Chat with AI
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787 Exercise 11
INCOME STATEMENT, DIRECT AND INDIRECT COST CONCEPTS, SERVICE COMPANY
Janine Wellington owns and operates a package mailing store in a college town. Her store, Send 'n' Deliver, helps customers wrap items and send them via UPS, FedEx, and the USPS. Send 'n' Deliver also rents mailboxes to customers by the month. In May, purchases of materials (stamps, cardboard boxes, tape, Styrofoam peanuts, bubble wrap, etc.) equaled $11,450; the beginning inventory of materials was $1,050, and the ending inventory of materials was $950. Payments for direct labor during the month totalled $5,570. Overhead incurred was $8,130 (including rent, utilities, and insurance, as well as payments of $4,050 to UPS and FedEx for the delivery services sold). Since Send 'n' Deliver is a franchise, Janine owes a monthly franchise fee of 5 percent of sales. She spent $750 on dvertising during the month. Other administrative costs (including accounting and legal services and a trip to Dallas for training) amounted to $3,650 for the month. Revenues for May were $36,100.
Required:
1. What was the cost of materials used for packaging and mailing services during May?
2. What was the prime cost for May?
3. What was the conversion cost for May?
4. What was the total cost of services for May?
5. Prepare an income statement for May.
6. Of the overhead incurred, is any of it direct? Indirect? Explain.
Janine Wellington owns and operates a package mailing store in a college town. Her store, Send 'n' Deliver, helps customers wrap items and send them via UPS, FedEx, and the USPS. Send 'n' Deliver also rents mailboxes to customers by the month. In May, purchases of materials (stamps, cardboard boxes, tape, Styrofoam peanuts, bubble wrap, etc.) equaled $11,450; the beginning inventory of materials was $1,050, and the ending inventory of materials was $950. Payments for direct labor during the month totalled $5,570. Overhead incurred was $8,130 (including rent, utilities, and insurance, as well as payments of $4,050 to UPS and FedEx for the delivery services sold). Since Send 'n' Deliver is a franchise, Janine owes a monthly franchise fee of 5 percent of sales. She spent $750 on dvertising during the month. Other administrative costs (including accounting and legal services and a trip to Dallas for training) amounted to $3,650 for the month. Revenues for May were $36,100.
Required:
1. What was the cost of materials used for packaging and mailing services during May?
2. What was the prime cost for May?
3. What was the conversion cost for May?
4. What was the total cost of services for May?
5. Prepare an income statement for May.
6. Of the overhead incurred, is any of it direct? Indirect? Explain.
Explanation
Verified
Verified
1.
2. Prime cost =
Prime cost =
...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Why don’t you like this exercise?
Other Minimum 8 character and maximum 255 character
Character 255
