Question

Santana Rey, owner of Business Solutions, decides to diversify her business by also manufacturing computer workstation furniture.

Required:

1.	Classify the following manufacturing costs of Business Solutions by behavior and traceability.

Product Costs	Cost by Behavior	Cost by Traceability
1. Monthly flat fee to clean workshop	(Click to select)VariableFixed	(Click to select)DirectIndirect
2. Laminate coverings for desktops	(Click to select)FixedVariable	(Click to select)IndirectDirect
3. Taxes on assembly workshop	(Click to select)FixedVariable	(Click to select)IndirectDirect
4. Glue to assemble workstation component parts	(Click to select)VariableFixed	(Click to select)IndirectDirect
5. Wages of desk assembler	(Click to select)VariableFixed	(Click to select)IndirectDirect
6. Electricity for workshop	(Click to select)VariableFixed	(Click to select)IndirectDirect
7. Depreciation on tools	(Click to select)FixedVariable	(Click to select)DirectIndirect

Direct materials: $2,600

Factory overhead: $550

Direct labor: $900

Beginning goods in process: none (December 31, 2011)

Ending goods in process: $550 (January 31, 2012)

Beginning finished goods inventory: none (December 31, 2011)

Ending finished goods inventory: $370 (January 31, 2012)

2.	Assume the above manufacturing costs. Prepare a manufacturing statement for Business Solutions for the month ended January 31, 2012. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Business Solutions
Manufacturing Statement
For Month Ended January 31, 2012
(Click to select)Direct materialsAdd: Goods in process, December 31, 2011Less: Goods in process, January 31, 2012Direct laborFactory overhead costs	$
(Click to select)Less: Goods in process, January 31, 2012Direct laborAdd: Goods in process, December 31, 2011Factory overhead costsDirect materials
(Click to select)Direct laborDirect materialsFactory overhead costsLess: Goods in process, January 31, 2012Add: Goods in process, December 31, 2011
Total manufacturing costs
(Click to select)Less: Goods in process, January 31, 2012Cost of goods manufacturedDirect laborFactory overhead costsAdd: Goods in process, December 31, 2011
Total cost of goods in process
(Click to select)Direct laborAdd: Goods in process, December 31, 2011Cost of goods manufacturedFactory overhead costsLess: Goods in process, January 31, 2012
(Click to select)Cost of goods manufacturedAdd: Goods in process, December 31, 2011Direct laborFactory overhead costsLess: Goods in process, January 31, 2012	$

3.	Prepare the cost of goods sold section of a partial income statement for Business Solutions for the month ended January 31, 2012. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Business Solutions
Partial Income Statement
For Month Ended January 31, 2012
(Click to select)Less: Finished goods inventory, January 31, 2012Finished goods inventory, December 31, 2011Factory overhead costsGoods available for saleCost of goods manufactured	$
(Click to select)Factory overhead costsCost of goods manufacturedLess: Finished goods inventory, January 31, 2012Finished goods inventory, December 31, 2011Goods available for sale
(Click to select)Factory overhead costsDirect laborFinished goods inventory, December 31, 2011Cost of goods manufacturedGoods available for sale
(Click to select)Factory overhead costsFinished goods inventory, December 31, 2011Cost of goods manufacturedDirect laborLess: Finished goods inventory, January 31, 2012
Cost of goods sold	$

Answer 1

1

Product Costs	Cost by Behavior	Cost by Traceability
1. Monthly flat fee to clean workshop	Fixed	Indirect
2. Laminate coverings for desktops	Variable	Direct
3. Taxes on assembly workshop	Fixed	Indirect
4. Glue to assemble workstation component parts	Variable	Indirect
5. Wages of desk assembler	Variable	Direct
6. Electricity for workshop	Variable	Indirect
7. Depreciation on tools	Fixed	Indirect

____________________________________________

2

Business Solutions
Manufacturing Statement
For Month Ended January 31, 2012
Direct material	2600
Direct Labor	900
Factory Overhead	550
Total manufacturing Cost	4050
Add: work In progress Dec 31-2011.	0
Total cost of goods in purchase	4050
Less: work In progress Dec 31-2012	550
Cost of goods manufactured	3500

______________________________________________

3

Business Solutions
Manufacturing Statement
For Month Ended January 31, 2012
Cost of goods sold	3500
Add: Finished goods of inventory Dec 31-2011.	0
Total cost of goods in purchase	3500
Less: Finished goods of inventory Dec 31-2012	370
Cost of goods sold	3130