In: Accounting
CRITICAL THINKING
this module, you are introduced to the two primary costing systems that organizations use to trace and allocate costs to various jobs and departments. Choosing the proper costing system is a top management decision that can have a significant financial impact on any company. Costing systems offer a granular view of how much money is being spent by an organization as it produces goods and services.
: Applying Managerial Accounting Concepts to the Manufacturing Industry Complete the following questions using Microsoft Excel. No other submission format is allowed. Review the grading rubric to confirm you are meeting the assignment requirements. (All amounts in SAR except units.)
Given the following information for Dorttmund Corporation: | |
Advertising costs | 320,000 |
Office rent | 240,000 |
Direct materials | 800,000 |
Delivery vehicle depreciation | 90,000 |
Factory repair and maintenance | 420,000 |
Sales salary | 510,000 |
Indirect labor | 220,000 |
Manufacturing equipment depreciation | 180,000 |
Administrative salaries | 360,000 |
President's salary | 700,000 |
Sales revenue | 5,200,000 |
Indirect materials | 190,000 |
Direct labor | 1,500,000 |
Machine hours | 2,000 |
Direct Labor hours | 10,000 |
Machine hours per unit | 3 |
Direct labor hours per unit | 6 |
Direct materials per unit | ? |
Units manufactured | 500 |
Units sold | 350 |
You must show all your work for credit.
Requirement 1
Period Costs | |
Advertising costs | 320,000 |
Office rent | 240,000 |
Delivery vehicle depreciation | 90,000 |
Sales salary | 510,000 |
Administrative salaries | 360,000 |
President's salary | 700,000 |
Total period costs | 2,220,000 |
Requirement 2
Overhead cost per unit | |
Indirect materials | $190,000 |
Indirect labor | $220,000 |
Manufacturing equipment depreciation | $180,000 |
Factory repair and maintenance | $420,000 |
Total overhead | $1,010,000 |
÷ Total machine hours | $2,000 |
Overhead cost per unit | $505 |
Requirement 3
Product Costs | |
Direct materials | $800,000 |
Direct labor | $1,500,000 |
Overhead | $1,010,000 |
Total product costs | $3,310,000 |
Requirement 4
Cost of goods sold = $3,310,000 x (500 units manufactured /350 units sold) = $4,728,571 |
Requirement 5
Income Statement | ||
Sales revenue | $5,200,000 | |
Cost of goods sold | ($4,728,571) | |
Gross profit | $471,429 | |
Operating expenses: | ||
Advertising costs | $320,000 | |
Office rent | $240,000 | |
Delivery vehicle depreciation | $90,000 | |
Sales salary | $510,000 | |
Administrative salaries | $360,000 | |
President's salary | $700,000 | |
Total operating expenses | $2,220,000 | |
Net income (loss) | ($1,748,571) |