The Following Costs and Inventory Data Were Taken from the Accounts

question 133

Essay

The following costs and inventory data were taken from the accounts of Simon Company for 2016: $$\begin{array} { l r r r } & \text { January 1,2016 } & \text { December 31, 2016 } \\\text { Inventories: } & & & \text { Raw } \\\text { materials } & \$ 8,000 & \$ 7,000 & \\\text { Work in process } & 15,000 & 13,000 & \\\text { Finished goods } & 16,000 & 12,000 &\\\text { Costs incurred: } & & & \text { Raw } \\\text { materials purchases } & & \$ 98,000 & \\\text { Direct labor } && 42,000 \\\text { Factory rent } & & 8,000 \\\text { Factory utilities } && 10,000 \\\text { Indirect materials } & & 6,000 \\\text { Indirect labor } && 9,000 \\\text { Operating expenses } & & 17,000\end{array}$$ Instructions
a. Prepare a schedule showing the amount of direct materials used in production during the year.
b. Compute the amount of manufacturing overhead incurred during the year.
c. Prepare a schedule of Cost of Goods Manufactured for Simon Company for the year ended December 31 2016 in good form.
d. Prepare the Cost of Goods Sold section of the Income Statement for Simon Company for the year ended December 31 2016 in good form.

Grasp the process of taking discounts on purchases and their effect on financial accounts.

Differentiate between F.O.B. shipping point and F.O.B. destination.

Calculate and record the effect of freight charges on merchandise purchases.

Explain the role and importance of subsidiary ledgers and control accounts in accounting.

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Definitions:

Capital Budgeting

The procedure of appraising and opting for long-term investments consistent with the goal of increasing the wealth of shareholders.

Straight-Line Depreciation

This refers to a method where the cost of a fixed asset is evenly reduced over its useful life.

Capital Budgeting

The process of making investment decisions in long-term assets and projects, evaluating their potential costs and benefits to ensure the most financially beneficial investments are made.

Straight-Line Depreciation

A technique for distributing an asset's cost uniformly across its lifespan.