Preparing an income statement and calculating unit cost for a service company
The Glass Doctors repair chips in car windshields. The company incurred the following operating costs for the month of July 2018:
Salaries and wages $ 10,000
Windshield repair materials 4,100
Depreciation on truck 500
Depreciation on building and equipment 900
Supplies used 450
The Glass Doctors earned $25,000 in service revenues for the month of July by repairing 250 windshields. All costs shown are considered to be directly related to the repair service.
1. Prepare an income statement for the month of July.
2. Compute the cost per unit of repairing one windshield, rounded to the nearest cent.
3. The manager of The Glass Doctors must keep unit operating cost below $80 per windshield in order to get his bonus. Did he meet the goal?
The net operating income is $4,500, the unit cost is $82 and the manager was not able to meet the goal.
|The Glass doctors|
|Month ended March 31, 2018|
Net Service Revenue
Salaries and wages expense
Depreciation expense-Building and Equipment
The manager of the company must keep the unit operating cost less than $80, but in this case, unit operating cost is $82, which is much higher than $80. So, the manager of the company was not able to meet the goal.
Computing cost of goods sold, merchandising company
Use the following information for The Windshield Helper, a retail merchandiser of auto windshields, to compute the cost of goods sold:
Web Site Maintenance $ 7,900
Delivery Expense 400
Freight In 2,400
Ending Merchandise Inventory 5,500
Marketing Expenses 10,700
Beginning Merchandise Inventory 8,600
Computing manufacturing overhead
Sunglasses Unlimited Company manufactures sunglasses. Following is a list of costs the company incurred during May. Use the list to calculate the total manufacturing overhead costs for the month.
Glue for frames $ 250
Depreciation on company cars used by sales force 4,000
Plant depreciation 7,500
Interest Expense 1,500
Company president’s salary 24,500
Plant foreman’s salary 3,500
Plant janitor’s wages 1,300
Oil for manufacturing equipment 150
Question: Preparing an income statement and calculating unit cost for a service company
The Windshield Doctors repair chips in car windshields. The company incurred the following operating costs for the month of March 2018:
Salaries and wages $ 12,000
Windshield repair materials 4,600
Depreciation on truck 300
Depreciation on building and equipment 1,200
Supplies used 300
The Windshield Doctors earned $23,000 in service revenues for the month of March by repairing 500 windshields. All costs shown are considered to be directly related to the repair service.
1. Prepare an income statement for the month of March.
2. Compute the cost per unit of repairing one windshield.
3. The manager of Windshield Doctors must keep unit operating cost below $50 per windshield in order to get his bonus. Did he meet the goal?
Question: Gateway produces electronic calculators. Suppose Gateway’s standard cost per calculator is $25 for direct materials and $68 for conversion costs. The following data applyto August activities:
Direct materials purchased (on account) $ 8,300
Conversion costs incurred 20,500
Number of calculators produced 300 calculators
Number of calculators sold (on account, at $105 each) 295 calculators
1. Prepare summary journal entries for August using JIT costing, including the entryto adjust the Conversion Costs account.
2. The beginning balance of Finished Goods Inventory was $1,300. Use a T-accountto find the ending balance of Finished Goods Inventory.
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