Question 1

Cost of goods sold for a manufacturer is calculated as follows: beginning finished goods + cost of goods manufacturered - ending finished goods.

Accepted Answer

Cost of goods sold is calculated as beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory.

Question 2

Which of the following formulas determine cost of goods sold in a manufacturing entity?

Accepted Answer

The correct formula for calculating the cost of goods sold in a manufacturing entity is: Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory. This formula accounts for the total cost of goods available for sale during the period and subtracts the cost of goods that remain unsold at the end of the period.

Question 3

Each of the following items pertains to one of these companies: Bedell Electronics (a manufacturing company), Gregory Food Retailers (a merchandising company), and Larson Real Estate (a service sector company). Classify each item as either inventoriable (I) costs or period (P) costs.

Accepted Answer

The answer of Each of the following items pertains to...

Question 4

Expert Manufacturing reported the following:

What is Expert's operating income?

Accepted Answer

$460,000 - ($45,000 + $97,800 - $41,000) - $158,000 = $200,200

Question 5

All Rite Manufacturing reported the following:

What is Leslie's cost of goods sold?

Accepted Answer

$46,000 + $239,000 - $45,000 = $240,000

Question 6

A company reported revenues of $377,000, cost of goods sold of $122,000, selling expenses of $12,000, and total operating costs of $72,000. Gross margin for the year is ________.

Accepted Answer

$377,000 - $122,000 = $255,000

Question 7

Conversion costs include ________.

Accepted Answer

Conversion costs include direct manufacturing labor and manufacturing overhead costs. Direct materials are not included in conversion costs, as they are part of prime costs.

Question 8

Prime costs include ________.

Accepted Answer

Prime costs refer to the costs directly associated with the production of goods or services, which are direct materials and direct manufacturing labor costs.

Question 9

The following information pertains to Expert System Corporation:

What is the gross profit margin earned by the company?

Accepted Answer

$36,000 + $241,000 - $31,000 = $246,000
Sales = $302,000
Profit = $302,000 - 246,000 = $56,000

Question 10

Using the following information find the unknown amounts. Assume each set of information is an independent case.

Accepted Answer

The answer of Using the following information find the unknown...

Question 11

Cost of goods sold refers to the products brought to completion, whether they were started before or during the current accounting period.

Accepted Answer

Cost of goods manufactured refers to the products brought to completion, whether they were started before or during the current accounting period.

Question 12

Worcester Manufacturing produces electronic storage devices, and uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labor, and indirect manufacturing costs. Total indirect manufacturing costs for January were $300 million, and were allocated to each product on the basis of direct manufacturing labor costs of each line. Summary data (in millions) for January for the most popular electronic storage device, the Big Brain, was:
  
Required:
a.Compute the manufacturing cost per unit for each product produced in January.
b.Suppose production will be reduced to 30,000 units in February. Speculate as to whether the unit costs in February will most likely be higher or lower than unit costs in January; it is not necessary to calculate the exact February unit cost. Briefly explain your reasoning.

Accepted Answer

The answer of Worcester Manufacturing produces electronic storage devices, and...

Question 13

For last year, Watson Limited reported revenues of $420,000, cost of goods sold of $118,000, cost of goods manufactured of $105,000, and total operating costs of $60,000. Operating income for that year was ________.

Accepted Answer

$420,000 - $118,000 - $60,000 = $242,000

Question 14

All Rite Manufacturing reported the following:

What is All Rite's gross margin (or gross profit)?

Accepted Answer

$450,000 - ($47,000 + $233,000 - $41,000) = $211,000

Question 15

Total manufacturing costs equal ________.

Accepted Answer

Total manufacturing costs include the cost of direct materials and the cost of converting those materials into finished products, which is represented by conversion costs (i.e. direct manufacturing labor costs + manufacturing overhead costs). Therefore, option B, which states that total manufacturing costs equals direct materials plus conversion costs is the correct choice.

Question 16

The following information pertains to the Ruby Corp:

What is cost of goods sold?

Accepted Answer

Cost of goods sold = $172,000 + $1,202,000 - $209,000 = $1,165,000

Question 17

What is the cost of goods manufactured for 2018?

Accepted Answer

$306,000 + $79,000 - $84,000 = $301,000

Question 18

Millworks Company manufactured 100,000 units in 2018 and reported the following costs:
Sandpaper$ 32,000Leasing costs-plant$ 384,000
Materials handling320,000Depreciation-equipment224,000
Coolants & lubricants22,400Property taxes-equipment32,000
Indirect manufacturing labor275,200Fire insurance-equipment16,000
Direct manufacturing labor2,176,000Direct material purchases3,140,000
Direct materials, 1/1/18348,000Direct materials, 12/31/18280,000
Finished goods, 1/1/18672,000Sales revenue12,800,000
Finished goods, 12/31/181,280,000Sales commissions640,000
Work-in-process, 1/1/1896,000Sales salaries576,000
Work-in-process, 12/31/1864,000Advertising costs480,000
Administration costs800,000
Required:
a.What is the amount of direct materials used during 2018?
b.What manufacturing costs were added to WIP during 2018?
c.What is cost of goods manufactured for 2018?
d.What is cost of goods sold for 2018?

Accepted Answer

The answer of Millworks Company manufactured 100,000 units in 2018...

Question 19

Which of the following formulas determine cost of goods sold in a merchandising entity?

Accepted Answer

The formula for determining cost of goods sold in a merchandising entity is Beginning inventory + purchases - ending inventory = cost of goods sold. This is because the cost of goods sold represents the cost of the products that were sold during the accounting period, and this can be calculated by subtracting the ending inventory from the sum of the beginning inventory and purchases.

Question 20

Product costs for financial statements are:

Accepted Answer

The answer of Product costs for financial statements are:
...

Quiz 2: An Introduction to Cost Terms and Purposes