ch04sm

CHAPTER 4

DISCUSSION QUESTIONS

4-1

Q4-1. The five parts are:(a) Direct materials section(b) Direct labor section(c) Factory overhead(d) Work in process inventories(e) Finished goods inventories

Q4-2. The balance sheet is a statement of financialposition; the income statement is a statementof activity. The income statement is comple-mentary to the balance sheet, accounting inparticular for the change in the proprietaryequity as a result of operations during the year.In that respect, the income statement is essen-tially nothing more than a major section of theretained earnings account. Therefore, the rev-enue and expense accounts in the incomestatement have been termed “explanatory”accounts, explaining the ebb and flow of rev-enues and expenses that lead to the newincome (or loss) and to the new retained earn-ings balance in the balance sheet.

Q4-3. The ordinary balance sheet and incomestatement are intended to provide informa-tion as to financial position and results ofoperation of a business, in accordance withseveral assumptons that are made in prepar-ing the statements. From the standpoint ofthe criticisms made, the most important ofthese assumptions are that cost less appro-priate amortization of cost measures unex-pired cost, and that a business may beassumed to be going to continue operationsindefinitely into the future. Accounting state-ments are usually prepared on the theorythat a sale or some other definite event isessential before revenue is recognized.Basically, the asset side of a balance sheetcontains a presentation of the amounts ofcost incurred, which can be presumed tobenefit future periods. An income statementpresents the amount of revenue recognizedas having been realized during the periodless the portion of all costs incurred thatdoes not appear to be fairly deferrable tofuture periods.

The income statement is primarily a meas-ure of what has been earned, and not ameasure of “earning power.” For plant assets,the balance sheet is primarily a measure ofaccountability for expenditures, showingacquisition costs less costs allocated to pastoperations. This measure of accountabilitymay be quite different from “true value.”

To increase its usefulness as one elementin judging earning power, the income state-ment is prepared with a distinction betweenoperating and nonoperating items. For thesame reason, certain items may be eliminatedfrom the income statement and shown in thestatement of retained earnings. However, theeffect of nonrecurring and nonoperating trans-actions is not entirely eliminated.

Information revealed by a series ofincome statements is more significant injudging earning power than informationrevealed by one income statement. Theincome of a business may follow or evenexaggerate the ups and downs of the busi-ness cycle and, therefore, the income of anyone year will not represent earning power.

Changes in law or local zoning ordinancesmay result in a marked change in the earningpower of a business. Likewise, changes inpublic taste, development of new products,appearance of new competition, acquisition ofsubsidiaries, changes in management andthe like, all may change earning power andyet not be clearly reflected, if reflected at all,in one income statement.

The accounting use of historical, ratherthan current, dollars in measuring deprecia-tion and cost of goods sold may result in dis-torting any view of earning power obtainedfrom a single income statement.

In regard to plant assets, it can be said thattheir value to a going concern is usuallydependent upon the earning power of thebusiness. Such a value is not necessarily thesame as liquidation value, cost, cost lessamortization, replacement value, or any other

kind of value. The phrase “true value” has nodefinite connotation.

Q4-4. Actual describes the way costs are meas-ured, i.e., at actual historical amounts;absorption describes which elements of costare allocated to inventory accounts, i.e., allelements of manufacturing cost are fully allo-cated to inventories; process describes howcost information is accumulated, i.e., costsare accumulated for each process or depart-ment in the factory.

Q4-5. Prime costing systems allocate only the primecosts, direct material and direct labor, toinventory accounts. Direct costing systems,also called variable costing systems, allocatethe variable manufacturing costs, direct mate-rial, direct labor, and variable factory over-head to the inventory accounts. Absorptioncosting systems allocate to inventories part orall of fixed factory overhead, in addition to allvariable manufacturing costs.

Q4-6. Actual costing measures product costs atactual historical amounts, while standardcosting measures product costs by using pre-determined amounts of resources to be con-sumed and predetermined prices of thoseresources.

Q4-7. Process costing accumulates costs for eachprocess or department in the factory andmaintains detailed records and calculations ofthe costs of work in process. Job order cost-ing accumulates costs for each job, lot, batch,or contract and maintains detailed recordsand calculations of the costs of work inprocess. Backflush costing accumulates costsby working backwards through the availableinformation after production is completed (i.e.,at the end of the accounting period) andmaintains no detailed records of the costs ofwork in process.

Q4-8. Actual costing is more common than standardcosting in defense-related industries, whilestandard costing is somewhat more commonelsewhere.

Q4-9. Super-full absorption or super absorptionrefers to the income tax requirement thatsome purchasing and storage costs be allo-cated to inventory accounts.

Q4-10. Job order costing would be common in repairshops, building construction, and printing; and

in service businesses such as medical, legal,architectural, construction engineering,accounting, and consulting firms, as men-tioned in the text. Other examples includeshipbuilding, bridge building, tool and diemanufacturing, art and antique restoration,and contract research.

Q4-11. As mentioned in the text, process costingwould be common in the milling, brewing,chemical, and textile industries; in simpleassembly operations; and in service busi-nesses serving large numbers of customerssimultaneously, such as airlines. Other exam-ples include petroleum refining, basic foodprocessing, and manufacture of low-cost con-sumer products such as toys, disposablepens, razors, and lighters.

Q4-12. Aspects common to job order and processcosting are:(a) They can be used by service organiza-

tions.(b) They require considerable detail to calcu-

late the cost of work in process.(c) The work in process account in the gen-

eral ledger is supported by subsidiaryrecords.

Q4-13. A blended costing method uses job order cost-ing to accumulate some element(s) of cost andprocess costing to accumulate others.

Q4-14. Flexible manufacturing systems consist of anintegrated collection of automated productionprocesses, automated materials movement,and computerized system controls to utilizefacilities in efficiently manufacturing a highlyflexible variety of products.

Q4-15. The advantages of a flexible manufacturingsystem over the other systems include short(near zero) setup times, the absence of alearning curve, lower lead times to shipment,lower direct labor cost per unit, lower directlabor cost in total, and lower work in processinventories.

Q4-16. The initial cost of creating a flexible manufac-turing system is much higher than that ofother manufacturing systems.

Q4-17. Manufacturing settings suited for backflushcosting are distinguished by very fast pro-cessing speeds, which remove both theincentive and the opportunity to track thedetailed costs of work in process.

4-2 Chapter 4

EXERCISES

E4-1 Calculation of cost of goods sold (in thousands):

Total manufacturing cost............................................. $110Add work in process inventory, beginning ................ 80

$190Less work in process inventory, ending .................... 90Cost of goods manufactured ...................................... $100Add finished goods inventory, beginning.................. 150Cost of goods available for sale ................................. $250Less finished goods inventory, ending ...................... 120Cost of goods sold....................................................... $130

E4-2 Calculation of cost of goods sold (in thousands):

Direct materials used ................................................... $ 90Direct labor.................................................................... 60Factory overhead.......................................................... 80Total manufacturing cost............................................. $230

. Add work in process inventory, beginning ................ 250$480

Less work in process inventory, ending .................... 210Cost of goods manufactured ...................................... $270Add finished goods inventory, beginning.................. 340Cost of goods available for sale ................................. $610Less finished goods inventory, ending ...................... 300Cost of goods sold....................................................... $310

Chapter 4 4-3

E4-3(1) Direct materials:

Direct materials inventory, beginning................ $ 37,500Purchases............................................................. 160,000Direct materials available for use ...................... $197,500Less direct materials inventory, ending ............ 43,500Direct materials consumed ................................ $154,000

Direct labor.................................................................... 120,000Factory overhead.......................................................... 108,000Total manufacturing cost............................................. $382,000Add work in process inventory, beginning ................ 61,500

$443,500 Less work in process inventory, ending .................... 57,500Cost of goods manufactured ...................................... $386,000

(2) Cost of goods manufactured (from (1))...................... $386,000Add finished goods inventory, beginning.................. 27,000Cost of goods available for sale ................................. $413,000Less finished goods inventory, ending ...................... 26.000Cost of goods sold....................................................... $387,000

E4-4

(1) Factory overhead incurred in May:Indirect labor ........................................................................................ $22,000Heat, light, and power.......................................................................... 11,220Factory rent .......................................................................................... 18,500Factory insurance ................................................................................ 2,000Supplies used* ..................................................................................... 16,920Supervisor’s salary .............................................................................. 5,000Overtime premium** ............................................................................ 2,750Total overhead...................................................................................... $78,390

*($5,600 + $16,500 – $5,180 = $16,920** (.5 × $22 per hr.) × 250 hrs. = $2,750

4-4 Chapter 4

E4-4 (Concluded)

(2) Cost of goods manufactured:

Stores, April 30..................................................................................... $ 10,250Purchases ............................................................................................. 105,000

$115,250 Less: Stores, May 31............................................................................ 12,700Direct materials consumed................................................................. $102,550Direct labor used (4,250 × $22)........................................................... 93,500Factory overhead ................................................................................. 78,390Total manufacturing cost .................................................................... $274,440 Add work in process, beginning inventory ....................................... 60,420

$334,860Less work in process, ending inventory ........................................... 52,800Cost of goods manufactured.............................................................. $282,060

(3) Ending balance of finished goods:

Finished Cost of Finished Cost of goods, + goods – goods, = goodsApril 30 manufactured May 31 sold

$45,602 + $282,060 – X = $280,000

X = $ 47,662

Therefore, the finished goods ending balances is $47,662.

E4-5 (a) Materials ............................................................... 40,000Accounts Payable....................................... 40,000

(b) Work in Process................................................... 33,000Factory Overhead Control .................................. 2,000

Materials ...................................................... 35,000

(c) Payroll ................................................................... 40,000Accrued Payroll .......................................... 40,000

(d) Accrued Payroll ................................................... 40,000Cash............................................................. 40,000

(e) Work in Process................................................... 32,000Factory Overhead control................................... 8,000

Payroll .......................................................... 40,000

(f) Factory Overhead Control .................................. 4,000Cash............................................................. 4,000

Chapter 4 4-5

E4-5 (Concluded)

(g) Factory Overhead Control .................................. 18,000Accounts Payable....................................... 18,000

(h) Factory Overhead Control .................................. 4,130Accumulated Depreciation ........................ 2,100Prepaid Expenses....................................... 780Accrued Property Taxes............................. 1,250

(i) Work in Process................................................... 36,130Factory Overhead Control ......................... 36,130

(j) Finished Goods ................................................... 92,000Work in Process.......................................... 92,000

(k) Accounts Receivable .......................................... 80,000Sales ............................................................ 80,000

Cash...................................................................... 40,000Accounts Receivable ................................. 40,000

Cost of Goods Sold............................................. 60,000Finished Goods .......................................... 60,000

E4-6 (a) Materials ............................................................... 13,500Accounts Payable....................................... 13,500

(b) Work in Process................................................... 17,500Materials ...................................................... 17,500

(c) Factory Overhead Control .................................. 1,800Materials ...................................................... 1,800

(d) Payroll ................................................................... 27,000Accrued Payroll .......................................... 27,000

Work in Process................................................... 17,000Factory Overhead Control .................................. 2,000Marketing Expenses Control .............................. 5,000Administrative Expenses Control ...................... 3,000

Payroll .......................................................... 27,000

(e) Factory Overhead Control .................................. 2,508Cash............................................................. 2,508

(f) Factory Overhead Control .................................. 8,500Accounts Payable....................................... 8,500

(g) Work in Process................................................... 14,808Factory Overhead Control ......................... 14,808

(h) Finished Goods ................................................... 60,100Work in Process.......................................... 60,100

4-6 Chapter 4

E4-6 (Concluded)

(i) Accounts Receivable .......................................... 75,000Sales ............................................................ 75,000

Cost of Goods Sold* ........................................... 60,000Finished Goods .......................................... 60,000

*$15,000 + $60,100 – $15,100 = $60,000

E4-7WALLACE INDUSTRIES

Cost of Goods Manufactured Statement For May

(in thousands of dollars)

Direct materials:Direct materials, April 30, 20A.......................... $ 28 Purchases........................................................... $510Freight in ........................................................... 15 525

Direct materials available for use..................... $553Less direct materials, May 31, 20A .................. 23

Direct materials consumed...................... $ 530 Direct labor ..................................................................... 260 Factory overhead:

Indirect factory labor......................................... $ 90Utilities ($135 × 80%)......................................... 108Property tax........................................................ 60Insurance ($20 × 60%)....................................... 12Depreciation ($20 + $30) ................................... 50

Total factory overhead ............................. 320Total manufacturing cost .................................. $1,110

Add work in process, April 30, 20A......... 150

$1,260 Less work in process, May 31, 20A ....... 210

Cost of goods manufactured............................ $1,050

Chapter 4 4-7

E4-8CINNABAR COMPANY

Statement of Cost of Goods Sold For Year Ended December 31

Raw materials:Purchases.................................................. $400,000

Less discounts on rawmaterials purchased............... 4,200 $395,800

Less raw materials on hand,December 31, 20A............................ 24,000

Cost of raw materials consumed ............ $371,800 Direct labor......................................................... 180,000 Factory overhead:

Factory maintenance................................ $ 38,400Factory supplies used.............................. 22,400Power and heat—factory.......................... 19,400 Insurance expense—factory

building and equipment .................. 4,800 Depreciation—factory building

and equipment ................................. 17,500Factory superintendence ......................... 100,000Indirect factory labor................................ 20,000

Total factory overhead .................... 222,500Total manufacturing costs ................................ $774,300Add work in process, January 1, 20A.............. 84,000

$858,300 Less work in process, December 31,

20A ............................................................. 30,000

Cost of goods manufactured............................ $828,300Add finished goods, January 1, 20A................ 37,500

Cost of goods available for sale ...................... $865,800 Less finished goods, December 31,

20A ............................................................. 70,000

Cost of goods sold ............................................ $795,800

CGA-Canada (adapted). Reprint with permission.

4-8 Chapter 4

PROBLEMS

P4-1(1) BEERTON COMPANY

Cost of Goods Sold Statement For Month Ended July 31

(in thousands)

Direct materials consumed................................................................. $16Direct labor ........................................................................................... 24Factory overhead ................................................................................. 20

Total manufacturing cost (a)............................................................... $60Add work in process inventory, July 1............................................... 15

$75 Less work in process inventory, July 31 ........................................... 25

Cost of goods manufactured.............................................................. $50Add finished goods inventory, July 1 (b)........................................... 20

Cost of goods available for sale......................................................... $70Less finished goods inventory, July 31 (c)........................................ 10

Cost of goods sold .............................................................................. $60

Calculations:(a) Cost of goods manufactured .................... $50

Add work in process, ending .................... 25

$75 Less work in process, beginning.............. 15

Equals total manufacturing cost............... $60

(b) Cost of goods available for sale ............... $70Less cost of goods manufactured............ 50

Equals finished goods, beginning............ $20

(c) Cost of goods available for sale ............... $70Less cost of goods sold ............................ 60

Equals finished goods, ending ................ $10

Chapter 4 4-9

P4-1 (Concluded)

(2) (a) Materials ............................................................... 25,000Accounts Payable....................................... 25,000


Materials ...................................................... 18,000

(c) Payroll ($24,000 + $5,000) ................................... 29,000Accrued Payroll ................................................... 29,000

(d) Work in Process................................................... 24,000Factory Overhead Control .................................. 5,000

Payroll .......................................................... 29,000

(e) Finished Goods ................................................... 50,000Work in Process.......................................... 50,000

(f) Accounts Receivable .......................................... 105,000Sales ($60,000 + (75% of $60,000)) ........... 105,000


4-10 Chapter 4

P4-2(1) SOUTHTON COMPANY

Cost of Goods Sold StatementFor Month Ended June 30

(in thousands)Direct materials:

Materials inventory, June 1 ............................... $15Purchases........................................................... 33

Materials available for use ................................ $48Less: Indirect materials used......................... $ 1

Materials inventory, June 30 ................ 19 20

Direct materials consumed............................... $28 Direct labor (Note (a)) .................................................... 42 Factory overhead:

Indirect materials ............................................... $ 1Indirect labor (a) ................................................ 7Depreciation ....................................................... 17Insurance ........................................................... 2General factory overhead ................................. 13 40

Total manufacturing cost (b) ......................................... $110 Add work in process inventory, June 1........................ 40

$150Less work in process inventory, June 30 30

Cost of goods manufactured ........................................ $120Add finished goods inventory, June 1 (c) .................... 70

Cost of goods available for sale ................................... $190Less finished goods inventory, June 30 (d)................. 50

Cost of goods sold......................................................... 140

Calculations:(a) indirect labor + direct labor = $49

indirect labor + (indirect labor × 6) = $49 indirect labor × 7 = $49indirect labor = $7direct labor = 6 × $7 = $42

(b) Cost of goods manufactured ............................. $120Add work in process, ending ............................. 30

$150Less work in process, beginning....................... 40Equals total manufacturing cost........................ $110

Chapter 4 4-11

P4-2 (Concluded)

(c) Cost of goods available for sale ........................ $190Less cost of goods manufactured..................... 120Equals finished goods, beginning..................... $ 70

(d) Cost of goods available for sale ........................ $190Less cost of goods sold ..................................... 140Equals finished goods, ending .......................... $ 50

(2) (a) Materials ............................................................... 33,000Accounts Payable....................................... 33,000


Materials ...................................................... 29,000



Payroll .......................................................... 49,000

(e) Finished Goods ................................................... 120,000Work in Process.......................................... 120,000

(f) Accounts Receivable .......................................... 210,000Sales ($140,000 + (50% of $140,000)) ....... 210,000


4-12 Chapter 4

P4-3(1) MERTON COMPANY

Schedule of Cost of Goods ManufacturedFor Month Ended March 31

Work in process, March 1 ............................................ $ 50,000 Production costs:

Direct materials.................................................... $104,000 **Direct labor........................................................... 160,000 ***Factory overhead................................................. 80,000 *** 344,000

$394,000Less work in process, March 31 ................................. 46,000Cost of goods manufactured ...................................... $348,000*

* Cost of goods sold ($345,000) + ending finished goods inventory ($105,000) – beginning finished goods inventory ($102,000) = $348,000.

** Purchases of materials during March ($110,000) + beginning materialsinventory ($20,000) – ending materials inventory ($26,000) = $104,000.

*** Production costs for March ($344,000) – direct materials ($104,000) = directlabor and factory overhead ($240,000).

Let x = direct labor 1.5x = $240,000

x = $160,000 direct labor.5x = $80,000 factory overhead

(2) Prime cost:Direct materials (requirement (1))............................... $104,000Direct labor (requirement (1))...................................... 160,000

$264,000

(3) Conversion cost:Direct labor (requirement (1))...................................... $160,000Factory overhead (requirement (1)) ............................ 80,000

$240,000

Chapter 4 4-13

P4-4

Company A:Sales .............................................................................. $4,000,000 Cost of goods sold:

Finished goods inventory, January 1 ................ $ 600,000Cost of goods manufactured ............................. 3,800,000

Cost of goods available for sale ........................ $4,400,000Finished goods inventory, December 31........... 1,200,000

Cost of goods sold.............................................. 3,200,000

Gross profit (20% of sales ........................................... $ 800,000

Company B:Cost of goods available for sale ................................. $1,490,000Less finished goods ending inventory....................... 190,000

Cost of goods sold....................................................... $1,300,000

Company C:Sales .............................................................................. $ 429,000 Cost of goods sold:

Cost of goods manufactured ............................. $ 340,000Add beginning finished goods inventory ......... 45,000

Cost of goods available for sale ........................ $ 385,000Less ending finished goods inventory.............. 52,000

Cost of goods sold.............................................. 333,000Gross profit ................................................................... $ 96,000

P4-5Finished Goods Work in Process

Beg. 34,000 350,000 Beg. 7,000 346,000(4) 346,000 M 50,000

380,000 L(2) 200,000End. 30,000 FOH 100,000

357,000 End. 11,000

Materials and Supplies Accrued PayrollBeg. 20,000 20,000 (8) 259,000 Beg. 13,000

65,000 (1) 50,000 55,00085,000 70,000 200,000

End. 15,000 268,000 End. 9,000

4-14 Chapter 4

P4-5 (Concluded)

Accounts Receivable Accounts PayableBeg. 54,000 (7) 532,000 (6) 77,000 Beg. 18,000

500,000 65,000554,000 83,000

End. 22,000 End. 6,000

Factory Overhead Control Sales20,000 (3) 100,000 500,000 55,00010,0002,000

13,000100,000

Payroll Cost of Goods Sold55,000 55,000 (5) 350,000

200,000 200,000255,000 255,000

(1) Materials issued to production, $50,000(2) Direct labor, $200,000(3) Total factory overhead, $100,000(4) Cost of goods manufactured, $346,000(5) Cost of goods sold, $350,000(6) Payment of accounts payable, $77,000(7) Collection of accounts receivable, $532,000(8) Payment of payroll, $259,000


Chapter 4 4-15

P4-6

Work in Process ........................................................... 84,000Materials ............................................................. 84,000Cost of goods sold ............................................ $140,000Add finished goods inventory increase .......... 17,000

Cost of goods manufactured............................ $157,000Add work in process inventory increase ........ 2,000

Total manufacturing cost .................................. $159,000Less: Factory overhead .................. $35,000

Direct labor............................. 40,000 75,000

Materials used in manufacturing ..................... $84,000

Materials.......................................................................... 91,000Accounts Payable .............................................. 91,000

Materials used in manufacturing(from above) .............................................. $84,000

Add materials inventory increase .................... 7,000

Materials purchased .......................................... $ 91,000

Payroll ............................................................................. 40,000Accrued Payroll.................................................. 40,000

Work in Process ............................................................. 40,000Payroll ................................................................. 40,000

Factory Overhead Control ............................................. 35,000Various Credits .................................................. 35,000

Work in Process ........................................................... 35,000Factory Overhead Control ................................ 35,000

Finished Goods (12,000 + 84,000 + 40,000 +35,000 – 14,000) ................................................. 157,000Work in Process................................................. 157,000

Cost of Goods Sold (28,000 + 157,000 – 45,000)......... 140,000Finished Goods.................................................. 140,000


4-16 Chapter 4

P4-7

(1) and (2)(a) Materials ............................................................... 92,000

Accounts Payable....................................... 92,000

(b) Factory Overhead Control .................................. 26,530Accounts Payable....................................... 26,530


Work in Process................................................... 60,500Factory Overhead Control .................................. 12,500Marketing Expenses Control .............................. 8,000Administrative Expenses Control ...................... 5,000

Payroll .......................................................... 86,000

Accrued Payroll (86,000 + 2,250)................................. 88,250Cash...................................................................... 88,250


Materials ...................................................... 90,800

(e) Work in Process................................................... 47,330Factory Overhead Control ......................... 47,330

(f) Finished Goods ................................................... 188,000Work in Process.......................................... 188,000

(g) Accounts Receivable .......................................... 241,150Sales ............................................................ 241,150


(h) Cash...................................................................... 208,662Sales Discounts................................................... 4,258

Accounts Receivable ................................. 212,920

(i) Marketing Expenses Control .............................. 18,000Administrative Expenses Control ...................... 12,000

Accounts Payable....................................... 30,000

(j) Accounts Payable................................................ 104,000Cash............................................................. 104,000

Chapter 4 4-17

P4-7 (Continued)

Cash Materials1/1 Bal. 20,000 (c) 88,250 1/1 Bal. 10,000 (d) 90,800(h) 208,662 (j) 104,000 (a) 92,000

228,662 192,250 102,000 36,412 11,200

Accounts Receivable Machinery1/1 Bal. 25,000 (h) 212,920 1/1 Bal. 40,000 (g) 241,150

266,15053,230

Finished Goods Accumulated Depreciation1/1 Bal. 9,500 (g) 185,500 1/1 Bal. 10,000 (f) 188,000

197,500 12,000

Work in Process Accounts Payable1/1 Bal. 4,500 (f) 188,000 (j) 104,000 1/1 Bal. 15,500(c) 60,500 (a) 92,000(d) 82,500 (b) 26,530(e) 47,330 (i) 30,000

194,830 164,0306,830 60,030

Accrued Payroll Retained Earnings(c) 88,250 1/1 Bal. 2,250 1/1 Bal. 21,250

(c) 86,000

Sales Cost of Goods Sold (g) 241,150 (g) 185,500

Sales Discounts Payroll(h) 4,258 (c) 86,000 (c) 86,000

Common Stock Factory Overhead Control1/1 Bal. 60,000 (b) 26,530 (e) 47,330

(c) 12,500(d) 8,300

47,330

Administrative Expenses Control Marketing Expenses Control(c) 5,000 (c) 8,000(i) 12,000 (i) 18,000

17,000 26,000

4-18 Chapter 4

P4-7 (Concluded)

(3) STEPHANOWICZ COMPANY Trial Balance January 31

Cash ........................................................................................... $36,412 Accounts Receivable ................................................................ 53,230 Finished Goods ......................................................................... 12,000Work in Process ........................................................................ 6,830Materials..................................................................................... 11,200Machinery .................................................................................. 40,000Accounts Payable...................................................................... $ 60,030Accumulated Depreciation....................................................... 10,000Common Stock.......................................................................... 60,000Retained Earnings..................................................................... 21,250Sales........................................................................................... 241,150Sales Discounts ........................................................................ 4,258Cost of Goods Sold ................................................................. 185,500Marketing Expenses Control.................................................... 26,000Administrative Expenses Control............................................ 17,000

$392,430 $392,430

Chapter 4 4-19

ch04sm

Documents

marketing expenses control

administrative expenses control

flexible manufacturing system

factory overhead control

total factory overhead

judging earning power

variable manufacturing costs

equals finished goods