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You, the managerial accountant, are asked by the CFO (Mr. Smith) of Wilson–West Manufacturing (a new company) to set up a product costing system. The following are the types of expenses that will be included:
- direct labor
- direct materials
- utilities
- depreciation
- maintenance
- insurance on the equipment
- rent on the plant
- administrative salaries
- rent for the office
In a memo format, explain to Mr. Smith and the president what will be included in product costing.
- Explain what is involved in a product costing system.
- Explain why Wilson–West Manufacturing needs to have a product costing system.
- Allocate the above expenses as fixed, mixed, or variable expenses.
- Prepare calculations for the following, and explain your computations:Variable cost: The unit rate is $0.25, and the actual hours used for manufacturing are 15,000.Mixed cost: The unit rate is $0.25, actual hours are 10,000, and the fixed cost is $5,000 per month.Total cost: Use your calculations from above.
- Explain this to Mr. Smith who will prepare these calculations on a monthly basis.
Assignment TWO
| 1–2 Excel spreadsheets | |
| Details: |
Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time. You are a fresh accounting graduate. You have landed a job with a big 3 accounting firm. The first day at your job, your manager approaches you: “Hi Bill! Welcome aboard. Hope you like your new cubicle. Have you met everyone? By the way, you will be working with me from tomorrow on Long House Company. This is an important client. They have sent me some information on their projects. Can you provide a report that answers all of the questions listed below? By the way I need it by tomorrow morning at 8 a.m.!” ProjectTotal Contract PriceBillings Through 12/31/12Cash Collections Through 12/31/12Contract Costs Incurred Through 12/31/12Estimated Additional Costs to CompleteA$200,000$100,000$80,000$120,000$90,000B250,00050,00045,00040,000180,000C180,000180,000150,000120,0000D100,00010,0005,00080,00020,000E140,000120,000110,000100,00010,000 870,000460,000390,000460,000300,000Prepare a schedule of gross profit (loss) to be reported.Prepare the entries for projects A and B only. Assignment THREE
Wilson-West Manufacturing Company is trying to determine which costing method to implement in its new manufacturing plant. The CFO, Mr. Smith, asked you, his new managerial accountant, to explain the three following costing systems: Activity-based costing (ABC)Job order costingProcess costing Create a 1–2 page table, comparing the following for each of the 3 costing systems: What are the 3 characteristics of the system?Give 2 examples of a product or service that would be accounted for by each system. Explain why you chose this product or service as your example.Describe 2–3 advantages of each system.Describe 2–3 disadvantages of each system. |
P3IP
| You are a fresh accounting graduate. You have landed a job with a big 3 accounting firm. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The first day at your job, your manager approaches you: “Hi | B | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Have you met everyone? By the way, you will be working with me from tomorrow on Long House | C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| This is an important client. They have sent me some information on their projects. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Can you provide a report that answers all of the questions listed below? By the way I need it by tomorrow morning at 8 a.m.!” | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Project | Total Contract Price | Billings | Cash | Contract Costs Incurred Through 12/31/12 | E | A | ||||||||||||||||||||||||||||||||||||||||||||||||||
| $2 | 0 | $ | 100,000 | $ | 80,000 | $ | 1 | 20,000 | $90,000 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2 | 50,000 | 4 | 5,000 | 40,000 | 180,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 150,000 | 120,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| D | 10,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 140,000 | 110,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 870,000 | 460,000 | 390,000 | 300,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fill in yellow cells below with the appropriate amounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| I – Schedule of gross profit or loss | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| D | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A (Not applicable because it is a loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| E | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit (loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Project A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Construction in process | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Materials | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Construction expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from long-term contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Construction in process loss | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Project B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Construction in process gross profit |
