Chapter 16 Introduction to Managerial Accounting Demonstration Problems © 2016 Pearson Education, Ltd.

Demonstration of E16-23 Use the following information for a manufacturer to compute cost of goods manufactured and cost of goods sold: Inventories: Beginning Ending Raw Materials $ 16,000 $ 12,000 Work-in-Process 98,000 87,000 Finished Goods 20,000 25,000 Other information: Purchases of materials $ 37,000 Direct labor 76,000 Manufacturing overhead 34,000

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000 Purchases of Raw Materials 37,000

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000 Purchases of Raw Materials 37,000 Raw Materials Available for Use 53,000

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000 Purchases of Raw Materials 37,000 Raw Materials Available for Use 53,000 Ending Raw Materials Inventory (12,000)

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000 Purchases of Raw Materials 37,000 Raw Materials Available for Use 53,000 Ending Raw Materials Inventory (12,000) Direct Materials Used 41,000

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000 Purchases of Raw Materials 37,000 Raw Materials Available for Use 53,000 Ending Raw Materials Inventory (12,000) Direct Materials Used 41,000 Direct Labor 76,000

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000 Purchases of Raw Materials 37,000 Raw Materials Available for Use 53,000 Ending Raw Materials Inventory (12,000) Direct Materials Used 41,000 Direct Labor 76,000 Manufacturing Overhead 34,000

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000 Purchases of Raw Materials 37,000 Raw Materials Available for Use 53,000 Ending Raw Materials Inventory (12,000) Direct Materials Used 41,000 Direct Labor 76,000 Manufacturing Overhead 34,000 Total Manufacturing Costs Incurred During the Year 151,000

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000 Purchases of Raw Materials 37,000 Raw Materials Available for Use 53,000 Ending Raw Materials Inventory (12,000) Direct Materials Used 41,000 Direct Labor 76,000 Manufacturing Overhead 34,000 Total Manufacturing Costs Incurred During the Year 151,000 Total Manufacturing Costs to Account For 249,000

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000 Purchases of Raw Materials 37,000 Raw Materials Available for Use 53,000 Ending Raw Materials Inventory (12,000) Direct Materials Used 41,000 Direct Labor 76,000 Manufacturing Overhead 34,000 Total Manufacturing Costs Incurred During the Year 151,000 Total Manufacturing Costs to Account For 249,000 Ending Work-in-Process Inventory (87,000)

Calculation of cost of goods manufactured Demonstration of E16-23 Calculation of cost of goods manufactured Beginning Work-in-Process Inventory   $ 98,000 Direct Materials Used: Beginning Raw Materials Inventory $ 16,000 Purchases of Raw Materials 37,000 Raw Materials Available for Use 53,000 Ending Raw Materials Inventory (12,000) Direct Materials Used 41,000 Direct Labor 76,000 Manufacturing Overhead 34,000 Total Manufacturing Costs Incurred During the Year 151,000 Total Manufacturing Costs to Account For 249,000 Ending Work-in-Process Inventory (87,000) Cost of Goods Manufactured $ 162,000

Calculation of cost of goods sold Demonstration of E16-23 Calculation of cost of goods sold Beginning Finished Goods Inventory $ 20,000  

Calculation of cost of goods sold Demonstration of E16-23 Calculation of cost of goods sold Beginning Finished Goods Inventory $ 20,000   Cost of Goods Manufactured 162,000 [previous slide]

Calculation of cost of goods sold Demonstration of E16-23 Calculation of cost of goods sold Beginning Finished Goods Inventory $ 20,000   Cost of Goods Manufactured 162,000 [previous slide] Cost of Goods Available for Sale 182,000

Calculation of cost of goods sold Demonstration of E16-23 Calculation of cost of goods sold Beginning Finished Goods Inventory $ 20,000   Cost of Goods Manufactured 162,000 [previous slide] Cost of Goods Available for Sale 182,000 Ending Finished Goods Inventory (25,000)

Calculation of cost of goods sold Demonstration of E16-23 Calculation of cost of goods sold Beginning Finished Goods Inventory $ 20,000   Cost of Goods Manufactured 162,000 [previous slide] Cost of Goods Available for Sale 182,000 Ending Finished Goods Inventory (25,000) Cost of Goods Sold $ 157,000

Demonstration of E16-25 Rise & Shine Company sells alarm clocks. The following information summarizes Rise & Shine’s operating activities for 2016: Selling and Administrative Expenses $ 147,000 Purchases 208,000 Sales Revenue 421,000 Merchandise Inventory, January 1, 2016 16,000 Merchandise Inventory, December 31, 2016 11,000 Requirements 1. Calculate the operating income for 2016. 2. Rise & Shine sold 50,000 alarm clocks in 2016. Compute the unit cost for one alarm clock.

Demonstration of E16-25 Requirement 1: Calculate the operating income for 2016. Sales Revenue   $ 421,000

Demonstration of E16-25 Requirement 1: Calculate the operating income for 2016. Sales Revenue   $ 421,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 16,000

Demonstration of E16-25 Requirement 1: Calculate the operating income for 2016. Sales Revenue   $ 421,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 16,000 Purchases 208,000

Demonstration of E16-25 Requirement 1: Calculate the operating income for 2016. Sales Revenue   $ 421,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 16,000 Purchases 208,000 Cost of Goods Available for Sale 224,000

Demonstration of E16-25 Requirement 1: Calculate the operating income for 2016. Sales Revenue   $ 421,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 16,000 Purchases 208,000 Cost of Goods Available for Sale 224,000 Ending Merchandise Inventory (11,000)

Demonstration of E16-25 Requirement 1: Calculate the operating income for 2016. Sales Revenue   $ 421,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 16,000 Purchases 208,000 Cost of Goods Available for Sale 224,000 Ending Merchandise Inventory (11,000) Cost of Goods Sold 213,000

Demonstration of E16-25 Requirement 1: Calculate the operating income for 2016. Sales Revenue   $ 421,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 16,000 Purchases 208,000 Cost of Goods Available for Sale 224,000 Ending Merchandise Inventory (11,000) Cost of Goods Sold 213,000 Gross Profit

Demonstration of E16-25 Requirement 1: Calculate the operating income for 2016. Sales Revenue   $ 421,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 16,000 Purchases 208,000 Cost of Goods Available for Sale 224,000 Ending Merchandise Inventory (11,000) Cost of Goods Sold 213,000 Gross Profit Selling and Administrative Expenses 147,000

Demonstration of E16-25 Requirement 1: Calculate the operating income for 2016. Sales Revenue   $ 421,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 16,000 Purchases 208,000 Cost of Goods Available for Sale 224,000 Ending Merchandise Inventory (11,000) Cost of Goods Sold 213,000 Gross Profit Selling and Administrative Expenses 147,000 Operating Income $ 61,000

© 2016 Pearson Education, Ltd. Demonstration of E16-25 Requirement 2: Rise & Shine sold 50,000 alarm clocks in 2016. Compute the unit cost for one alarm clock. Unit cost of one alarm clock = © 2016 Pearson Education, Ltd.

© 2016 Pearson Education, Ltd. Demonstration of E16-25 Requirement 2: Rise & Shine sold 50,000 alarm clocks in 2016. Compute the unit cost for one alarm clock. Unit cost of one alarm clock = Cost of goods sold Total units sold © 2016 Pearson Education, Ltd.

© 2016 Pearson Education, Ltd. Demonstration of E16-25 Requirement 2: Rise & Shine sold 50,000 alarm clocks in 2016. Compute the unit cost for one alarm clock. Unit cost of one alarm clock = Cost of goods sold Total units sold = $213,000 50,000 alarm clocks © 2016 Pearson Education, Ltd.

© 2016 Pearson Education, Ltd. Demonstration of E16-25 Requirement 2: Rise & Shine sold 50,000 alarm clocks in 2016. Compute the unit cost for one alarm clock. Unit cost of one alarm clock = Cost of goods sold Total units sold = $213,000 50,000 alarm clocks $4.26 per alarm clock © 2016 Pearson Education, Ltd.