I. Cost analysis and identification.
Georgia Pacific, a manufacturer, incurs the following costs:
a. Classify each cost as either a product or a period cost. If a product cost, identify it as a prime or a conversion cost.
b. Classify each product cost as either a direct cost or an indirect cost using the product as the cost object.
II. Manufacturing statement preparation
Given the following selected account balances of Randa Company, prepare its manufacturing statement for the year ended on December 31, 2013. Include a listing of the individual overhead account balances in this statement.
Sales………………………………………………………………………………………..$1,252,000
Raw Materials inventory, Dec.31,2012………………………………………………….39,000
Goods in process inventory, Dec. 31, 2012…………………………………………….55,900
Finished goods inventory, Dec. 31, 2012……………………………………………….64,750
Raw materials purchases………………………………………………………………….177,600
Direct labor…………………………………………………………………………………..227,000
Factory computer supplies used………………………………………………………….19,840
Indirect labor…………………………………………………………………………………49,000
Repairs – factory equipment……………………………………………………………….7,250
Rent cost of factory building……………………………………………………………….59,000
Advertising expense…………………………………………………………………………96,000
General and administrative expense……………………………………………………..131,300
Raw materials inventory, Dec. 31, 2013…………………………………………………44,700
Goods in process inventory, Dec. 31, 2013……………………………………………..43,500
Finished goods inventory, Dec. 31, 2013………………………………………………..69,300
III. Income Statement Preparation
Use the information from problem II above to prepare an income statement for Randa Company (a manufacturer). Assume that its cost of goods manufactured is $546,390.
IV. Inventory computation and reporting
Shown here are annual financial data at December 31, 2013, taken from two different companies.
Pinnacle Retail Slope Board Manufacturing Beginning inventory Merchandise $150,000 Finished goods $300,000 Cost of purchases 250,000 Cost of goods manufactured 586,000 Ending inventory Merchandise 100,000 Finished goods 200,000
1. Compute the cost of goods sold section of the income statement at December 31, 2013, for each company. Include the proper date, title and format in the solution.
2. Write a half-page memorandum to your instructor (a) identifying the inventory accounts and (b) describing where each is reported on the income statement and balance sheet for both companies.
V. Analysis of cost flows
As of the end of June, the job cost sheets at Racing Wheels, Inc. show the following total costs accumulated on three custom jobs:
