Chapter 18 Handout Problem Problem #1 Listed here are the total costs associated with the production and sales of 50,000 sports water bottles manufactured by Thirst Quenchers Inc for the month March 2013. The water bottles sell for $6 each. Cost Element Cost Plastic for bottles $3.00 per bottle Wages of assembly workers ($10 per hour for 5,000 hours) $60,000 Rent on factory $6,000 Other operating expenses (advertising, freight expense, etc) $30,000 Office workers salaries $15,000 Factory Insurance $6,000 Quality control testing $7,000 Sales commissions $0.10 per bottle Factory equipment depreciation (straight line method) $5,000 Required 1. Complete the schedule on the answer sheet by entering EACH COST in the amount for the production of 50,000 units as (a) either a product cost (direct materials, direct labor or factory overhead) or a period cost. 2. Compute totals for each column. In other words, you should have a total for direct materials, direct labor and factory overhead for product costs and a total for period costs. Save yourself some time – use the sum function to add column totals. 3. Compute the cost of one water bottle. Think about this. What is included in the cost of making a product? 4. Assume that you sold all bottles produced for $6.00 per bottle. Prepare a basic income statement for the month of March 2013. This is similar in format to the one you made for the excel extra credit assignment. 5. From the income statement you prepare compute the gross profit rate and profit margin for the month of March 2013 Problem #2 Horton Foods bakes and sells bagels each week to food service operations. Among the costs are bakers’ salaries, $40,000; production management salaries, $25,000, equipment operating costs, $50,000; and flour and ingredient costs, $75,000
Sheet3 Sheet2 Sheet1 Problem #1 Plastic for bottles Rent on factory Office workers salaries Sales commissions Factory Insurance Quality control testing Cost element Cost by Function Product Period Totals include labeled computations Total Problem #2 bakers’ salaries production management salaries flour and ingredient costs Prime Conversion Problem #3 manufacturing statement production equipment operating costs Cost to produce one water bottle Remember , proper formatting and formulas Direct Materials Factory Overhead Factory equipment depre. Assembly line Wages apply the excel skills you have learned Direct Labor income statement Prepare an income statement for the month (please use formulas and format the values. 1. enter cost amounts for theproduction and sale of the water bottles in the appropriate columns Other operating expenses (you DO NOT need two columns for the values!!) You don’t need to include the formal heading. You only need to enter the contents 0.00 0.00 0.00 0.00 Sheet3 Sheet2 Sheet1 Problem #1 Plastic for bottles Rent on factory Office workers salaries Sales commissions Factory Insurance Quality control testing Cost element Cost by Function Product Period Totals include labeled computations Total Problem #2 bakers’ salaries production management salaries flour and ingredient costs Prime Conversion Problem #3 manufacturing statement production equipment operating costs Cost to produce one water bottle Remember , proper formatting and formulas Direct Materials Factory Overhead Factory equipment depre. Assembly line Wages apply the excel skills you have learned Direct Labor income statement Prepare an income statement for the month (please use formulas and format the values. 1. enter cost amounts for theproduction and sale of the water bottles in the appropriate columns Other operating expenses (you DO NOT need two columns for the values!!) You don’t need…
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