Accounting

# Accounting - o Assign costs(\$\$ P.676 Demonstration...

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Accounting 20:11 Writing assignment To: Chief Financial Officer From: Blake Best Concerning: Allocating overhead POHR=estimated OH/estimated Base=OH/DL cost=10500/2100=50% Process flow for manufacturing Materials (inventory)   Goods in Process inventory o + Beginnig Inventory o – transfers out o ----------------- o ending inventory Goods in Process Iventory   Finished Goods Inventory o + Direct materials o + Direct labor o + Overhead Rent etc. Overhead   Goods in Process inventory o Indirect o Rent o Etc. Labor   Goods in Process o Direct Labor Finished Goods Inventory

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o + Cost of goods manufactured o – (credit) Cost of Goods sold Equivalent Units used to figure out what the cost of goods manufactured Find the cost of the goods manufactured 4 Steps: o Figure out the physical flow of  units  thru Goods in Process inventory  (UNITS) o Determining or compute equivalent units using % of completion (UNITS) o Calculate the dollars per equivalent unit (\$\$)

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Unformatted text preview: o Assign costs (\$\$) P.676 Demonstration Problem (applying the above process) Step 1 • Beginning Inventory 5,000 units • Transferred out 17,000 units • Started 20,000 units • Ending 8,000 units • Beginning + Started – Transferred out = ending • 5000+20000-17000=8000 Step 2 – equivalent units of production • DM 100% 8000 units + completed 17000= 25000 units • Labor 20% 1600 units + completed 17000= 18600 units • OH 20% 1600 units +completed 17000= 18600 units Step 3 – cost per equivalent unit (&/EUP) Materials o Beg inventory \$ 20,000 o Materials used \$190,000 o----------o 210000/25000= \$8.40 each Labor o 9600 o + 55500 o---------o 65100/18600 = \$3.50 each OH o 19200 o + 111000 o----------o 130200/18600= \$7.00 each Step 4 Check page 677 20:11 20:11...
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Accounting - o Assign costs(\$\$ P.676 Demonstration...

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