Question

2-39 Income statement and schedule of cost of goods manufactured. The Howell Corporation has the following account balances (in millions): $15 For Specific Date For Year 2017 Direct materials inventory, Jan 1, 2017 Purchases of direct materials $325 Work-in-process inventory, Jan. 1, 2017 10 Direct manufacturing labor 100 Finished goods inventory, Jan. 1, 2017 Depreciation-plant and equipment Direct materials inventory, Dec. 31, 2017 Plant supervisory salaries Work-in-process inventory, Dec. 31, 2017 Miscellaneous plant overhead Finished goods inventory, Dec. 31, 2017 Revenues Marketing, distribution, and customer-service costs Plant supplies used Plant utilities Indirect manufacturing labor Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31, 2017. (For additional questions regarding these facts, see the next problem.) 2-40 Interpretation of statements (continuation of 2-39). 1. How would the answer to Problem 2-39 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. 2. Would the sales manager's salary included in marketing, distribution, and customer-service costs) be accounted for any differently if the Howell Corporation were a merchandising-sector company instead of a manufacturing-sector company? 3. Using the flow of manufacturing costs outlined in Exhibit 2-9 (page 64), describe how the wages of an assembler in the plant would be accounted for in this manufacturing company. 4. Plant supervisory salaries are usually regarded as manufacturing overhead costs. When might some of these costs be regarded as direct manufacturing costs? Give an example. 5. Suppose that both the direct materials used and the plant and equipment depreciation are 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 and equipment depreciation? Assume that yearly plant and equipment depreciation is computed on a straight-line basis. 6. Assume that the implied cost-behavior patterns in requirement 5 persist. That is, direct material costs behave as a variable cost and plant and equipment depreciation behaves as a fixed cost. Repeat the computations in requirement 5, assuming that the costs are being predicted for the manufacture of 12 million units of product. How would the total costs be affected? 7. As a management accountant, explain concisely to the president why the unit costs differed in require ments 5 and 6.

Answer 1

As per policy, only one question is allowed to answer at a time, so answering 2-39 here. For rest please upload your query with requirement again :

2-39)
Cost of Goods Manufactured
	Amount $	Amount $	Amount $
WIP - OB			10
Direct Materials:
OB	15
add:purchases	325
Total DM available	340
Less:CB	20
DM used		320
DM Labor		100
Manuf. O/H:
Depreciation - P&E	80
Plant super. Salary	5
Misc. Plant OH	35
Plant supp used	10
Plant utilities	30
Ind. Manuf. Lab.	60
Total Manuf OH		220
Total Manuf. Cost added			640
Total Work in Process			650
Less:WIP - CB			5
Cost of Goods Manufactured			645
Income Statement:
		Amount $
Revenues		950
Less: COGS:
FG Inventory OB	70
Add: Cost of Goods Manufactured	645
Total FG available	715
Less: FG Inventory CB	55
Cost of Goods Sold		660
Gross Profit		290
Less:Marketing, Distri & Cust-Serv. Costs		240
Net Operating Income		50