CASE 1- MANO SA

"MANO S.A". is specialized in the production of leather gloves sold to major commercial
distributors. The product is manufactured from the raw materials 'leather' in the production
center. At end of March, MANO, S.A. presents the following information in Euros:

Debit Balances Euros Debit Balances Euros

Inventory Direct material (2.000 m2) 8.000 Sales (340.000 units) 1.000.000
Work in progress inventory 20.000
Finishing good inventory (50.000 units) 65.000 Discounts on purchases 6.100
Purchases Material (80.000 m2) 300.000
Rent 100.000
Marketing 9.000
Utilities 50.000
Sales commissions 6.000
Other direct material used 10.000
Labour costs 235.000
Depreciation 50.000
Financial costs 2.000
Sales discounts 8.000

Additional Information:
 All inventories run by the weighted average cost criterion.
 Direct material used is 75,000 m2
 Out of the total Personnel expenses, €135,000 corresponds to direct labor.
 The rest of the expenses by nature are allocated to the different departments in
the following way:

Purchases expenses Production Sales and Administration

Distribution
Rent 20% 50% 30%
Utilities 10% 70% 20%
Labour cost 10% 40% 50%
(100.000€)
Depreciation 15% 50% 10% 25%

 Diverse materials correspond entirely to the monthly consumption of yarn for

the production of gloves (no beginning or ending inventory).
 This month it have been manufactured 300,000 gloves. The work in progress
inventory at the end of the moth € 30,000.
WORK to be done:

1- Determine the value of ending stocks of all inventories.

2- Perform the analytical income statement
 CASE 2- BEMICE

The industrial company "BEMICE, S.A." manufactures a single product from two
different raw materials. It presents the following balances March 31, 2011,:

Debit Balances Euros Debit Balances Euros

Land 60.000 Common equity 103.000
Plant 139.000 Retain earnings (Reserves) 23.200
Equipment 24.000 Long term debt 94.000
Work in progress 3.800 Accumulated Depreciation 36.500
Finishing goods inventories (1.000 3.700 Accounts Payables 1.200
units)
Raw material A (1.000 kgr) 712 Short term debt 48.130
Raw material B (500 kgr) 605 Sales (9.000 units) 72.000
Accounts receivable 20.000 Returns on purchases 70
Banks 30.408 Discounts on purchases for early 100
payment
Purchase direct material 5.675
Rent 20.000
Utilities 14.000
Depreciation 18.000
Personal expenses 32.400
Sales commissions 2.800
Discounts on sales 2.100
Financial costs 1.000
TOTAL 1693.88 TOTAL 548.03

Complementary information

1- Raw materials inventories are valued according to the criterion of the weighted average
cost, while finished products are valued according to FIFO.

2- The amount invoiced by suppliers for the raw materials, excluding transport costs, has
the following detail:
a. Raw material A. 3,000 kg. X 0.7 €/ kg. = 2.100€
b. Raw material B: 2,500 kgs. X 1,21 €/ kg. = 3,025€

3- Discounts on cash purchases correspond to material B

4- Returns of purchases (point 2) correspond to the material A, which was returned 100
Kgs.

5- The raw materials purchases account includes transportation cost of €550, which shall
be charged according to the kgs. acquired raw materials to both material A and B
6- The consumption of raw materials during the period has been the following:
a. Raw material A 3,000 kg
b. Raw material B: 2,800 kg.
7- At the end of the period were final work in progress inventory is €1,068. 13,000 units
were manufactured.
 8- The allocation of expenses by nature cost through functions will be based on the
following information:

MOHC Sales Administration

Utilities 60,00% 10,00% 30,00%
Rent 50,00% 25,00% 25,00%
Depreciation 70,00% 10,00% 20,00%

9. From the total labor cost € 2,400 corresponds to Direct labor, the rest of the labor
costs are distributes equally between the factory, sales and administrative functions.

WORK TO BE DONE:

1- Determine the value of ending stocks of all inventories.

2- Perform the analytical income statement
 CASE 3- CLAUS

CLAUS, S.A. company is dedicated to the production of two types of furniture (A and B) from
single row material, its monthly cost shows the following balances in €

Debit Balances Credit balances

Raw material (1.000 kgs.) 5.500 Sales product A (3.800 units) 304.000
Work in progress A 8.000 Sales product B (11.000 units) 660.000
Finishing good inventories B (2.000 units) 76.000 Returns raw material 800
Purchases (40.000 kgs.) 400.000
Local taxe 1.000
Marketing 8.000
Suppliers and external services 50.000
Sales commissions 7.000
Consumption of other indirect material 10.000
Labour cost 305.000
Depreciation 40.000
Financial costs 3.000
Discounts on product B 8.000

The company has 4 centers of costs: Purchases, Production, Sales & distribution and
administration.

During the period 4,000 units has been manufactured of product A and 10,000 of product B.

Each unit of product A required 2 kg. of the raw material and B need 3 Kgs.

Direct labor cost for product A is 3,400 and €1.600 for product B

At the end of the period Work in progress of product B was € 9,600 B .

For the Allocation of costs between the different cost centers, we have the following
information:

Purchases Production Sales & Administration

Distribution
Labour cost 10% 70% 5% 15%
Suppliers and
external services 20% 10% 70%
Depreciation 10% 60% 5% 25%

Production works the same hours for each product. Therefore MOHC (Indirect costs)
will be allocated equally to both products. Distribution costs are distributed on the basis
of units sold for each product. All inventories are valued using the weighted average
cost criterion.

WORK TO BE DONE:

1- Determine the value of ending stocks of all inventories.

2- Perform the analytical income statement
 CASE 4- MIT SA

MIT SA manufactures a single product, a drink from two row materials. A solid vegetarian
extract and a one bottle. At the end of December 2016 the financial information is as follows
(figure in euros):

Depreciation Factory 5.000

Depreciation Equipment 3.200
Depreciation Patent 4.000
Labor cost 50.000
Utillities 4.000
Office rent 1.000
Marketing 1.500
Financial cost 250
Purchase extract (5.000 Kg) 50.000
Purchase deduction 3.000

Empty Packages (400,000 units) 24.000

120.000
Sales (200.000 Units)

Additional Information

 The company has four cost centers: Purchases, Factory, Sales & distribution and
Administration.

 From the total labor, 25.000 euros correspond to Direct Labor. The indirect Labor is
distributed as follows.

Purchases Factory Selling & Administration

total expenses distribution
Number of employees 32 4 20 2 6
Indirect labor 25.000 5.300 7.500 3.500 8.700

 Utilities are allocated using the number of employees as a driver.

 Distribution is subcontracted to an external company at a cost of 5 % of sales

 The direct material used to manufacture 250.000 units of the drink is 4.000 Kg of extract
and one package (Bottle)

 There is not initial or final Work in progress

 All inventories are valued using the weighted average cost criterion.
WORK TO BE DONE:

1- Determine the value of ending stocks of all inventories.

2- Perform the analytical income statement
 CASE 5- BAMI
Merchandising company

BAMI is a merchandising company that sells baby clothes. The financial information at
the end of January 2017 is as follows.

1- Initial inventory : 5.000 units a cost of 19.5 euros/ unit

2- Purchase of merchandising at credit: 60.000 units at a cost of 22 euros/unit ( VAT
included of 252.000 euros)
3- The company imported part of their collection from China. The import tax has been
120.000 euros
4- Transport in cost are 10.000 euros
5- Insurance on the merchandising is 45.000 euros
6- There is a discount of 80.000 euros, 40.000 has already been included in the invoice
7- Sales during January has been: 62.000 units at a selling price of 30 euros per unit.

WORK TO BE DONE:

 Determine the gross margin and the value of ending inventories using,
weighted average, FIFIO and LIFO

8-
 CASE 6- BEJAR SA
BEJAR, S.A. company is dedicated to the production of two types of furniture, chairs and tables
from a single row material WOOD, its monthly cost shows the following balances in €

Debit balances €   Credit balances €  

Raw material inventory (1.000 SQM.) 9.000 Sales product chair (3.000 units) 494.000
Land 100.000 Sales product tables (10.000 units) 770.000

Building and equipment 300.000 Shareholder equity 41.200

Work in progress Product Chair 10.000 Returns raw material 800

Finishing good inventories Tables
150.000 Long term debt 100.000
(3.000 units.)
Purchases Wood (40.000 SQM.) 400.000    

Local taxes 1.000    

Marketing 8.000    

Suppliers and external services 50.000    

Sales commissions 7.000    

Distribution cost 20.000    

Labour cost 300.000    

Depreciation 40.000    

Financial costs 3.000    

Discounts on product table 8.000    

  1.406.000   1.406.000

Additional Information

 The company has three cost centers: Production, Sales & distribution and
Administration.

 During the period 3.000 units has been manufactured of product chair and 8.000 of
product Table

 Each unit of product Chair required 2 SQM of the raw material and Product Table need
4 SQM of wood

 Direct labor cost for product Chair is €100.000 and €50.000 for product Table

 At the end of the period Work in progress of product table was € 20.600. No ending
Work in progress for Chairs

 For the Allocation of costs between the different cost centers, we have the following
information:
 Production Sales & Administration
Distribution
Labour cost 80% 5% 15%
Suppliers and
external services 20% 10% 70%
Depreciation 70% 5% 25%

 Factory indirect cost (MOHC) will be allocated to both product equally (50%
each)

 Distribution costs are allocated to each product on the basis of units sold of each
product.

 Row material inventories are valued using the weighted average cost criterion
and finishing good inventories based on FIFO
 CASE 7- TEDES SA

TEDES, S.A. company is dedicated to the production of two types of fabrics (R and T) ,
each of them is made out of a single row material , Fabric R is made of rayon and Fabric
T is made of tergal . Its monthly information is as follows. Balances are in €

Debit balances €   Credit balances €  

Raw material inventory rayon (800 m) 3.800 Sales product R (3,200 units) 77.000
Raw material inventory Tergal (1.400 m) 4.200 Sales product T (4,300 units) 60.000
Land, Building and equipment 200.000 Shareholder equity 101.125
Work in progress Product R 10.000 Returns raw mat. tergal (500 1.375
m)
Work in progress Product T 5.000 Long term debt 200.000
Finishing good inventories R (3.000 48.000
units.)
Finishing good inventories T (1.000 12.000
units.)
Purchases rayon (5,000 m) 21.000
Purchases Tergal (8,000 m) 22.000
Utilities 3.000
Rent 4.000
Depreciation 1.500
Total labor 90.000
Marketing and public relations 5.000
Financial expenses 2.000
Discounts on product R 8.000
  439.500   439.500
Total Total

Additional Information

 The company has three cost centers: Production, Sales and Administration.

 During the period 3.500 units has been manufactured of product R and 4.500
units of product T

 Each unit of product R required 1.5 m of rayon and product T need 1.8 m of
tergal.
  Direct labor cost for product R is € 24.000 and € 20.000 for product T

 At the end of the period Work in progress of product R was € 2.600 and Work in
progress for product T was € 10.000

 Factory indirect cost (MOHC) will be allocated to both product based on the
number of units produced

 Sales costs are allocated to each product equally

 All inventories are valued using FIFO

 For the Allocation of the indirect costs between the different cost centers, we
have the following information:

Administratio
  Production Sales n TOTAL
Utilities 60% 10% 30% 100%
Rent 50% 25% 25% 100%
Depreciation 70% 10% 20% 100%
Indirect labor 50% 20% 30% 100%

WORK TO BE DONE:

3- Determine the value of ending stocks of all inventories.

4- Perform the analytical income statement
 CASE 8- LINA SA
LINA, S.A. Company is dedicated to the production of two types of Glasses, Big and Small from
two row material, frames and Lents: Small Lents will be used to produce Small Glasses and Big
Lents will be used to produce Big Glasses. Monthly cost shows the following balances in €

Debit balances €   Credit balances €  

Raw material inventory Lents BIG (500 2.000 Sales product BIG ( 1,200 units)
units) 120.000
Raw material inventory Lents Small 11.000 Sales product Small (4000 units)
(1,000 units) 300.000
Land, Building and equipment 210.600 Shareholder equity
65.000
Work in progress BIG Glasses 10.000 Returns raw material Lents Small
(500 units) 3.000
Work in progress Small Glasses 1.000 Discount Row material lents BIG
600
Finishing good inventories BIG Glasses 10.500 Long term debt
(300 units.) 5.000
Finishing good inventories Small Glasses 25.000
(1.000 units.)
Purchases Lents BIG (3,000 m) 15.000  
Purchases Lents Small (10,000 m) 60.000  
Utilities 10.000  
Rent 4.000  
Depreciation 2.500  
Total labour cost 110.000  
Marketing and public relations 15.000  
Financial expenses 2.000  
Discounts on product Glasses BIG 5.000  
Purchases Frames (5500 frames) 55.000

Total 493.600 Total 493.600

Additional Information

 The company has three cost centers: Production, Sales & distribution and
Administration.
  During the period 1.000 units has been manufactured of BIG Glasses and 4.500 os small
glasses

 Each unit of product required 2 Lents and 1 frame. Big glasses use big Lents and small
glasses use small Lents

 Direct labor cost for BIG Glasses is €10.000 and €45.000 for Small Glasses

 At the end of the period Work in progress BIG Glasses is €5.000 and €10.000 for Small
Glasses

 For the Allocation of costs between the different cost centers, we have the following
information:

  Production Sales Admon

Utillities 50% 20% 30%
Rent 30% 30% 40%
Depreciation 70% 10% 20%

 Indirect Labor is allocated using the number of employees as a driver

  Production Sales Admon

2 7
Number of emplyees 50 0 0

 Factory indirect cost (MOHC) will be allocated to both product based on the units
produced

 Sales & Distribution costs are allocated equally to both products

 Row material inventories are valued using the weighted average cost criterion and
finishing good inventories based on FIFO

WORK TO BE DONE:

1- Determine the value of ending stocks of all inventories.

2- Perform the analytical income statement

CASE 9 LORE SA

Lore, S.A. company is dedicated to the production of two types of furniture, chairs and tables
from a single row material plastic , its monthly cost shows the following balances in €

Debit balances   Credit balances  

Raw material inventory (1.000 SQM.) 9.000 Sales product chair (2.000 units) 390.000
Land 100.000 Sales product tables (7.000 units) 700.000

Building and equipment 300.000 Shareholder equity 41.200

Work in progress Product Chair 10.000 Returns raw material 800

Finishing good inventories Tables
150.000 Long term debt 210.818
(3.000 units.)
Purchases (40.000 SQM.) 400.000    

Local taxes 1.000    

Marketing 10.000    

Suppliers and external services 40.000    

Sales commissions 6.000    

Distribution cost 15.000    

Labour cost 250.000    

Depreciation 40.000    

Financial costs 3.818    

Discounts on product table 8.000    

  1.342.818   1.342.818

Additional Information

 The company has three cost centers: Production, Sales & distribution and
Administration.

 During the period 2.000 units has been manufactured of product chair and 5.000 of
product Table

 Each unit of product Chair required 1.5 SQM of the raw material plastic and Product
Table need 3 SQM of plastic

 Direct labor cost for product Chair is €80.000 and €40.000 for product Table

 At the end of the period Work in progress of product table was €10.600. No ending
Work in progress for Chairs
  For the Allocation of costs between the different cost centers, we have the following
information:

Production Sales & Administration

Distribution
Labour cost 50% 35% 15%
Suppliers and
external services 70% 10% 20%
Depreciation 70% 15% 15%

 Factory indirect cost (MOHC) will be allocated to both product based in the
number of units produced

 Distribution costs are allocated to each product on the basis of units sold of each
product.

 Row material inventories are valued using FIFO and finishing good inventories
based on the weighted average cost criterion

WORK TO BE DONE:

1. Determine the value of ending stocks of all inventories.

2. Perform the analytical income statement