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    Manufacturing Statement and Income Statement

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    EXERCISE 18-13
    Given the following selected account balances of Randa Company, prepare its manufacturing statement in proper form for the year ended on December 31, 2005. Include a listing of the individual overhead account balances in this statement

    Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,252,000
    Raw materials inventory, Dec. 31, 2004 . . . . . . . . . . 39,000
    Goods in process inventory, Dec. 31, 2004 . . . . . . . 55,900
    Finished goods inventory, Dec. 31, 2004 . . . . . . . . . . 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 expenses . . . . . . . . . . . . . . . . . . . . . . . 96,000
    General and administrative expenses . . . . . . . . . . . . 131,300
    Raw materials inventory, Dec. 31, 2005 . . . . . . . . . . 44,700
    Goods in process inventory, Dec. 31, 2005 . . . . . . . 43,500
    Finished goods inventory, Dec. 31, 2005 . . . . . . . . . . 69,300

    Check Cost of goods manufactured,
    $546,390

    PROBLEM 18-2A
    A trip through a drive-up window of any leading fast-food restaurant is useful in understanding concepts such as total quality management (TQM), just-in-time (JIT), and continuous improvement (CI). Each restaurant can be viewed as a small manufacturing center. List two fast-food restaurants you are familiar with in the first column of the following table (e.g., McDonald's, Taco Bell, Burger King, and KFC). Record in the table how each company is putting each of these lean business concepts into
    action, both favorably and unfavorably.

    Restaurant TQM JIT CI
    1.
    2.
    Required
    Discuss the potential contributions and responsibilities of the managerial accounting professional in
    helping an automobile manufacturer succeed. (Hint: Think about information and estimates that a
    managerial accountant might provide new entrants into the sports utility market.)

    EXERCISE 18-5
    Following are three separate events affecting the managerial accounting systems for different companies.
    Match the management concept(s) that the company is likely to adopt for the event identified.
    There is some overlap in the meaning of customer orientation and total quality management and, therefore, some responses can include more than one concept.
    Event Management Concept
    _______ 1. The company starts measuring inventory a. Total quality management (TQM)
    turnover and discontinues elaborate
    inventory records. Its new focus is b. Just-in-time (JIT) system
    to pull inventory through the system.
    _______ 2. The company starts reporting measures c. Continuous improvement (CI)
    on customer complaints and product
    returns from customers. d. Customer orientation (CO)
    _______ 3. The company starts reporting measures
    such as the percent of defective products
    and the number of units scrapped.

    PROBLEM 18-8A
    The following calendar year-end information is taken from the December 31, 2005, adjusted trial balance and other records of Plaza Company.
    Advertising expense . . . . . . . . . . . . . . . . . $ 30,750 Direct labor . . . . . . . 677,480
    Depreciation expense?Office equipment .. 9,250 Income taxes expense 235,725
    Depreciation expense?Selling equipment . . 10,600 Indirect labor . . . . .58,875
    Depreciation expense?Factory equipment . 35,550 Miscellaneous production costs . . . 10,425
    Factory supervision . . . . . . . . . . . . . . 104,6000 Office salaries expense . .. . . . . . . . . 65,000
    Factory supplies used . . . . . . . . . . . . . . . . . . 9,350 Raw materials purchases . . . . . 927,000
    Factory utilities . . . . . . . . . . . . . . . . . . 35,000 Rent expense?Office space . . . . 24,000
    Inventories Rent expense?Selling space . . . 28,100
    Raw materials, December 31, 2004 . . . . . 168,850 Rent expense?Factory building . . 78,800
    Raw materials, December 31, 2005 . . . . 184,000 Maintenance expense?Factory equipment . 37,400
    Goods in process, December 31, 2004 . . . .17,700 Sales .. . . . . . . . . . . . . . . . . . 4,527,000
    Goods in process, December 31, 2005 . . . . . ,380 Sales discounts . . . . . . . . . . . . . . 64,500
    Finished goods, D ecember 31, 2004 . .169,350 Sales salaries expense .394,560
    Finished goods, December 31, 2005 . 138,490

    Required
    1. Prepare the company's 2005 manufacturing statement.
    2. Prepare the company's 2005 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.
    Analysis Component
    3. Compute the (a) inventory turnover and (b) days' sales in inventory for both its raw materials inventory and its finished goods inventory (see Chapter 6). Discuss some possible reasons for differences between these ratios for the two types of inventories.

    Check (1) Cost of goods
    manufactured, $1,955,650

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    EXERCISE 18-13
    Given the following selected account balances of Randa Company, prepare its manufacturing statement
    in proper form for the year ended on December 31, 2005. Include a listing of the individual
    overhead account balances in this statement

    Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,252,000
    Raw materials inventory, Dec. 31, 2004 . . . . . . . . . . 39,000
    Goods in process inventory, Dec. 31, 2004 . . . . . . . 55,900
    Finished goods inventory, Dec. 31, 2004 . . . . . . . . . . 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 expenses . . . . . . . . . . . . . . . . . . . . . . . 96,000
    General and administrative expenses . . . . . . . . . . . . 131,300
    Raw materials inventory, Dec. 31, 2005 . . . . . . . . . . 44,700
    Goods in process inventory, Dec. 31, 2005 . . . . . . . 43,500
    Finished goods inventory, Dec. 31, 2005 . . . . . . . . . . 69,300

    Check Cost of goods manufactured,
    $546,390

    RANDA COMPANY
    Manufacturing Statement
    For Year Ended December 31, 2005
    Direct materials
    Raw materials inventory, December 31, 2004 $ 39,000
    Raw materials purchases 177,600
    Raw materials available for use 216,600
    Less raw materials inventory, December 31, 2005 44,700
    Direct materials used $171,900
    Direct labor 227,000
    Factory overhead
    Factory computer supplies used 19,840
    Indirect labor 49,000
    Repairs?Factory equipment 7,250
    Rent cost of factory building 59,000
    Total factory overhead costs 135,090
    Total manufacturing costs 533,990
    Goods in process inventory, December 31, 2004 55,900
    Total cost of goods in process 589,890
    Less goods in process inventory, December 31, 2005 43,500
    Cost of goods manufactured $546,390

    PROBLEM 18-2A
    A trip through a drive-up window of any leading fast-food restaurant is useful in understanding concepts such as total quality management (TQM), just-in-time (JIT), and continuous improvement (CI). Each restaurant can be viewed as a small manufacturing center. List two fast-food restaurants you are familiar with in the first column of the following table (e.g., McDonald's, Taco Bell, Burger King, and ...

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    The solution explains how to prepare a manufacturing statement and an income statement

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