Introduction to Management Accounting (ACC 202) Spring 2018/19 Chapter 19 Managerial Accounting Part I: Exercises Ex. 1 Knight Company reports the following costs and expenses in May. Factory utilities $15,500 Direct labor $69,100 Depreciation on factory equipment 12,650 Sales salaries 46,400 Depreciation on delivery trucks 3,800 Property taxes on factory building 2,500 Indirect factory labor 48,900 Repairs to office equipment 1,300 Indirect materials 80,800 Factory repairs 2,000 Direct materials used 137,600 Advertising 15,000 Factory managers salary 8,000 Office supplies used 2,640 Instructions From the information, determine the total amount of: a. Manufacturing overhead. b. Product costs. c. Period costs. Ex. 2 Cepeda Corporation has the following cost records for June 2018 Indirect factory labor $ 4,500 Factory utilities $ 400 Direct materials used 20,000 Depreciation, factory equipment 1,400 Work in process, 6/1/18 3,000 Direct labor 40,000 Work in process, 6/30/18 3,800 Maintenance, factory equipment 1,800 Finished goods, 6/1/18 5,000 Indirect materials 2,200 Finished goods, 6/30/18 7,500 Factory managers salary 3,000 . Instructions a. Prepare a cost of goods manufactured schedule for June 2018. b. Prepare an income statement through gross profit for June 2018 assuming sales revenue is $92,100. Part II: Problems Phillips Company is a manufacturer of computers. Its controller resigned in October 2018. An inexperienced assistant accountant has prepared the following income statement for the month of October 2018. Phillips Company Income Statement For the Month Ended October 31, 2018 Sales revenue $780,000 Less: Operating expenses Raw materials purchases $264,000 Direct labor cost 190,000 Advertising expense 90,000 Selling and administrative salaries 75,000 Rent on factory facilities 60,000 Depreciation on sales equipment 45,000 Depreciation on factory equipment 31,000 Indirect labor cost 28,000 Utilities expense 12,000 Insurance expense 8,000 803,000 Net loss $ (23,000) Prior to October 2018, the company had been profitable every month. The companys president is concerned about the accuracy of the income statement. As her friend, you have been asked to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired additional information as follows. Inventory balances at the beginning and end of October were: October 1 October 30 Raw materials $18,000 $29,000 Work in process 16,000 14,000 Finished goods 30,000 45,000 Only 75% of the utilities expense and 60% of the insurance expense apply to factory operations. The remaining amounts should be charged to selling and administrative activities. Instructions a. Prepare a schedule of cost of goods manufactured for October 2018. b. Prepare a correct income statement for October 2018.