Able Baker Charlie Company Managerial vs. Financial Cost Classification Able Baker Charlie Company X Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He's also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information. Required: 1. Choose whether the characteristics on the Managerial vs. Financial panel are most often associated with managerial accounting or financial accounting 2. Charles has provided some of the costs he expects to incur on the Cost Classification panel. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake. 3. Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B on the Income Statements panel, and balance sheets C and D on the Balance Sheets panel. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie. Then, on the Financial Statements panel, denote which income statement and balance sheet would be most appropriate for a manufacturing business 4. At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he's collected, but he was unable to figure out some of the amounts. On the costs and Balances panel, determine the missing amounts. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. Able Baker Charlie Company Managerial vs. Financial Cost Classification Cost Classification Shaded cells have feedback. X Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake. Product Period Direct Direct Conversion Direct Materials Factory Overhead Selling Expense Indirect Cost Administrative Expense Prime Cost Cost Cost Cost Labor Cost Cost Eggs used to make cheesecakes o O O O O 0 o 0 0 O Baker's wages O O U Delivery driver wages 0 U U U 0 Depreciation of office computers O n Power to run the cheesecake ovens n o o 1 0 0 0 0 0 0 President's salary C U 0 O OOOO 0 0 OOOO O O O O Sales commissions O O O 0 0 Factory supervisor salary o Points: 078 Income Statement A (scroll down for Income Statement B): Sample Company A Income Statement For the Year Ended December 31, 20Y8 1 Sales $42,000.00 2 Beginning finished goods inventory $5,250.00 3 Cost of goods manufactured 6,400.00 4 Cost of finished goods available for sale $11,650.00 5 Ending finished goods inventory (400.00) 6 Cost of goods sold 11,250.00 7 Gross profit $30,750.00 8 Operating expenses: 9 Selling expenses $6,400.00 10 Administrative expenses 5,250.00 11 Total operating expenses 11,650.00 12 Net income $19,100.00 Income Statement B: Balance Sheet C (scroll down for Balance Sheet D): Sample Company C Balance Sheet December 31, 20Y8 1 Assets 2 Cash $20,800.00 3 Accounts receivable (net) 10,000.00 6,000.00 4 Inventory 5 Supplies 2,100.00 6 Land 17,000.00 7 Total assets $55,900.00 8 Liabilities 9 Accounts payable $17,800.00 10 Stockholders' Equity 11 Common stock $19,000.00 12 Retained earnings 19,100.00 13 Total stockholders' equity 38,100.00 14 Total liabilities and stockholders' equity $55,900.00 Sample Company D Balance Sheet December 31, 20Y8 1 Assets 2 Cash $20,800.00 3 Accounts receivable (net) 10,000.00 4 Inventory: 5 Direct materials $2,500.00 6 Work in process 1,500.00 7 Finished goods 2,000.00 8 Total inventory 6,000.00 9 Supplies 2,100.00 10 Land 17,000.00 11 Total assets $55,900.00 12 Liabilities 13 Accounts payable $17,800.00 14 Stockholders' Equity 15 Common stock $19,000.00 16 Retained earnings 19,100.00 17 Total stockholders' equity 38,100.00 18 Total liabilities and stockholders' equity $55,900.00 Costs and Balances Shaded cells have feedback. At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he's collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured. Data for February Decrease in materials inventory. $3,300 Materials inventory on Feb. 28 50% of materials inventory on Jan. 31 Direct materials purchased $12,600 Direct materials used 3 times the direct labor incurred $29,400 Total manufacturing costs incurred in period Total manufacturing costs incurred in period 70% of Cost of Goods Manufactured Total manufacturing costs incurred in period $7,000 less than Cost of Goods Sold Account Balances Account Jan. 31 Feb. 28 Costs Incurred Materials Inventory $ $ Direct Materials Used $ Work in Process Inventory 27,000 Direct Labor Incurred Finished Goods Inventory 16.000 Factory Overhead Incurred Cost of Goods Sold Points: 0/8 Feedback Check My Work Able Baker Charlie Company Managerial vs. Financial Cost Classification Able Baker Charlie Company X Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He's also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information. Required: 1. Choose whether the characteristics on the Managerial vs. Financial panel are most often associated with managerial accounting or financial accounting 2. Charles has provided some of the costs he expects to incur on the Cost Classification panel. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake. 3. Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B on the Income Statements panel, and balance sheets C and D on the Balance Sheets panel. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie. Then, on the Financial Statements panel, denote which income statement and balance sheet would be most appropriate for a manufacturing business 4. At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he's collected, but he was unable to figure out some of the amounts. On the costs and Balances panel, determine the missing amounts. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. Able Baker Charlie Company Managerial vs. Financial Cost Classification Cost Classification Shaded cells have feedback. X Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake. Product Period Direct Direct Conversion Direct Materials Factory Overhead Selling Expense Indirect Cost Administrative Expense Prime Cost Cost Cost Cost Labor Cost Cost Eggs used to make cheesecakes o O O O O 0 o 0 0 O Baker's wages O O U Delivery driver wages 0 U U U 0 Depreciation of office computers O n Power to run the cheesecake ovens n o o 1 0 0 0 0 0 0 President's salary C U 0 O OOOO 0 0 OOOO O O O O Sales commissions O O O 0 0 Factory supervisor salary o Points: 078 Income Statement A (scroll down for Income Statement B): Sample Company A Income Statement For the Year Ended December 31, 20Y8 1 Sales $42,000.00 2 Beginning finished goods inventory $5,250.00 3 Cost of goods manufactured 6,400.00 4 Cost of finished goods available for sale $11,650.00 5 Ending finished goods inventory (400.00) 6 Cost of goods sold 11,250.00 7 Gross profit $30,750.00 8 Operating expenses: 9 Selling expenses $6,400.00 10 Administrative expenses 5,250.00 11 Total operating expenses 11,650.00 12 Net income $19,100.00 Income Statement B: Balance Sheet C (scroll down for Balance Sheet D): Sample Company C Balance Sheet December 31, 20Y8 1 Assets 2 Cash $20,800.00 3 Accounts receivable (net) 10,000.00 6,000.00 4 Inventory 5 Supplies 2,100.00 6 Land 17,000.00 7 Total assets $55,900.00 8 Liabilities 9 Accounts payable $17,800.00 10 Stockholders' Equity 11 Common stock $19,000.00 12 Retained earnings 19,100.00 13 Total stockholders' equity 38,100.00 14 Total liabilities and stockholders' equity $55,900.00 Sample Company D Balance Sheet December 31, 20Y8 1 Assets 2 Cash $20,800.00 3 Accounts receivable (net) 10,000.00 4 Inventory: 5 Direct materials $2,500.00 6 Work in process 1,500.00 7 Finished goods 2,000.00 8 Total inventory 6,000.00 9 Supplies 2,100.00 10 Land 17,000.00 11 Total assets $55,900.00 12 Liabilities 13 Accounts payable $17,800.00 14 Stockholders' Equity 15 Common stock $19,000.00 16 Retained earnings 19,100.00 17 Total stockholders' equity 38,100.00 18 Total liabilities and stockholders' equity $55,900.00 Costs and Balances Shaded cells have feedback. At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he's collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured. Data for February Decrease in materials inventory. $3,300 Materials inventory on Feb. 28 50% of materials inventory on Jan. 31 Direct materials purchased $12,600 Direct materials used 3 times the direct labor incurred $29,400 Total manufacturing costs incurred in period Total manufacturing costs incurred in period 70% of Cost of Goods Manufactured Total manufacturing costs incurred in period $7,000 less than Cost of Goods Sold Account Balances Account Jan. 31 Feb. 28 Costs Incurred Materials Inventory $ $ Direct Materials Used $ Work in Process Inventory 27,000 Direct Labor Incurred Finished Goods Inventory 16.000 Factory Overhead Incurred Cost of Goods Sold Points: 0/8 Feedback Check My Work