Accounting Question

Prob. 11 Managerial Costs

REQUIREMENTS:

A. Develop an Excelspreadsheet that includes the content outlined below in items 1 through 3 — use solution example provided where item was assigned and discussed in class.

B. The Excel Spreadsheet should be able to change variables for units produced and units sold:

a. Base – 4000 units produced and 4000 units sold

b. Change 1 – 4500 units produced and 4,300 units sold

c. Change 2 – 4800 units produced and 4,700 units sold

The Spreadsheet should provide the following schedules and financial statements

1. Basic Schedule of Cost of Goods Manufactured

• DMDLMOTotal Manfacturing CostsTotal and Per Unit Cost Columns for each of the above.

2. Balance Sheet – Finished Goods Inventory Account only

• # of units in FG InventoryTotal and Per Unit $ Amounts for FG Inventory

3. Income Statement – Contribution Approach

• SalesLess Variable Costs= Contribution MarginFixed Costs= Net IncomeTotal and Per Unit $Amounts for Sales, VC and CMTotal $ amounts for FC and NI

Create one sheet for each of the above scenarios – Base, Change 1, Change 2

IMPORTANT: update info on problem 11 excel. (some notes in there)

problem 11 attached below.

Problem 11: Introduction Managerial – Cost Classification and Cost Behavior
Heritage Company manufactures and sells desk sets with a wholesale price of $275. The company has
sold approximately 4,000 desk sets in the previous and current year, but has the capacity to make more
without adding another shift. Annual costs associated with making 4,000 desks:
Wood, glass, brass, other materials
General office salaries
Factory supervision
Sales commissions
Depreciation, factory building
Depreciation, office equipment
Indirect materials, factory
Factory cutting and assembly labor
Advertising
Insurance, factory
General office billing supplies
Property taxes, factory
Utilities, factory
$
$
$
$
$
$
$
$
$
$
$
$
$
430,000
110,000
70,000
60,000
105,000
2,000
18,000
90,000
100,000
6,000
4,000
20,000
45,000
Required: Based on the above, classify costs based on:
1. GAAP Scheme: costs are:
a. Inventory/CGS related:
• Direct Material
• Direct Labor
• Manufacturing Overhead
b. Operating Expenses:
• Selling
• General & administrative
2. Managerial Scheme: costs are either variable or fixed