CH 10 HMWK 10-1B, 10-3B, 10-6B, 10-10B
Exercise 10-1B Identifying financial versus managerial accounting items Required Indicate whether each of the following items is representative of managerial or of financial accounting. a. Information is based on estimates that are bounded by relevance and timeliness. b. Information is historically based and usually reported annually. c. Information is local and pertains to subunits of the organization. d. Information includes economic and nonfinancial data as well as financial data. e. Information is global and pertains to the company as a whole. f. Information is provided to insiders, including executives, managers, and employees. g. Information is factual and is characterized by objectivity, reliability, consistency, and accuracy. h. Information is reported continuously and has a current or future orientation. i. Information is provided to outsiders, including investors, creditors, government agencies, analysts, and reporters. j. Information is regulated by the SEC, FASB, and other sources of GAAP.Cost Category Product/SG&A Asset/ Expense Utilities used in manufacturing facility Product Asset Cars for sales staff Real estate tax levied on a factory General office supplies Raw materials used in the manufacturing process Cost to rent office equipment Wages of production workers Advertising costs Promotion costs Production supplies Depreciation on administration building Depreciation on manufacturing equipment Research and development costs Cost to set up manufacturing equipmentExercise 10-3B Classifying costs: Product or SG&A cost; asset or expense Required Use the following table to classify each cost as a product cost or an SG&A cost. Also indicate whether the cost would be recorded as an asset or an expense. Assume product cost is defined by generally accepted accounting principles. The first item is shown as an example.Exercise 10-63 Hamming product tcrsus SG&A costs A review of the accounting records of Spiller Manufacturing indicated that the company incurred the following payroll costs during the month of September. Assume the company's nancial statements are prepared in accordance with GAAP. 1. Salary of the company president$40,000. 2. Salary of the vice president of manufacturing$25,000. 3. Salary of the chief financial officer$20,000. 4. Salary of the vice president of marketing3; 18,000. 5. Salaries of middle managers (department heads, production supervisors) in manufacturing plant $ 196,000. 6. Wages of production workers$938,000. 7. Salaries of administrative secretaries$60,000. 8. Salaries of engineers and other personnel responsible for maintaining production equipment$118,000. 9. Commissions paid to sales staff$252,000. Requked a. What amount of payroll cost would be classified as SG&A expense? 1:. Assuming that Spiller made 4,000 units of product and sold 3,600 of them during the month of September, determine the amount of payroll cost that would be included in cost of goods sold Exercise 10-10B Identifying upstream and downstream costs During Year 1, Welch Manufacturing Company incurred $67,000,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in Year 1. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $250 per unit. Packaging, shipping, and sales commissions are expected to be $50 per unit. Welch expects to sell 2,000,000 batteries before new research renders the battery design technologically obsolete. During Year 1, Welch made 440,000 batteries and sold 400,000 of them. Required a. Identify the upstream and downstream costs. b. Determine the Year 1 amount of cost of goods sold and the ending inventory balance that would appear on the financial statements that are prepared in accordance with GAAP.Determine the sales price assuming that Welch desires to earn a profit margin that is equal to 25 percent of the total cost of developing, making, and distributing the batteries. Prepare a GAAP-based income statement for Year 1. Use the sales price developed in Requirement {1 Given that the price was properly established using total cost (upstream, midstream, and down- stream costs}, wh),r does the GAAP-based income statement prepared in Requirement art show a loss
