost b. Inventoriable product cost* c. Inventoriable product cost d. Period cost e. Inventoriable product cost f. Period cost g. Inventoriable product cost h. Inventoriable product cost i. Period cost *Since the software is for tracking inventory, the cost would be associated with production. It would therefore likely be classified as part of manufacturing overhead, an inventoriable cost. However, some companies might consider the software an administrative cost, which would be a period cost. (5 min.) S 1-13 Providing earnings information to your brother before it is publicly announced violates the confidentiality standard. Stealing from your employer is a violation of the integrity standard. Skipping continuing education sessions could violate the requirement to maintain professional competence. If your company paid for you to attend the conference, skipping the sessions also violates the integrity standard. Failing to read the specifications of the software package before purchasing it violates the competence standard. Failing to provide job description information to management because you fear it may be used to cut a position in your department violates the credibility standard. Exercises (5 min.) E 1-14 a. Companies must follow GAAP in their financial accounting systems. b. Financial accounting develops reports for external parties, such as creditors and shareholders. c. When managers compare the company’s actual results to the plan, they are performing the controlling role of management. d. Managers are decision makers inside a company. e. Financial accounting provides information on a company’s past performance. f. Management accounting systems are not restricted by GAAP, but are chosen by comparing the costs versus the benefits of the system. g. Choosing goals and the means to achieve them is the planning function of management. (5 min.) E 1-15 a. Just-in-time(JIT)manufacturing is a management philosophy that focuses on producing products as needed by the customer. b. The goal of total quality management (TQM) is to please customers by providing them with superior products and services by eliminating defects and waste. c. Enterprise Resource Planning (ERP) can integrate all of a company’s worldwide functions, departments, and data. d. Firms adopt e-commerce to conduct business on the Internet. (5-10 min.) E 1-16 Buddy Grooming Income Statement Month of November Revenue from grooming $15,600 Wages $ 4,300 Grooming supplies expense 1,700 Building rent expense 1,400 Utilities 260 Depreciation on equipment 180 Total operating expenses $ 7,810 Net Operating Income $ 7,790 Unit cost to groom one dog = Total operating expenses ÷ total number of dogs groomed $7,810 ÷ 690 dogs = $11.32 per dog (5-10 min.) E 1-17 Georgie’s Grooming Income Statement Quarter Ended March 31, 2011 Revenue from grooming $46,300 100% Wages $16,700 Grooming supplies expense 4,000 Building rent expense 2,500 Utilities 1,100 Depreciation on furniture and equipment 300 Total operating expenses $24,600 53% Net Operating Income $21,700 47% b. Unit cost to groom one dog = Total operating expenses ÷ total number of dogs groomed $24,600 ÷ 2,700 dogs = $9.11 per dog (15 min.) E1-18 Req. 1 Gonzales Brush Company Income Statement Year Ended December 31, 2011 Sales revenue $128,500 100% Cost of goods sold: Beginning inventory $ 7,400 Purchases 62,800 Cost of goods available for sale 70,200 Ending inventory 6,000 Cost of goods sold 64,200 50% Gross profit 64,300 50% Selling and administrative expenses 45,400 35% Operating Income $ 18,900 15% Req. 2 Unit cost of one hair brush = total cost of goods sold ÷ total number of brushes sold $64,200 ÷ 5,700 = $11.26 per brush (15-20 min.) E 1-19 Flynt Corp. White Corp. Fit Apparel Beginning work in process inventory (a) 10,700 $ 40,000 $2,100 Direct materials used $14,900 $ 35,000 (g) $3,600 Direct labor 10,100 20,100 1,100 Manufacturing overhead: (b) 20,700 10,700 900 Total manufacturing costs incurred during year 45,700 (d) 65,800 (h) 5,600 Total manufacturing costs to account for $56,400 (e) 105,800 $7,700 Less: Ending work in process inventory (c) (4,500) (25,700) (2,800) Costs of goods manufactured $51,900 (f) $80,100 (i) $4,900 (a) Total manufacturing costs to account for $ 56,400 ? Total manufacturing costs incurred during year (45,700) = Beginning work in process inventory $10,700 (b) Total manufacturing costs incurred during year $ 45,700 ? Direct materials used (14,900) ? Direct labor (10,100) = Manufacturing overhead $ 20,700 (c) Total manufacturing costs to account for $ 56,400 ? Cost of goods manufactured (51,900) = Ending work in process inventory $ 4,500 (continued) E 1-19 (d) Direct materials used $ 35,000 Direct labor 20,100 Manufacturing overhead 10,700 Total manufacturing costs incurred during year $ 65,800 (e) Beginning work in process inventory $ 40,000 Total manufacturing costs incurred during year (from (d) above) 65,800 Total manufacturing costs to account for $105,800 (f) Total manufacturing costs to account for (from (e) above) $105,800 ? Ending work in process inventory (25,700) = Cost of goods manufactured $ 80,100 (g) Total manufacturing costs incurred during year (from (h) below) $ 5,600 ? Direct labor (1,100) ? Manufacturing overhead (900) = Direct materials used $ 3,600 (h) Total manufacturing costs to account for $ 7,700 ? Beginning work in process inventory (2,100) = Total manufacturing costs incurred during year $ 5,600 (i) Total manufacturing costs to account for $ 7,700 ? Ending work in process inventory (2,800) = Cost of goods manufactured $ 4,900 (15-20 min.) E 1-20 Req. 1 Clarkson Corp. Schedule of Cost of Goods Manufactured Year Ended December 31, 2012 Beginning work in process inventory $105,000 Add: Direct materials used: Beginning materials inventory $ 55,000 Purchases of materials 150,000 Available for use 205,000 Ending materials inventory (25,000) Direct materials used $180,000 Direct labor 127,000 Manufacturing overhead: Indirect labor $ 33,000 Insurance on plant 28,000 Depreciation—plant building and equipment 18,000 Repairs and maintenance—plant 7,000 86,000 Total manufacturing costs incurred during the year 393,000 Total manufacturing costs to account for 498,000 Less: Ending work in process inventory (61,000) Cost of goods manufactured $437,000 Req. 2 Unit product cost = Cost of goods manufactured ÷ total units produced = $437,000 ÷ 3,200 lamps = $136.56 per lamp (15-20 min.) E 1-21 Beginning work in process inventory $ 43,000 Add: Direct materials used: Beginning inventory $21,000 Purchases of materials 72,000 Available for use 93,000 Ending inventory (31,000) Direct materials used $62,000 Direct labor 89,000 Manufacturing overhead 46,000 Total manufacturing costs incurred during the year 197,000 Total manufacturing costs to account for 240,000 Less: Ending work in process inventory (29,000) Cost of goods manufactured 211,000 Add: Beginning finished goods inventory 15,000 Cost of goods available for sale 226,000 Less: Ending finished goods inventory 26,000 Cost of goods sold $200,000 (15 min.) E 1-22 Req. 1 Although the amount is not large now, the repeated nature of the thefts means that they add up over time. Also, the repeated nature of the thefts increases the severity of Cory Loftus’ unethical behavior. A new employee who has engaged in repeated thefts is unlikely to become a valued and trusted employee. This type of behavior is unethical. As controller, Mary Gonzales probably hired Cory, and she is also responsible for the lack of controls that permitted a new employee to commit this theft. However, this is no excuse for Cory’s unethical behavior. The controller should think carefully whether it is in her or the company’s interest to keep Cory. This incident also reflects poorly on Mary’s competence. She needs to learn from the experience and supervise the next bookkeeper more carefully. Req. 2 The new information makes Mary’s decision more complex. Being new, she may want to discuss the situation with the company president. Even if the bookkeeper believed he was just “borrowing” the money, his behavior still is unethical. It will probably be difficult to confirm whether or not Cory did in fact repay money he had taken in the past. Another possibility is that Cory repaid the amounts and the previous controller turned a blind eye. Unless Mary can obtain additional clarifying information, one alternative would be to indicate to Cory that this behavior will not be tolerated in the future and to establish better controls and closer supervision. Students’ responses will vary. Problems Group A (15 min.) P 1-23A Req. 1 The Tree Doctors Income Statement Month Ended January 31, 2012 Sales revenue $28,000 100% Salaries and wages 8,000 Chemicals 4,400 Depreciation on buildings and equipment 1200 Depreciation on truck 400 Supplies expense 400 Gasoline and utilities 1,400 Total operating expenses $15,800 56% Net operating income $ 12,200 44% Req. 2 Unit cost of one foot = total operating expenses ÷ total number of feet sprayed $15,800 ÷ 35,000 = $0.45 per foot Req. 3 Yes. (continued) P1-23A Req. 4 Enterprise resource planning (ERP) (15-20 min.) P 1-24A Clyde’s Pets Income Statement Year Ended December 31, 2011 Sales revenue $55,000 Cost of goods sold: Beginning inventory $15,300 Purchases of merchandise 25,000 Cost of goods available for sale 40,300 Ending inventory (10,700) Cost of goods sold 29,600 Gross profit 25,400 Operating expenses: Utilities expense $ 3,200 Rent expense 4,300 Sales commission expense 2,850 10,350 Operating income $15,050 (25-30 min.) P 1-25A Req. 1 Denim Bones Schedule of Cost of Goods Manufactured Year Ended December 31, 2011 Beginning work in process inventory $ 0 Add: Direct materials used: Beginning materials inventory $13,900 Purchases of direct materials 39,000 Available for use 52,900 Ending materials inventory (10,500) Direct materials used $42,400 Direct labor 24,000 Manufacturing overhead: Rent on plant $14,000 Utilities for plant 1,500 Plant janitorial services 200 15,700 Total manufacturing costs incurred during the year 82,100 Total manufacturing costs to account for 82,100 Less: Ending work in process inventory (3,500) Cost of goods manufactured $78,600 (continued) P 1-25A Req. 2 Denim Bones Income Statement Year Ended December 31, 2011 Sales revenue $108,000 Cost of goods sold: Beginning finished goods inventory $ 0 Cost of goods manufactured* 78,600 Cost of goods available for sale 78,600 Ending finished goods inventory (5,200) Cost of goods sold 73,400 Gross profit 34,600 Operating expenses: Customer service hotline expense $ 1,000 Delivery expense 1,300 Sales salaries expense 5,800 8,100 Operating income $ 26,500 *From the Schedule of Cost of Goods Manufactured in Req. 1. Req. 3 Denim Bones’ cost of goods sold is based on its cost of goods manufactured. In contrast, Clyde’s Pets cost of goods sold is based on its cost of merchandise purchases. (continued) P 1-25A Req. 4 Unit product cost = Cost of goods manufactured ÷ total units produced = $78,600 ÷ 17,400 = $4.52 per unit (25-35 min.) P 1-26A Webber Manufacturing Company Schedule of Cost of Goods Manufactured Month Ended June 30, 2012 Beginning work in process inventory $ 20,000 Direct materials used: Beginning materials inventory $21,000 Purchases of materials 56,000 Available for use 77,000 Ending materials inventory (27,000) Direct materials used $50,000 Direct labor 77,000 Manufacturing overhead 44,000 Total manufacturing costs incurred during the month 171,000 Total manufacturing costs to account for 191,000 Ending work in process inventory (22,000) Cost of goods manufactured $169,000 (continued) P 1-26A Webber Manufacturing Company Income Statement Month Ended June 30, 2012 Sales revenue $460,000 Cost of goods sold: Beginning finished goods inventory $114,000 Cost of goods manufactured* 169,000 Cost of goods available for sale 283,000 Ending finished goods inventory (61,000) Cost of goods sold 222,000 Gross profit 238,000 Operating expenses: Marketing expense 96,000 Administrative expenses 60,000 156,000 Operating income $82,000 *From the Schedule of Cost of Goods Manufactured (20-25 min.) P 1-27A Req. 1 and 2 Flow of Costs Through West Shoe Company’s Inventory Accounts Direct Materials Inventory Work in Process Inventory Finished Goods Inventory Beginning inventory……. $ .9M Beginning inventory…………….. $ 1.2M Beginning inventory……………. $ .4M + Purchases…………….. (a) 2.0M + Direct materials used………… $ 2.3M + Cost of goods manufactured. 25.3M + Direct labor…………………….. 18.8M + Manufacturing overhead……. (c) 4.7M Total manufacturing costs incurred during the year……. 25.8M = Direct materials = Total manufacturing = Cost of goods available for available for use…. (b) 2.9M costs to account for.......... 27.0M sale…………………………. 25.7M ? Ending inventory…….. .6M ? Ending inventory……………… (d) (1.7)M ? Ending inventory……………... (f) .5M = Direct materials used.. $2.3M = Cost of goods manufactured.. (e) $25.3M = Cost of goods sold…………... (g) $25.2M Req. 3 $2.3M - $0.9M + $0.6M = $2.0M (20-25 min.) P 1-28A If the goods have been received, postponing recording of the purchase understates liabilities. This is unethical and inconsistent with the IMA standards even if the supplier agrees to delay billing. The software has not been sold. Therefore, it would be inconsistent with the IMA standards to record it as sales. Delaying year-end closing incorrectly records next year’s sales as this year’s sales. This is clearly unethical and inconsistent with the IMA standards. The appropriate allowance for bad debts is a difficult judgment. The decision should not be driven by the desire to meet a profit goal. It should be based on the likelihood that the company will collect the debts. We cannot determine this without more information. However, since the company emphasizes earnings growth, which can lead to sales to customers with weaker credit records, reducing the allowance seems questionable. This strategy is not clear whether it is inconsistent with the IMA standards. (continued) P 1-28A If the maintenance is postponed, there is no transaction to record. This strategy is beyond the responsibility of the controller, so it does not violate IMA standards. Strategies a, b, and c are clearly unethical and inconsistent with the IMA standards of integrity, objectivity, and perhaps competence. Strategy d is likely unethical, but we cannot be certain without more information. The controller should resist attempts to implement a, b, and c, and she should gather more information about d. If the president ignores Reinhardt’s concerns and still insists that these strategies be implemented, then Reinhardt needs to decide if she wants to work for a company that engages in unethical behavior. Problems Group B (15 min.) P 1-29B Req. 1 The Tree People Income Statement Month Ended March 31, 2012 Sales revenue $22,000 100% Salary 7,000 Chemicals 4,900 Depreciation on buildings and equip 1,100 Depreciation on truck 250 Supplies expense 600 Gas and Utilities 1,000 Total operating expenses $14,850 68% Net operating income $7,150 33%* *rounding difference Req. 2 Unit cost per automobile = Total operating expenses ÷ total number of automobiles repaired $14,850 ÷ 20,000 = $0.74 per foot (continued) P 1-29B Req. 3 The manager of The Tree People must keep unit operating costs below $.60 per foot in order to get his bonus. Did the manager meet his goal? No. Req. 4 What kind of system could The Tree People use to integrate all their data? The Tree People could use a/an enterprise resource planning (ERP) system to integrate all their data. (15 min.) P 1-30B Cam’s Pets Income Statement Year Ended December 31, 2011 Sales revenue $55,000 Cost of goods sold: Beginning inventory $15,900 Purchases of merchandise 24,000 Cost of goods available for sale 39,900 Ending inventory (10,400) Cost of goods sold 29,500 Gross profit 25,500 Operating expenses: Utilities expense 3,800 Rent expense 4,100 Sales commissions expense 2,550 10,450 Operating income $15,050 (25-30 min.) P 1-31B Req. 1 Chewy Bones Schedule of Cost of Goods Manufactured Year Ended December 31, 2011 Beginning work in process inventory $ 0 Add: Direct materials used: Beginning materials inventory $13,300 Purchases of direct materials 33,000 Available for use 46,300 Ending materials inventory (9,500) Direct materials used $36,800 Direct labor 25,000 Manufacturing overhead: Rent on plant $ 8,000 Utilities for plant 1,100 Plant janitorial services 300 9,400 Total manufacturing costs incurred during the year 71,200 Total manufacturing costs to account for 71,200 Less: Ending work in process inventory (3,500) Cost of goods manufactured $67,700 (continued) P 1-31B Req. 2 Chewy Bones Income Statement Year Ended December 31, 2011 Sales revenue $106,000 Cost of goods sold: Beginning finished goods inventory $ 0 Cost of goods manufactured* 67,700 Cost of goods available for sale 67,700 Ending finished goods inventory (5,700) Cost of goods sold 62,000 Gross profit 44,000 Operating expenses: Customer service hotline expense $ 1,600 Delivery expense 1,300 Sales salaries expense 5,200 8,100 Operating income $ 35,900 *From the Schedule of Cost of Goods Manufactured in Req. 1. Req. 3 A manufacturing company’s cost of goods sold is based on its cost of goods manufactured. In contrast, a merchandiser cost of goods sold is based on its merchandise purchases. (continued) P 1-31B Req. 4 Unit product cost = Cost of goods manufactured ÷ total units produced = $67,700 ÷ 17,300 = $3.91 per unit (25-35 min.) P 1-32B Nelly Manufacturing Company Schedule of Cost of Goods Manufactured Month Ended June 30, 2012 Beginning work in process inventory $ 28,000 Direct materials used: Beginning materials inventory $27,000 Purchases of materials 51,000 Available for use 78,000 Ending materials inventory (28,000) Direct materials used $50,000 Direct labor 79,000 Manufacturing overhead 44,000 Total manufacturing costs incurred during the month 173,000 Total manufacturing costs to account for 201,000 Ending work in process inventory (22,000) Cost of goods manufactured $179,000 Nelly Manufacturing Company Income Statement Month Ended June 30, 2011 Sales revenue $470,000 Cost of goods sold: Beginning finished goods inventory $115,000 Cost of goods manufactured* 179,000 Cost of goods available for sale 294,000 Ending finished goods inventory (62,000) Cost of goods sold 232,000 Gross profit 238,000 Operating expenses: Marketing expenses 92,000 Administrative expenses 67,000 159,000 Operating income $ 79,000 *From the Schedule of Cost of Goods Manufactured (20-25 min.) P 1-33B Flow of Costs Through Happy Feet Shoe Company’s Inventory Accounts Direct Materials Inventory Work in Process Inventory Finished Goods Inventory Beginning inventory……. $ .5M Beginning inventory………......... $ 1.8M Beginning inventory……………. $ 1.1M + Purchases…………….. 2.8M + Direct materials used………... $2.7M + Cost of goods manufactured. 25.6M + Direct labor……………………. 11.8M + Manufacturing overhead……. 11.3M Total manufacturing costs incurred during the year....... 25.8M = Direct materials = Total manufacturing = Cost of goods available for available for use…. 3.3M costs to account for…….. 27.6M sale…………………………. 26.7M ? Ending inventory…….. .6M ? Ending inventory……………... (b) 2.0M ? Ending inventory……………... (d) .7M = Direct materials used.. (a) $2.7M = Cost of goods manufactured. (c) $25.6M = Cost of goods sold…………... (e) $26.0M (15-20 min.) P 1-34B If the invoicing is postponed for valid billings then it is inconsistent with the IMA standards. The value of each individual sales return is not relevant. Failing to record sales returns and allowances will falsely inflate this year’s sales, so it is inconsistent with the IMA standards. Delaying closing to improperly inflate sales is inconsistent with the IMA standards. The appropriate allowance for bad debts is a difficult judgment. The allowance for bad debts should not be driven by the desire to meet a profit goal. It should be based on the collectibility of the accounts receivable. Without more information on the collectibility of accounts receivable, it is not clear whether this strategy would violate IMA standards. (continued) P 1-34B Postponing route monthly maintenance expenditures is a management decision and does not violate the IMA standards. Strategies a, b and c are clearly unethical and violate the IMA standards of integrity, objectivity, and perhaps competence. Without more information, it is not clear whether strategy d violates the IMA standards. The controller should resist attempts to implement a, b and c and should gather more information about d. If the president ignores Tom’s concerns, then Tom needs to consider if she wants to work for a company that engages in unethical behavior. (5-10 minutes) E 1-35 Shaft and handle of weed eating: direct materials Motor of weed eating: direct materials Factory labor for workers assembling weed eaters: direct labor Nylon thread in weed eater: factory overhead Glue to hold housing together: factory overhead Plant janitorial wages: factory overhead Depreciation on factory equipment: factory overhead Rent on plant: factory overhead Sales commission expense: period costs Administrative salaries: period costs Plant utilities: factory overhead Shipping costs to deliver finished weed eaters to customers: period costs (10-15 min.) P 1-36 Haupt Consulting Schedule of Cost of Goods Manufactured Month Ended January 31, 2012 Beginning work in process inventory $ 0 Direct materials used: Beginning materials inventory $10,000 Purchases of materials 15,000 Available for use 25,000 Ending materials inventory (9,000) Direct materials used $16,000 Direct labor 300,000 Manufacturing overhead: Rent on plant 8,000 Utilities for plant 12,000 Plant janitorial services 300 20,300 Total manufacturing costs incurred during the month 336,300 Total manufacturing costs to account for 336,300 Ending work in process inventory (22,000) Cost of goods manufactured $314,300 12 Managerial Accounting 1/e Solutions Manual 1 Chapter 1 Introduction to Management Accounting 12 Managerial Accounting 1/e Solutions Manual 1 Chapter 1 Introduction to Management Accounting 12 Managerial Accounting 1/e Solutions Manual 1 Chapter 1 Introduction to Management Accounting 12 Managerial Accounting 1/e Solutions Manual 1 Chapter 1 Introduction to Management Accounting 12 Managerial Accounting 1/e Solutions Manual 1 Chapter 1 Introduction to Management Accounting