Financial Accounting
Financial Accounting
17th Edition
ISBN: 9781259692390
Author: Jan Williams, Susan Haka, Mark S Bettner, Joseph V Carcello
Publisher: McGraw-Hill Education
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Chapter 5, Problem 14DQ
To determine

Explain the significance of measuring the return on equity of a company.

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Grass Reed Bayou is a bottling company in The Netherlands. The company uses a normal costing system in which factory overhead is applied on the basis of direct labor costs. Budgeted factory overhead for the year was $680,000, and management budgeted $320,000 of direct labor costs. During the year, the company incurred the following actual costs. Direct materials used $ 382,000 Direct labor 313,000 Factory overhead 650,700 The January 1 balances of inventory accounts are shown below. Materials-all direct $ 64,000 Work-in-process 41,400 Finished goods 25,600 The December 31 balances of these inventory accounts were ten percent lower than the balances at the beginning of the year. The cost of goods manufactured during the year is:
Magna Carta Interiors is a job-order manufacturer. The company uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours are 150,000 and estimated factory overhead is $1,140,000. The following information is for September. Job X was completed during September, while Job Y was started but not finished. September 1, inventories:   Materials $ 25,700 Work-in-process (All Job X) 55,100 Finished goods 107,300 Materials purchases $ 174,000 Direct materials requisitioned:   Job X $ 75,700 Job Y 69,700 Direct labor hours:   Job X 8,700 Job Y 7,200 Labor costs incurred:   Direct labor ($7.70 per hour) $ 122,430 Indirect labor 50,100 Factory supervisory salaries 12,800 Rental costs:   Factory $ 11,000 Administrative offices 4,900 Total equipment depreciation costs:   Factory $ 12,100 Administrative offices 4,500 Indirect materials used $ 30,400 The total…
Grass Reed Bayou is a bottling company in The Netherlands. The company uses a normal costing system in which factory overhead is applied on the basis of direct labor costs. Budgeted factory overhead for the year was $680,000, and management budgeted $320,000 of direct labor costs. During the year, the company incurred the following actual costs. Direct materials used    $ 382,000Direct labor    313,000Factory overhead    650,700The January 1 balances of inventory accounts are shown below. Materials-all direct    $ 64,000Work-in-process    41,400Finished goods    25,600The December 31 balances of these inventory accounts were ten percent lower than the balances at the beginning of the year. The cost of goods manufactured during the year is:
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