Cost Accounting Questions

Question No.M-1 Inventory calculation On January 1, the finished goods inventory of the Manuel Company was $300,000during the year Manuel’s cost of goods manufactured was $1,900,000sales were $2,000,000 with a 20% gross profit Required: The cost assigned to the December 31 finished goods inventory Question No.M-2 Manufacturing costs; cost of goods manufactured; cost of goods sold The December 31,19B trial balance of the balk well company showed Sales……………………………………. $4,000,500 sales returns and allowances…………$ 25,200 Purchases (net)……………………..2,400,500 Transportation in………………………….. 32,00 Direct labor…………………………..3,204,000 Factory overhead………………………….. 1,885,600 Sales salaries………………………….200, 000 Advertising expense……………………… 155,000 Delivery expense………………………….. 65,000 Inventories: December 31,19B December 31,19A Finished goods……………….... $467,400 $620,000 Work in process……………….. 136,800 129,800 Materials…………………………. 196,000 176,000 Required: 1) Total manufacturing cost 2) Cost of goods manufactured 3) cost of goods sold Question No.M-3 The accounting department of the Ruthven Company provided the following data for May: sales, $72,000; marketing expenses 5%; administrative expenses 1%; other expenses 5% of all sales purchase, $36,000; factory overhead 2/3 of direct labor; direct labor, $15,000 Beginning inventories Finished goods………………………………………………………………………………... $ 7,000 Work in process………………………………………………………………………………. 8,000 Materials…………………………………………………………………………………………. 8,000 Ending inventories Finished goods………………………………………………………………………………… $ 10,200 Work in process………………………………………………………………………………. 15,000 Materials…………………………………………………………………………………………. 8,500 Required: 1) Cost of goods sold statement 2) Income statement Question No.M-4 Income statement Crowley Inc., submits the following data for September Direct labor cost, $30,000 Cost of goods sold, $111,000 Factory overhead is applied at the rate of 150% of direct labor cost Inventory accounts showed these beginning and ending balances:

Finished goods……………….... Work in process……………….. Materials………………………….

September 1 $15,000 9,600 7,000

September 30 $17,500 13,000 7,400

Other data: Marketing expenses………………………………………………………………………… $ 14,100 General and administrative expenses……………………………………………… 22,000 Sales for the month………………………………………………………………………… 182,000 Required:An income statement with schedule showing cost of goods manufactured and sold Question No.M-5 Income statement; profit percentage: The shelikoff company submits the following information on December 31, 19 Sales for the year………………………………………………………………………………. Inventories at the beginning of the year: Finished goods………………………………………………………………………………… Work in process………………………………………………………………………………. Materials…………………………………………………………………………………………. Purchase of materials for the year ……………………………………....………………………. Direct labor…………………………………………………………..………………………………………. Factory overhead 50% of labor cost Inventories at the end of the year: Finished goods………………………………………………………………………………… Work in process………………………………………………………………………………. Materials…………………………………………………………………………………………. Other expenses for the year: Marketing expenses………………………………………………………………………… Administrative expenses……………………………………………….………………… Required: 1) An income statement for the year ended December 31,19— 2) The percentage of income to sales, before income tax

$314,000 5,900 4,600 3,800 140,000 67,350

9,270 6,200 4,300 23,115 17,650

Question No.M-6 Cost of goods sold statement: The following data are provided by the controller of the Metaxas Corporation Cash…………….………………………………………………………………………………… $240,000 Accounts receivable………………………………………………………………………. 348,000 Inventories: January 1 December 31 Finished goods……………….... $44,200 $66,000 Work in process……………….. 29,800 38,800 Materials…………………………. 88,000 64,000 Materials purchased………….……………………………………………………………………… $366,000 Sales discount………….………………………………………………………………..……………… 8,000 Factory overhead (excluding depreciation)………….……………………………………… 468,400 Marketing and administrative expenses (excluding depreciation)…………………. 344,200 Depreciation (90% manufacturing 10% marketing and administrative expenses)……. 116,000

Sales………….……………………………………………………………………………………………………. Direct labor………….………………………………………………………………………………………… Freight on materials purchased………….…………………………………………………………. Rental income………….……………………………………………………………………………….……. Interest on bonds payable………….………………………………………………………………….…

1,844,000 523,600 6,600 64,000 16,000

Required: Cost of goods sold statement Question No.M-7 Cost of goods sold statement: The following data relate to the Brockway Corporation Inventories Ending Beginning Finished goods……………………………………………………………………… $95,000 $110,000 Work in process…………………………………………………………………… 80,000 70,000 Direct Materials……………………………………………………………………. 95,000 90,000 Cost incurred during the period: Costs of goods available for sales…………………………………………………………… Total manufacturing cost……………………………………………………………………….. Factory overhead…………………………………………………………………………………… Direct materials used………………………………………………………………………………..

$684,000 584,000 167,000 193,000

Required: Cost of goods sold statement Question No.M-8 Cost of goods sold statement; unit cost The records of Reinecke, Inc., show the following information as of march 31, 19B Material used…………………………………………………………………………………………….. $193,000 Direct labor……………………………………………………………………………………………..…. 290,000 Indirect labor………………………………………………………………………………………………. 46,000 Light and power…………………………………………………………………………………………. 4,260 Depreciation………………………………………………………………………………………………. 4,700 Repairs to machinery………………………………………………………………………………….. 5,800 Miscellaneous factory overhead………………………………………………………………… 29,000 Work in process inventory, April 1,19A……………………………………………………….. 41,200 Finished goods inventory, April 1,19A…………………………………………………………. 34,300 Work in process inventory March 31, 19B…………………………………………………… 42,500 Finished goods inventory March 31, 19B………………………………………………………. 31,500 During the year, 18, 000 units were completed Required: 1) A cost of goods sold statement for the year ended march 31,19B 2) The unit cost of goods manufactured 3) The amount of over-or under applied factory overhead if the company applies factory over head on the basis of 30% of direct labor cost

Question No.M-9 Unit cost; Inventory valuation; cost of goods sold The cost department of the while corporation prepared the following data and costs for the year 19-Inventories: January 1 December 31 Finished goods……………….... $48,600 ? Work in process……………….. 81,500 $42,350 Materials…………………………. 34,200 49,300 Depreciation –factory equipment……………………………………….... 21,350 Interest earned…………………………………………………………………..... 6,300 Finished goods inventory January 1:300 units December 31:420 units all from current year’s production Sold during 19—3,880 units at $220 per unit Materials purchased…………………………………………………………………………………….... $364,000 Direct labor……………………………………………………………………………………………..…….. 162,500 Indirect labor……………………………………………………………………………………………….…. 83,400 Freight in…………………………………………………………………………………………….………….. 8,600 Miscellaneous factory overhead………………………………………………………………………. 47,900 Purchases discount………………………………………………………………………………………..…. 5,200 Required: 1) The unit cost of the finished goods inventory December 31 2) The total cost of the finished goods inventory December 31 3) The cost of goods sold 4) The gross profit total and the gross profit per unit Question No.M-10 Rate of return on capital employed: During the past year a company had net income $40,000 sales $200,000 and total capital employed $400,000 Required: Rate of return on capital employed Question No.M-11 Income statement: In an accounting conference, discussion turned to the possibility of preparing financial statements from a few key accounts together with financial or cost ratios The assistant controller of a participating firm provided the following data pretax income for the year $1,200,000; pretax income rate on sales 10% gross profit rate 40% rate of marketing expenses to sales 15%; 5% bonds payable represent 37.5% of the total liabilities of $ 2,000,000 Required: An income statement for the year based on the above information Question No.M-12 Income statement cost and profit ratios. The records of the Yukon refrigerator company show the following information for the three months ended march 31, 19— Materials purchased……………………………………………………………………………………………… $1,946,700 Inventories January 1, 19-Finished goods (100 refrigerators)………………………………………………………………………... 43,000 Materials…………………………………………………………………………………………………………..…. 268,000

Direct labor……………………………………………………………………………………………………....…. 2,125,800 Factory overhead (40% variable)………………………………………………………………………… 764,000 Marketing expenses (all fixed)…………………………………………………………………………….. 516,000 General and administrative expenses (all fixed)……………………………………………………461,000 Sales (12,400 refrigerators)…………………………………………………………………………………. 6,634,000 Inventories March 31, 19— No unfinished work on hand Finished goods (200 refrigerators), costed at $395 each Materials……………………………………………………………………………………..………………………. 167,000 Required: 1) An income statement for the period 2) The number of units manufactured 3) The unit cost of refrigerators manufactured 4) The gross profit per unit sold 5) The income per unit sold 6) The ratio of gross profit to sales 7) The income to sales percentage 8) The break-even point in sales dollars