ORIE 350 Lecture 16 - When you sell something, then it...

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Finished Goods inventory(A) aaa bbb Work in Process inventory(A) yyyy aaa Direct labor Manufacturing overhead Raw materials(A) xxx yyyy Cost of goods sold expense(TSE) bbb Manufacturing overheaed 2,000 90,000 15,000 40,000 20,000 18,000 Work in Process inventory(A) 30,000 aaa 50,000 60,000 Raw materials(A) 7,000 52,000 60,000 Job A 30000 28,000 100,000 Finished Goods inventory(A) 158,000 ORIE lecture 16 1. Inventory = 5, 816, 775/ (249, 697 + 287,798)/2 = 11.97 a. 365/ 11.97= 30.48 days b. A/R= 147.3 days c. A/P = CGS/ AVG A/P = 3, 816, 775/ [450, 361 + 763, 186]/2= 6.29 d. 365/6.29= 58 days e. Cash used = n f /365 x CGS= 119.75/365 x 3, 816, 795,00= 1, 252, 257,000 Managerial accounting Job-order -Recognising the difference between a cost and an expense Cost-> turning one asset into another Expense-> cost of goods sold
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Unformatted text preview: When you sell something, then it become an expense-it is a series of T-accounts Overhead-this is not waste-it is indirect cost(either too small to track or too difficult to track)-overhead must be estimated-assign to products using 1. A single cost driver(now)-direct labor-direct labor dollars-machine hours 2. multiple cost drivers (Activity based costing) ABC Procedure 1. Estimate overhead cost= x 2. Estimate Cost driver amount= y 3. Driver = x/y e.g. 40/direct labor hours 4. Assign to jobs 5. Zero out the overhead periodically Dump into CGS! Could be either debit or credit Rand corporation Cost driver= 1,000,000 x 1.08/ 166,667 x 1.08= 6/ machine hour 7-10 are not manufacturing costs...
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This note was uploaded on 03/30/2008 for the course ORIE 350 taught by Professor Callister during the Spring '08 term at Cornell University (Engineering School).

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ORIE 350 Lecture 16 - When you sell something, then it...

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