hello it's Ronda Thomas and we're getting ready to do managerial accountings exam one review we're going to do five problems one from each of the five chapters not a problem but an exercise uh so that you get an idea of what you can expect on the test so you will get problems or exercises like this but they'll have different numbers so let's get going okay um so I'll stop my video and share my screen here and I am on okay so let me get this out of the way all right I've got uh the exam review open and you can check your work on the exam review okay um I've also got a uh ex Excel spreadsheet open for uh computations and calculations okay so the first exercise we're going to do is a traditional versus a contribution format income statement so to remind you traditional uh let's just go ahead and put in our titles okay so we start with the sales at the top of a regular income statement then it's the cost of goods sold then it's the gross margin okay and then we have selling uhhuh selling expenses and then we have admin okay and then we should have a net operating income okay so let's see what our information says now I've got a spreadsheet here that um so let me put down so we've got I've got 12,000 units sold you write down how many units you have to sell what is their price okay the price is going to help is is how we determine how many we sold okay so they're $18 a piece okay so I've got for sales okay the number of sales that I have is 216,000 when you take 12,000 * 18 so I'm going to fill that in right here so um let me finish this 216,000 okay and then um we have to evaluate okay now we have to evaluate draw your t account call it merchandise inventory put you a beginning there's going to be a purchase you're going to have a certain amount available and an ending my beginning balance in merchandise inventory is 11,000 I purchased 88,000 so you add those two together to know how much inventory you have available right and then my ending inventory is 22,000 so this is how much uh inventory went out of here right so this is the cost of the goods that we sold so these are all dollars so I want to make sure to get that on here and then these two are dollars okay so these two are dollars okay so our cost of goods gold that we found is 77,000 okay and then we have to calculate the gross margin so you subtract cost of goods sold from what you sold okay 139,000 um selling okay now be careful here let's go so when it comes to selling we need to I've got $2 and $3 so my selling per unit is two two okay so um we're going to take so let's do selling okay uh selling is how many we sold times 2 which is 24 and my fixed selling which I need to change 20,000 okay and then my variable admin is $3 per unit 12,000 units and my fixed admin is 14,000 so we're going to put in okay so you have to add the variable and the fixed when you're doing the traditional okay because we don't separate those out at the time 44,000 and 50,000 okay and then we're going to subtract so net operating income so is 45,000 let's give it a try see if if I've calculated correctly okay all right so now we're going to do the contribution so the good news is the beginning and the ending will be the same so whatever you put in so I'm going to put sales in and put that amount in okay so now we're going to requirement two let's do sales okay 216,000 that does not change now instead of net income it's net operating income and that's going to be exactly the same also okay so now we need to separate the variable from each other okay so the variable here's the variable cost of goods sold is still the same cost of goods sold is still 77,000 okay now it's just the variable piece of selling so remember here it is two times the number I sold so the variable selling or just selling expenses is fine and admin will be next okay so the variable part of selling is 24,000 and the variable part of admin is 36 okay all right that should be and then you've got your for um selling that's fixed and admin that's fixed okay so selling is uh the fixed is 20,000 and uh 14,000 for me all right so let's see if we're correct okay um okay so now we need contribution margin okay contribution margin now we need to subtract our all of our variable from our sales okay so I will put this on here just a second here all right so if our sales are let's just put sales oops 216,000 and our variable costs variable expenses remember yep um are 137 okay so then our contribution margin is one subtracted okay so then 79,000 I believe 79,000 let me take out the zero or I'll get it wrong 79,000 minus 34 leaves 45 okay so I'm just going to double check it just double check my math before I move on so then the fixed expenses is 34,000 so our net operating income is 45,000 so I feel pretty good about this let's see what we did okay are we complete yes so you don't move on until the answer is complete but you can move backwards and forwards in this test but in the review you get to check your work okay all right we're ready to move on okay we're ready to move on we're to chapter two now okay um luthan company uses a plantwide predetermined overhead rate of 2350 so I'm going to put it in 2350 and it's applied per direct labor hour okay um and their direct labor hour actual amount is right here so let's put 12,000 and so the men manufactured overhead applied okay is the pre- overhead rate they threw this in here just to confuse you but um as long as we know what the rate is if we would have had to calculate the rate we would have taken the overhead and divided by the estimated actual and when you do the math that's what you get okay so now that we're going to apply it we know what the rate is and we apply it to actual direct labor hours so I'm going to put this amount in okay and let's check our work make sure we're right okay let's move on to number three chapter three we're going to prepare some journal entries excuse me now remember this is job order costing um let's draw some tea accounts okay draw a few tea accounts here I'm going to take this down just one more percentage so you can see it so I would draw 6t accounts raw materials let's draw a raw materials t account okay I'm not sure what's happening here okay raw materials accounts payable manufacturing overhead work in process you need a cash and you need accumulated depreciation so the first thing we're going to do is we're going to purchase uh 89,000 right here and it's going to be a credit to because it's on account all right so uh let me do 89,000 here just a minute 89,000 why is that happening just a minute okay I had to fix something in my spreadsheet all right so the first one is 89,000 in raw materials were purchased on account so we're going to make raw materials go up with a debit because that's an asset account okay raw materials there it is for 89,000 and we buying it on account so that's accounts payable okay make sure my numbers are right record the entry okay now raw materials is going down by 87,000 okay and the um 880,000 is for work and process direct materials so the remainder goes in manufacturing overhead so we're going to do a debit to work in process for 80 grand a debit to manufacturing overhead for $7,000 and a credit to raw materials 87,000 so here we go work in process gets 80,000 for direct materials then manufacturing overhead it's the Seven Grand and then out of raw materials comes all of that okay let's record the entry make sure you do make sure your green circles are here okay um now it's total labor wages of 124,000 were paid in cash so I'm going to make 124,000 go down in cash of those 10,200 was for direct labor 10,200 so the remainer right the remainder was for indirect so remember all indirect goes into manufact facturing overhead so we're going to debit work in process for direct labor okay debit direct uh work process for direct labor direct labor is 10 1,200 and we're going to debit manufacturing overhead for the remainder which is the indirect labor and then out of cash gets the credit for 24 124,000 and we're going to record the entry okay this last one is depreciation on the factory so the fact that it's depreciation you've got accumulated depreciation here um it is 192,000 there it is and it gets credited to this Contra asset and it goes in manufacturing overhead as part of the actual manufacturing remember the actual side is the left side and the applied side is the right side so let's do the entry okay the entry is going to be manufacturing overhead or 192,000 and then accumulated depreciation gets the credit okay let's record the entry view the journal okay let's see if we're right see if we're right and I think we got it answer is complete and correct okay so now we're moving on to chapter four if you remember chapter four is the process costing one of the steps to uh put together process costing is to find what are called equivalent cost of equivalent units cost of equivalent units so um I'm going to put beginning of May okay and I need to push this down okay hang on I'll just I'll just take it out and put it back in again there we go so beginning in may let me write put it in so 25,900 labor 4221 and manufactured overhead 204 540 how much was added in May those are the costs that are added during the month so that more production uh can be made and we're going to be using the weighted average so 28,141 36360 okay so here are the total costs materials labor and overhead now we just need the units so we want to put the number of units in the number of units are 2200 2100 and 2,000 so now we should be able to divide EQ units Okay so we've got our total cost for materials in working process here's how many equivalent units there are for materials so when you do the math here 183,184 25 okay same for labor um we added these two together and this total cost um and I guess I can put total cost here total costs this is in work in process total cost work in process then we're going to divide 2100 into 7,35 and that comes to 3335 and overhead is 34,900 when you add these two together um the equivalent units are 2,000 for that one so each one has different equivalent units so this one becomes 17,4 or $170 45 added all together 28705 so let's see if I'm right okay and then the total 28705 let's check our work okay make sure that you put it in two decimal places whenever you're dealing with money you always put it in two decimal places okay this last one has to do with um we're going to do the um Computing the contribution margin ratio and the variable expense ratio so contribution margin ratio and variable expense ratio okay so let's see what they say so let's do it in units fixed expenses were oh oh oh okay hold on now be careful so we sold I'm going to put units here okay okay I'm going to put units we got 38,000 units okay so those are not dollar um I got 38,000 units okay whoop all right now we want totals the sales total is So you see it says sales variable expenses and fixed expenses so these are those three numbers okay so totals go here 152,000 variable expenses 8,560 and 36,200 whoops got to move that down one 36,200 now you can go ahead and do some math here which works out nice so be able to put that in and then we want another equal sign okay so then we can answer just about anything so there's our contribution margin okay let me make sure that I have this correct okay what is the comp company's contribution margin ratio okay contribution margin ratio okay so all that's all they want to know what is the percentage so the percentage is equals okay so let's start over here remember we don't even need per unit unless we want to do it okay there's that divided by sales yes no okay this is the percentages so and that's what they want to do so sales minus or divided by sales is one so we want that as a percentage okay and then this is going to be the variable expenses divided by the sales okay so we will turn that into a percentage okay and then that leaves contribution margin remember that has these two numbers must add up to 100% but you can also do it this way okay so okay let's make this into all right so 22 so this is contribution margin ratio 22% and 78% let's see if we're right yes so those are the types of problems you're going to have or exercises on the test I want you to feel comfortable about taking care of these right so uh you can check your work make sure you're right you'll earn 10 points for doing this all right so we're ready to go for our exam um and so I'm going to submit okay and the exam you get two hours okay so um and you'll have multiple choice questions and five questions very similar to what we just went through okay there's 100 points on the test so uh there's 30 questions so there's 25 multiple choice [Music] uhhuh and five uh exercises okay 25 multiple choice and five exercises so the 25 multiple choice are worth two points a piece and the five uh exercises like what we just did here are worth 10 points a piece okay so okay I think that is it I'm going to say goodbye for now keep up the hard work um and we just keep chugging along we're almost to spring break