ACC 206 Week 3

ACC 206 Week 3 Quiz

Assignments

P 17-26A & P 17A-11A

E16-17 Calculating income and cost per unit for a service company [510 min]

Fido Grooming provides grooming services in the local community. In April, Kevin Oliver, the owner, incurred the following operating costs to groom 650 dogs:

Wages $ 3,900

Grooming supplies expense 1,625

Building rent expense 1,300

Utilities 325

Depreciation on equipment 130

Fido Grooming earned $16,300 in revenues from grooming for the month of April.

Requirement

1. What is Fido's net operating income for April?

2. What is the cost to groom one dog?

P16-25A Preparing cost of goods manufactured schedule and income statement for a manufacturing company [3045 min]

Charlie's Pets succeeded so well that Charlie decided to manufacture his own brand of chewing boneFido Treats. At the end of December 2012, his accounting records showed the following:

Requirements

1. Prepare a schedule of cost of goods manufactured for Fido Treats for the year ended December 31, 2012.

2. Prepare an income statement for Fido Treats for the year ended December 31, 2012.

3. How does the format of the income statement for Fido Treats differ from the income statement of a merchandiser?

4. Fido Treats manufactured 18,075 units of its product in 2012. Compute the company's unit product cost for the year.

Discussion Questions

Ethical Issue 16-1

Becky Knauer recently resigned from her position as controller for Shamalay Automotive, a small, struggling foreign car dealer in Upper Saddle River, New Jersey. Becky has just started a new job as controller for Mueller Imports, a much larger dealer for the same car manufacturer. Demand for this particular make of car is exploding, and the manufacturer cannot produce enough to satisfy demand. The manufacturer's regional sales managers are each given a certain number of cars. Each sales manager then decides how to divide the cars among the independently owned dealerships in the region. Because of high demand for these cars, dealerships all want to receive as many cars as they can from the regional sales manager.

Becky's former employer, Shamalay Automotive, receives only about 25 cars a month. Consequently, Shamalay was not very profitable.

Becky is surprised to learn that her new employer, Mueller Imports, receives over 200 cars a month. Becky soon gets another surprise. Every couple of months, a local jeweler bills the dealer $5,000 for miscellaneous services. Franz Mueller, the owner of the dealership, personally approves payment of these invoices, noting that each invoice is a selling expense. From casual conversations with a salesperson, Becky learns that Mueller frequently gives Rolex watches to the manufacturer's regional sales manager and other sales executives. Before talking to anyone about this, Becky decides to work through her ethical dilemma.

Requirement

1. Put yourself in Becky's place.

a. What is the ethical issue?

b. What are your options?

c. What are the possible consequences?

d. What should you do?

Job Order and Process Costing. Manufacturers use three inventory accounts. Name each one and explain what costs each contain.