Santana Rey, owner of Business Solutions, decides to diversify her business by a

Question

Santana Rey, owner of Business Solutions, decides to diversify her business by also manufacturing computer workstation furniture.

Classify the following manufacturing costs of Business Solutions by behavior and traceability.

Assume the above manufacturing costs. Prepare a manufacturing statement for Business Solutions for the month ended January 31, 2012. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Prepare the cost of goods sold section of a partial income statement for Business Solutions for the month ended January 31, 2012. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Santana Rey, owner of Business Solutions, decides to diversify her business by also manufacturing computer workstation furniture.

Explanation / Answer

Answer:

1

Product Costs

Cost by Behavior

Cost by Traceability

  1. Monthly flat fee to clean workshop

Fixed

Indirect

  2. Laminate coverings for desktops

Variable

Direct

  3. Taxes on assembly workshop

Fixed

Indirect

  4. Glue to assemble workstation component parts

Variable

Indirect

  5. Wages of desk assembler

Variable

Direct

  6. Electricity for workshop

Variable

Indirect

  7. Depreciation on tools

Fixed

Indirect

____________________________________________

2

Business Solutions

Manufacturing Statement

For Month Ended January 31, 2012

Direct material

2600

Direct Labor

900

Factory Overhead

550

Total manufacturing Cost

4050

Add: work In progress Dec 31-2011.

0

Total cost of goods in purchase

4050

Less: work In progress Dec 31-2012

550

Cost of goods manufactured

3500

______________________________________________

3

Business Solutions

Manufacturing Statement

For Month Ended January 31, 2012

Cost of goods sold

3500

Add: Finished goods of inventory Dec 31-2011.

0

Total cost of goods in purchase

3500

Less: Finished goods of inventory Dec 31-2012

370

Cost of goods sold

3130

Product Costs

Cost by Behavior

Cost by Traceability

  1. Monthly flat fee to clean workshop

Fixed

Indirect

  2. Laminate coverings for desktops

Variable

Direct

  3. Taxes on assembly workshop

Fixed

Indirect

  4. Glue to assemble workstation component parts

Variable

Indirect

  5. Wages of desk assembler

Variable

Direct

  6. Electricity for workshop

Variable

Indirect

  7. Depreciation on tools

Fixed

Indirect

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