Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Chapter IE, Problem 19IE
1.
To determine
Introduction: An income statement is a profitability statement that represents the profit position of the business for a particular period. It is a financial statement prepared at the end of the year to determine the
The given budgeted figures.
2.
To determine
Introduction: An income statement is a profitability statement that represents the profit position of the business for a particular period. It is a financial statement prepared at the end of the year to determine the profit earned or loss incurred during the period.
To prepare: The income statement and reconciliation.
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1. Assign Overhead Costs to Activity Cost Pools
国日
First-Stage Allocation to Activity Cost Pools - Excel
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2 Total costs and distribution of resource consumption across activity cost pools:
3
4
Activity Cost Pools
Customer
Product
Customer
Total Cost
Orders
Development
Relations
Other
Total
6 Production Department:
7
Indirect factory wages
$
400,000
50%
30%
15%
5% 100%
Factory equipment depreciation
Factory utilities
10 Factory property taxes and insurance
8
150,000
55%
30%
0%
15% 100%
9
120,000
59%
34%
0%
7%
100%
75,000
57%
33%
0%
10%
100%
11
12 General Administrative Department:
Administrative wages and salaries
Office equipment depreciation
13
275,000
20%
10%
40%
30% 100%
14
40,000
32%
16%
15%
37%
100%
15
Administrative property taxes and insurance
60,000
0%
0%
0%
100%…
ABSORPTION COSTING VERSUS THROUGHPUT COSTING
The book The Goal illustrates the concept of throughput costing. For the problem below
prepare all journal entries and determine the impact on the income statement of the
differences between absorption costing (normal accounting) and throughput costing.
HINT: pay very careful attention to definitions of throughput, inventory and operating
expense from the book
BUDGETED MANUFACTURING COSTS
DIRECT MATERIAL
$20
PER UNIT
DIRECT LABOR
$2
PER UNIT
VARIABLE OVERHEAD
$10
PER UNIT
FIXED OVERHEAD
$150,000
YEAR 1
NO BEGINNING INVENTORY
ACTUAL COSTS OF PRODUCTION EQUALS ABOVE MANUFACTURING COSTS
PURCHASE DIRECT MATERAILS OF
$200,000
INCUR SELLING AND ADMIN COSTS OF
$80,000
#UNITS PRODUCED
10,000
# UNITS SOLD
9,000
SALES PRICE OF UNITS SOLD
$100
YEAR 2
THERE…
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Homework: Cost Management and Allocation Assignment
Question 7- Homework: Cost Management and Allocation Assignment- Connect
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State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments
(Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the
year ended December 31 follows.
4.
points
Administration Communications
Facilities
Deposits
$8,320,000 $4,600,000
447, 000
Loans
Direct costs
$200,000
24,000
$290,000
31,000
$253,000
20,500
Employee hours
Number of employees
Square footage occupied
Skipped
360,000
8.
14
6.
230
130
4,600
13,800
5,100
244, 100
203,300
The costs of the service departments are allocated on the following bases: Administration, employee-hours; Communications, number
of employees; and Facilities, square…
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