Question

The Genesis Corporation has the following account balances (in millions) For Year 20x1 Purchases of direct materials Direct manufacturing labor For Specific Date Direct materials, January 1, 20X1 Work in process, January 1,20X1 Finished goods, January 1, 20X1 P325 100 P15 10 70 Depreciation plant building 80 Direct materials, December 31, 20X1 20 Work in process, December 31, 20X15 Finished goods, December 31, 20X1 55 and equipment Plant supervisory salaries Miscellaneous plant overhead Revenues Marketing, distribution and 35 950 customer-service costs Plant supplies used Plant utilities Indirect manufacturing labor 240 10 30 60 Required 1. Prepare an income statement and a supporting schedule of costs of goods manufactured for the year ended December 31, 20X1 How would the answer to the preceding problem be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? Be specific. Would the sales manager's salary (included in marketing, distribution and customer-service costs) be accounted for differently if the Genesis Corporation were a merchandising company instead of a manufacturing company? Describe how wages of an assembler in the plant would be accounted for in this manufacturing company. Plant supervisory salaries are usually regarded as indirect manufacturing costs. Under what conditions might some of these costs be regarded as direct manufacturing costs? Give an example. 2. 3. 4. 5. Suppose that both the direct materials used and the plant depreciation were related to the manufacture of 1 million units of product. What is the unit cost for the direct materials assigned to those units? What is the unit cost for plant building and equipment depreciation? Assume that yearly plant depreciation is computed on a straight-line basis.

Answer 1

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As per HOMEWORKLIB POLICY we are allowed to answer first four sub parts. Answered first four, please post
separate question for remaining parts.
Part -1
Revenues			$       950
Cost of goods sold:
Beginning finished goods		$         70
Cost of goods manufactured (below)		$       645
Cost of goods available for sale		$       715
Ending finished goods		$        -55	$       660
Gross Margin			$       290
Marketing, distribution, and customer-service costs			$       240
Operating Income			$         50
Working for Cost of Goods Manufactured:
Direct materials costs
-Beginning inventory		$         15
- Purchases of direct materials		$       325
-Cost of direct materials available for use		$       340
Ending inventory		$        -20
Direct Material Used			$       320
Direct manufacturing labor costs			$       100
Indirect manufacturing labor costs
-Indirect manufacturing labor		$         60
-Plant supplies used		$         10
-Plant Utilities		$         30
-Depreciation––plant and equipment		$         80
-Plant supervisory salaries		$           5
-Miscellaneous plant overhead		$         35	$       220
Manufacturing costs incurred			$       640
Add beginning work-in-process inventory			$         10
Total manufacturing costs to account for			$       650
Less Ending WIP			$          -5
Cost of Goods Manufactured			$       645
Part -2
In that case, Working of Cost of Goods Manufactured above can be made as Cost of Goods sold by adjusting increase/decrease of finished goods.
And, in body of income statement, we can show directly cost of goods sold
Part -3
Sales Manager salary will always be as Markeging/Distribution customer service in manufacturing concern as well
An assembler’s wages would be assigned to the products worked on. Thus, the wages cost would be charged to Work-in-Process
and would not be expensed until the product is transferred through Finished Goods Inventory to Cost of Goods Sold as the product is sold.
Part -4
The direct-indirect distinction can be resolved only with respect to a particular cost object. directly and wholly to that single contract
For example, in defense contracting, the cost object may be defined as a contract. Then, a plant supervisor working only on that contract will have his or her salary charged