Print Item Question Content Area Mastery Problem: Introduction to Managerial Accounting Able Baker Charlie Company 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. Hes also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information. Question Content Area Managerial vs. Financial Select whether the following characteristics are most often associated with managerial accounting or financial accounting. Primarily used for internal decision making Managerial Accounting Generally Accepted Accounting Principles (GAAP) must be used Financial Accounting Prepared statements usually pertain to the company as a whole rather than individual departments or products Financial Accounting Information provided will often be subjective, such as estimated future results Managerial Accounting Often prepared on an as-needed basis rather than at fixed intervals Managerial Accounting Feedback Area Feedback Review the differences between managerial and financial accounting, and how each type of accounting is used in the organization and for management processes. Question Content Area Cost Classification 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. (Select "Yes" or "No" from the below dropdowns.) Cost Product Cost Period Cost Direct Materials Direct Labor Factory Overhead Selling Expense Administrative Expense Direct Cost Indirect Cost Prime Cost Conversion Cost Eggs used to make cheesecakes Yes No Yes No No No No Yes No Yes No Bakers wages Yes No No Yes No No No Yes No Yes Yes Delivery driver wages No Yes No No No Yes No No No No No Depreciation of office computers No Yes No No No No Yes No No No No Power to run the cheesecake ovens Yes No No No Yes No No No Yes No Yes Presidents salary No Yes No No No No Yes No No No No Sales commissions No Yes No No No Yes No No No No No Factory supervisor salary Yes No No No Yes No No No Yes No Yes Feedback Area Feedback Review the definitions of each type of cost. Note that each cost may be in more than one category. Question Content Area Financial Statements 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, and balance sheets C and D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company. Income Statement A Sample Company A Income Statement For the Year Ended December 31, 20Y8 Sales $42,000 Finished goods inventory, January 1, 20Y8 $5,250 Cost of goods manufactured 6,400 Cost of finished goods available for sale $11,650 Finished goods inventory, December 31, 20Y8 (400) Cost of goods sold (11,250) Gross profit $30,750 Operating expenses: Selling expenses $6,400 Administrative expenses 5,250 Total operating expenses (11,650) Net income $19,100 Income Statement B Sample Company B Income Statement For the Year Ended December 31, 20Y8 Sales $42,000 Beginning inventory $5,250 Net purchases 6,400 Inventory available for sale $11,650 Ending inventory (400) Cost of goods sold (11,250) Gross profit $30,750 Operating expenses: Selling expenses $6,400 Administrative expenses 5,250 Total operating expenses (11,650) Net income $19,100 Balance Sheet C Sample Company C Balance Sheet December 31, 20Y8 Assets Cash $20,800 Accounts receivable (net) 10,000 Inventory 6,000 Supplies 2,100 Land 17,000 Total assets $55,900 Liabilities Accounts payable $17,800 Stockholders Equity Common stock $19,000 Retained earnings 19,100 Total stockholders equity 38,100 Total liabilities and stockholders equity $55,900 Balance Sheet D Sample Company D Balance Sheet December 31, 20Y8 Assets Cash $20,800 Accounts receivable (net) 10,000 Inventory: Direct materials $2,500 Work in process 1,500 Finished goods 2,000 Total inventory 6,000 Supplies 2,100 Land 17,000 Total assets $55,900 Liabilities Accounts payable $17,800 Stockholders Equity Common stock $19,000 Retained earnings 19,100 Total stockholders equity 38,100 Total liabilities and stockholders equity $55,900 Which income statement is most appropriate for a manufacturing business? Income statement A Which balance sheet is most appropriate for a manufacturing business? Balance sheet D Feedback Area Feedback Think about which accounts would be needed in a manufacturing environment. Question Content Area Costs and Balances At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data hes 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 $2,700 Materials inventory on Feb. 28 50% of materials inventory on Jan. 31 Direct materials purchased $12,000 Direct materials used 3 times the direct labor incurred Total manufacturing costs incurred in period $27,300 Total manufacturing costs incurred in period 70% of Cost of Goods Manufactured Total manufacturing costs incurred in period $9,000 less than Cost of Goods Sold Account Balances Account Jan. 31 Feb. 28 Costs Incurred Materials Inventory $fill in the blank c768d4f58fe5005_1 3,300 $fill in the blank c768d4f58fe5005_2 3,300 Direct Materials Used $fill in the blank c768d4f58fe5005_3 15,000 Work in Process Inventory 27,000 fill in the blank c768d4f58fe5005_4 42,000 Direct Labor Incurred fill in the blank c768d4f58fe5005_5 5,000 Finished Goods Inventory fill in the blank c768d4f58fe5005_6 12,400 17,000 Factory Overhead Incurred fill in the blank c768d4f58fe5005_7 9,400 Cost of Goods Sold fill in the blank c768d4f58fe5005_8 37,400