BE 14-1

Primary users of reports

Financial Accountoing
Managerial Accounting
Stockholders, creditors, and regulatory Officers and managers

Types of reports
Frequency of reports
Purpose of reports
Content of reports

Financial statements
Quarterly and annually
General-purpose
Pertains to business as a whole and is
condensed, limited to double entry
accounting and cost data, the standard
is GAAP

Internal reports
As needed
Special purpose for specific decisions
Pertains to subunits of the business Very
detailed, extends beyond double-entry data
to any relevant data, standard is relevance
to decisions

Verification of reports

Annual independent audit by CPA

No independent audits

(a) DM

Frames and tires used in

manufacturing bicycles

(b) DL

Wages paid to production workers

( c) MO

Insurance on factory equipment and

machinery

(d) MO

Depreciation on factory equipment

BE 14-4

BE 14-5 (a) DM
(b) DM
(c ) DL
(d) MO
(e ) MO
(f) DM
(g) DM
(h) MO

Windshield
Engine
Wages of assembly line workers
depreciation of factory machinery
Factory machinery lubricants
Tires
Steering wheel
Salary of painting supervisor

BE 14-6
(a) Product cost
(b) Period cost
(c ) Period cost
(d) Period cost
(e ) Product cost
(f) Product cost

Manufacturing overhead
Selling expenses
Administrative expenses
Advertising expenses
Direct labor
Direct material

BE 14-8
Beginning work in process
Direct labor
Direct materials
Total manufacturing overhead

$
$
$

209,000
180,000
208,000

Total manufacturing cost

597,000

Total cost of work in process

25,000

622,000

BE 14-10
Direct Materials Used
1) $
2) $
3) $

Direct Labor Used

Factory Overhead

40,000 $
(81,000) $
55,000 $

61,000 $
75,000 $
(144,000) $

Total Manufacturing Cost

1) $
(151,000) $
2) $
296,000 $
3) $
310,000 $

Work in Process (1/1)

120,000 $
(123,000) $
463,000 $

50,000
140,000
111,000

BE14-11
Work in Process (12/31)
82,000
98,000
(58,000)

E14-1

1)Financial accouniting foucuses False, financial accounting is actually to 6)Managerial accounting reports are
on providing information to
get information to external users
prepared only quarterly and anually.
internal users.
2)Analyzing cost-volume-profit
relationships is part of
managerial accounting.

True

7) Financial accounting reports are generalpurpose reports.

3)Preparation of budgets is part

of financial accounting.

False, it is part of managerial

accounting

8)Managerial accounting reports pertain to

subunits of the business

4)Managerial accounting applies False, it can also be used by service

only to marchandising and
companies
manufacturing companies.

9)Managerial accounting reports must

comply with GAAP.

5)Both managerial accounting

True
and financial accounting deal
with many of the same economic
events.

10)Although managerial accountants are

expected to behave ethically, there is no
code of ethical standards for managerial
accountants.

1. Salaries for assembly line

inspectors.

Manufacturing overhead

6.Wages paid to assembly line workers.

2. Insurance on factory
machines.

Manufacturing overhead

7. Factory machinery depreciation.

3.Property taxes on factory

building.

Manufacturing overhead

8.Glue, nails, paint, and other small parts

used in production.

4.Factory repairs.
5. Upholstery used in
manufacturing furniture

Manufacturing overhead
Direct materials

9.Factory supervisors' salaries.

10. Wood used in manufacuring furniture.

E14-2

E14-3
a)

b)

Materials used in product

$100,000

Direct materials

Advertising Expense $45,000

Depreciation on plant $60,000

Period cost

Property taxes on plant $14,000

Property taxes on store $7,500

Manufacturing overhead

Delivery expense $21,000

Labor cost of assembly-line

workers $110,000

Direct labor

Sales commissions $35,000

Factory supplies used $13,000

Manufacturing overhead

Salaries paid to sales clerks $50,000

Product cost consist of direct labor, direct materials, and manufactureing overhead used in making the factory's
product. Period cost are not a necessary part of the manufacturing process.

E14-4
Factory utilities
Depreciation on factory
equipment

$
$

Depreciation on delivery truck

Indirect factory labor

Indirect materials
Direct materials used
Factory manager's salary

$
$
$
$

a) Manufacturing overhead
170, 350
b) Product cost $ 377,050
c) Period cost $ 69,140

15,500 Direct labor

12,650 Sales salaries
3,800 Property taxes on factory building
48,900
80,900
137,600
8,000

Repairs to office equipment

Factory repairs
Advertising
Office supplies used

E14-9

Molina Company
Cost of Goods Manufatured Schedule
For the Year Ended December 31, 2014
Work in Process (1/1)
Direct materials
Raw materials inventory (1/1)

210,000

401,000

Total cost of work in process

Less: Work in process (12/31)

$
$

611,000
81,000

Cost of goods manufactured

530,000

54,500

Add: Raw materials inventory

(1/1)

158,000

Total raw materials available

for use

212,500

$
$
$

22,500
190,000
89,000

$
$
$

18,000
36,000
68,000

122,000

Less: Raw materials inventory

(12/31)
Direct materials Used
Direct Labor
Manufacturing overhead
Indirect labor
Factory depreciation
Factory utilities
Total overhead
Total manufacturing costs

E14-12
Cepeda Corporation has the following cost records for June 2014.
Indirect factory labor
$
4,500
Direct materials used
$
20,000
Work in process, 6/1/14
$
3,000
Work in process, 6/30/14
$
3,800
Finished goods, 6/1/14
$
5,000
Finished goods, 6/30/14
$
7,500
(a)

CEPEDA CORPORATION
Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2014
Work in process, June 1
Direct materials used
Direct labor
Manufacturing overhead
Indirect labor
$
Factory manager's salary
$
Indirect materials
$
Maintenance, factory
$
equipment
Depreciation, factory
equipment
Factory utilities
Total manufacturing
overhead
Total manufacturing costs
Total cost of work in process

Factory utilities
Depreciation, factory equipment
Direct labor
Maintenance, factory equipment
Indirect materials
Factory manager's salary

$
$

20,000
40,000

13,300

4,500
3,000
2,200
1,800

1,400

400

Less: Work in process, June 30

Cost of goods manufactured

(b)

CEPEDA CORPORATION
Income Statement (partial)
For the Month Ended June 30, 2014
Sales Revenue
Cost of goods sold
Finished goods inventory, June
1
$
Cost of goods manufactured
(from (a) above)
$

72,500

77,500

Less: Finished goods

inventory, June 30

7,500

Gross profit

92,100

$
$

70,000
22,100

5,000

Cost of goods available for

sale

Cost of goods sold

Total Manufacuring Costs

$
$
$

(151,000)
296,000
310,000

Cost of Goods Manufactured

$
(189,000)
$
321,000
$
715,000

False, such reports can be prepared as

often as needed
True

True
False, managerial reports do not have
to comply to any external standards or
principles
True

Direct labor
Manufacturing overhead
Manufacturing overhead
Manufacturing overhead
Direct materials

Period cost
Manufacturing overhead
Manufacturing overhead
Period cost
Manufacturing overhead

$
$

69,100
46,400

2,500

$
$
$
$

1,300
2,000
15,000
2,640

$
$
$
$
$
$

400
1,400
40,000
1,800
2,200
3,000

3,000

73,300

76,300

3,800

72,500