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CASE 2-27 Missing Data; Schedule of cost of goods manufactured statement “ I know I’m pretty good scientist, but I guess

I still have some things to learn about running a business, “said Staci Morales, founder and president of Medical Technology, Inc. “ emand has been so strong for our heart monitor that I was sure we’d be profitable immediately, but !ust look at the gusher of red ink for the first "uarter .#The data to which Staci was referring are shown below$ Medical Technology INC Schedule of Cost of !oods Sold Manufactured "or the #uarter ended $une %& Sales %&'((( monitors) .ess$ /perating 01penses$ Selling and 2dministrative salaries 2dvertising 4leaning Supplies, 5roduction Indirect .abor cost epreciation, /ffice e"uipment irect .abor cost 8aw Materials purchased Maintenance, 5roduction 8ental cost, facilities Insurance, production :tilities epreciation, production e"uipment Travel, salespersons ;et /perating .oss * +(((( 3((((( '((( &6-((( &7((( 7(((( 6&(((( 9,((( '-((( +((( 9(((( ,-((( '(((( &&6-((( *%&'(((() <<<<<<< “2t this rate we’ll be out of business in a year,# said erek .ouganis, the company’s accountant. “=ut I’ve double checked these figures, so I know they’re right.# Medical Technology was organi>ed on 2pril of the current year to produce and market a revolutionary new heart monitor. The company’s accounting system was setup by ?erb Scteinbeck, an e1perienced accountant who recently left the company. The statement above was prepared by .ouganis, his assistant. *+,-(((

# said Staci.per units Monitors produced during the "uarter 9. o you agree that the insurance company owes..((( The following additional information is available on the company’s activities during the "uarter ended Aune 6($ a. if any were made in preparing the income statement aboveH 3....( End of the (uarter *9(. destroying the entire load.. @hat conceptual errors. Medical Technology.( Ginished goodsFFFFF.. 9.. The trucking company’s insurer is liable for the cost of goods lost.. . but that’s a lot of baloney.. 5repare a schedule of cost of goods manufactured for the "uarter.((( monitors wrecked and burned.((( 6(.# Aust after the end of the "uarter.. )e#uired* &. *33.“@e may not last a year if the insurance company doesn’t pay the *33. Inventories at the beginning and end of the "uarter were as follows$ 'eginning of the (uarter 8aw materialsFFFFFFF( @ork in processFFFFFF.ougains has determined this cost as follows$ Total cost for the "uarter CCCCCCCCCCCCCCCCCCCCCCCCCCCCCC < *&6-(((D3((((units < *-'.((( it owe us for the 9((( monitors lose in the truck accident last week.(((H 01plain your answer. Inc.((( H b. 5repare a correct income statement for the "uarter.((( units E *-'. a truck carrying 9. . Jour statement should show in detail how the cost of goods sold is computed.per unit < *33. The monitors were part of the 3(... 6. The agent says our claim is in flated. They were in a warehouse awaiting sale at "uarterBend and were sold and shipped on Auly 6 %this sale is not included on the income statement above).((( unites completed during the "uarter ended Aune 6(. 0ighty percent of the rental cost for facilities and +(I of the utilities cost relate to manufacturing operating amounts relate to selling and administrative activities.