CHAPTER 16
MANAGEMENT ACCOUNTING: A BUSINESS PARTNER
OVERVIEW OF BRIEF EXERCISES, EXERCISES, PROBLEMS, AND CRITICAL
THINKING CASES
Brief
Exercises
B. Ex. 16.1
B. Ex. 16.2
B. Ex. 16.3
B. Ex. 16.4
B. Ex. 16.5
B. Ex. 16.6
B. Ex. 16.7
B. Ex. 16.8
B. Ex. 16.9

Topic
Product vs. period costs
Direct material used
Cost of goods sold
Materials inventory
Direct labor journal entries
Manufacturing overhead assigned
Inventory balances
Work in process balances
Prime vs. conversion costs

B. Ex. 16.10

Partial balance sheet

Exercises
16.1
16.2
16.3
16.4
16.5
16.6

Topic
Accounting terminology
Basic types of manufacturing costs
Product and period costs
Flow of costs through manufacturing accounts Schedule of cost of finished goods manufactured Flow of
Owner of a company in its first year of operations confuses manufacturing costs with period costs, which leads him/her to think that the business is failing. Student is asked to assign costs to inventories, determine the unit cost of production, prepare a revised income statement, and explain the shortcomings in the owner’s original analysis.

40 Strong

Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education.

Critical Thinking Cases
16.1
West Texas Guitar Company
Student is presented with a poorly prepared income statement in which inventories are ignored and all manufacturing costs and operating expenses are included in the cost of goods sold. Student is to identify the shortcomings in this income statement and prepare a schedule of the cost of finished goods manufactured and a corrected income statement.
16.2

16.3

16.4

40 Strong

Prescott Manufacturing
In a presentation to the board of directors, a plant manager attributes the decline in the cost of finished goods manufactured to increased efficiency. Students are asked to make several unit cost computations and then to evaluate the manager’s claims.

40 Strong

Pfizer, Inc.
Internet
The student is asked to examine the notes to the financial statements and describe the categories of inventories shown. Information from the financial statements is then used to calculate the cost