account balances: schedule of cost of goods sold:

income statement:

For Specific Date For Year 2017 $ 20 Purchases of direct materials $ 330 105 90 Direct materials inventory, Jan. 1, 2017 Work-in-process inventory, Jan. 1, 2017 Finished goods inventory, Jan. 1, 2017 Direct materials inventory, Dec. 31, 2017 Work-in-process inventory, Dec. 31, 2017 Finished goods inventory, Dec. 31, 2017 7 Direct manufacturing labor 72 Depreciationplant and equipment 27 Plant supervisory salaries 6 Miscellaneous plant overhead 6 36 58 Revenues 920 250 Marketing, distribution, and customer-service costs Plant supplies used 7 Plant utilities 38 Indirect manufacturing labor 66 Schedule of Cost of Goods Manufactured For the Year Ended December 31, 2017 (in millions) Direct materials costs: $ 20 330 Beginning inventory, Jan. 1, 2017 Purchases of direct materials Cost of direct materials available for use Ending inventory, Dec. 31, 2017 350 27 Direct materials used $ 323 105 Direct manufacturing labor costs Indirect manufacturing costs: Indirect manufacturing labor Plant supplies used 66 7 Plant utilities 38 90 Depreciationplant and equipment Plant supervisory salaries 6 36 243 671 Miscellaneous plant overhead Manufacturing costs incurred during 2017 Add: Beginning work-in-process inventory, Jan. 1, 2017 Total manufacturing costs to account for 7 678 6 Less: Ending work-in-process inventory, Dec. 31, 2017 $ 672 Cost of goods manufactured Smith Corporation Income Statement $ 920 For the Year Ended December 31, 2017 (in millions) Revenues $ Cost of goods sold: Beginning finished goods, Jan. 1, 2017 $ 72 Cost of goods manufactured 672 Cost of goods available for sale 744 58 Ending finished goods, Dec. 31, 2017 686 Cost of goods sold Gross margin 234 250 Marketing, distribution, and customer-service costs $ (16) Operating income/(loss) Requirement 1. How would the schedule of cost of goods manufactured be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? The schedule of cost of goods manufactured can become a schedule of cost of goods manufactured and sold by including the figures in the supporting schedule, rather than directly in the body of the Requirement 2. Would the sales manager's salary (included in marketing, distribution, and customer-service costs) be accounted for any differently if the Smith Corporation were a merchandising-sector company instead of a manufacturing-sector company? The sales manager's salary would be charged as for a manufacturing company and as for a merchandising company. Requirement 3. Using your understanding of the flow of manufacturing costs, describe how the wages of an assembler in the plant would be accounted for in this manufacturing company. An assembler's wages would be assigned to Thus, the wages cost would be charged to the product is sold. Requirement 4. Plant supervisory salaries are usually regarded as manufacturing overhead costs. When might some of these costs be regarded as direct manufacturing costs? Give an example. The direct-indirect distinction can be resolved For example, in defense contracting, the cost object may be defined as a Then, a plant supervisor working only on one contract will have his or her salary Requirement 5. Suppose that both the direct materials used and the plant and equipment depreciation are related to the manufacture of 1.1 million units of product. What is the unit cost for the direct materials assigned to those units? (Round your answer to the nearest cent.) The unit cost for the direct materials assigned to those units is per unit. What is the unit cost for plant and equipment depreciation? Assume that yearly plant and equipment depreciation is computed on a straight-line basis. (Round your answer to the nearest cent.) The unit cost for plant and equipment depreciation is per unit. Requirement 6. Assume that the implied cost-behavior patterns in requirement 5 persist. That is, direct material costs behave as a variable cost, and plant and equipment depreciation behaves as a fixed cost. Repeat the computations in requirement 5, assuming that the costs are being predicted for the manufacture of 1.3 million units of product. How would the total costs be affected? (Round your answers to the nearest cent.) The unit cost for the direct materials would be per unit and the unit cost for plant and equipment depreciation would be per unit. The total direct materials costs would whereas the total depreciation would Requirement 7. As a management accountant, explain concisely to the president why the unit costs differed in requirements 5 and 6. Unit costs are averages, and they must be interpreted with caution. The direct materials unit cost valid for predicting total costs because direct materials is a 1; total direct materials costs change as output levels change. However, like depreciation must be interpreted quite differently. Changes in output levels (the denominator) total variable costs, but total fixed costs. Graphs of the two costs may clarify this point; it is to think in terms of total costs rather than in terms of unit costs. For Specific Date For Year 2017 $ 20 Purchases of direct materials $ 330 105 90 Direct materials inventory, Jan. 1, 2017 Work-in-process inventory, Jan. 1, 2017 Finished goods inventory, Jan. 1, 2017 Direct materials inventory, Dec. 31, 2017 Work-in-process inventory, Dec. 31, 2017 Finished goods inventory, Dec. 31, 2017 7 Direct manufacturing labor 72 Depreciationplant and equipment 27 Plant supervisory salaries 6 Miscellaneous plant overhead 6 36 58 Revenues 920 250 Marketing, distribution, and customer-service costs Plant supplies used 7 Plant utilities 38 Indirect manufacturing labor 66 Schedule of Cost of Goods Manufactured For the Year Ended December 31, 2017 (in millions) Direct materials costs: $ 20 330 Beginning inventory, Jan. 1, 2017 Purchases of direct materials Cost of direct materials available for use Ending inventory, Dec. 31, 2017 350 27 Direct materials used $ 323 105 Direct manufacturing labor costs Indirect manufacturing costs: Indirect manufacturing labor Plant supplies used 66 7 Plant utilities 38 90 Depreciationplant and equipment Plant supervisory salaries 6 36 243 671 Miscellaneous plant overhead Manufacturing costs incurred during 2017 Add: Beginning work-in-process inventory, Jan. 1, 2017 Total manufacturing costs to account for 7 678 6 Less: Ending work-in-process inventory, Dec. 31, 2017 $ 672 Cost of goods manufactured Smith Corporation Income Statement $ 920 For the Year Ended December 31, 2017 (in millions) Revenues $ Cost of goods sold: Beginning finished goods, Jan. 1, 2017 $ 72 Cost of goods manufactured 672 Cost of goods available for sale 744 58 Ending finished goods, Dec. 31, 2017 686 Cost of goods sold Gross margin 234 250 Marketing, distribution, and customer-service costs $ (16) Operating income/(loss) Requirement 1. How would the schedule of cost of goods manufactured be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? The schedule of cost of goods manufactured can become a schedule of cost of goods manufactured and sold by including the figures in the supporting schedule, rather than directly in the body of the Requirement 2. Would the sales manager's salary (included in marketing, distribution, and customer-service costs) be accounted for any differently if the Smith Corporation were a merchandising-sector company instead of a manufacturing-sector company? The sales manager's salary would be charged as for a manufacturing company and as for a merchandising company. Requirement 3. Using your understanding of the flow of manufacturing costs, describe how the wages of an assembler in the plant would be accounted for in this manufacturing company. An assembler's wages would be assigned to Thus, the wages cost would be charged to the product is sold. Requirement 4. Plant supervisory salaries are usually regarded as manufacturing overhead costs. When might some of these costs be regarded as direct manufacturing costs? Give an example. The direct-indirect distinction can be resolved For example, in defense contracting, the cost object may be defined as a Then, a plant supervisor working only on one contract will have his or her salary Requirement 5. Suppose that both the direct materials used and the plant and equipment depreciation are related to the manufacture of 1.1 million units of product. What is the unit cost for the direct materials assigned to those units? (Round your answer to the nearest cent.) The unit cost for the direct materials assigned to those units is per unit. What is the unit cost for plant and equipment depreciation? Assume that yearly plant and equipment depreciation is computed on a straight-line basis. (Round your answer to the nearest cent.) The unit cost for plant and equipment depreciation is per unit. Requirement 6. Assume that the implied cost-behavior patterns in requirement 5 persist. That is, direct material costs behave as a variable cost, and plant and equipment depreciation behaves as a fixed cost. Repeat the computations in requirement 5, assuming that the costs are being predicted for the manufacture of 1.3 million units of product. How would the total costs be affected? (Round your answers to the nearest cent.) The unit cost for the direct materials would be per unit and the unit cost for plant and equipment depreciation would be per unit. The total direct materials costs would whereas the total depreciation would Requirement 7. As a management accountant, explain concisely to the president why the unit costs differed in requirements 5 and 6. Unit costs are averages, and they must be interpreted with caution. The direct materials unit cost valid for predicting total costs because direct materials is a 1; total direct materials costs change as output levels change. However, like depreciation must be interpreted quite differently. Changes in output levels (the denominator) total variable costs, but total fixed costs. Graphs of the two costs may clarify this point; it is to think in terms of total costs rather than in terms of unit costs