Manufacturing%20Simulation%20Part%201 (1).pdf - Accounting...

This preview shows page 1 - 2 out of 8 pages.

Accounting 312 Manufacturing Simulation Background Information : The purpose of this simulation is to provide a “hands - on” experience with the manufacturing process. You will assemble a basic product and process the manufacturing transactions. Another purpose of this simulation is to link the source documents used by support departments to the general ledger accounts used in the accounting department. The simulation is split into two parts: 1. Simulation 1 introduces the source documents and uses standard costing to account for the transactions. 2. Simulation 2 introduces the analysis of material, labor, and overhead variances. Source Documents: Source documents provide the detail and support for the balances in the general ledger accounts. The following source documents will be used in this simulation: Time Card : The time card is used to record the actual hours worked by an individual or group of workers. In a job-shop, the time is broken down by the amount of time spent on specific jobs. The time card is used to pay the worker(s) and is the source for the Wages and Salaries Payable account. For direct labor workers, the time card identifies the amount of direct labor to be charged to each job. Materials Requisition : The materials requisition form is used to identify direct and indirect materials taken from the Raw Materials account. In the case of direct materials, a reference to the specific job the materials are being used on is included on the requisition and serves as the support for the amount of direct materials charged to jobs. Purchase Order : The purchase order serves several purposes. One purpose is to provide the actual amount paid for individual items used to manufacture a product. It becomes the source for the purchases of direct and indirect materials in the Raw Materials account. The purchase order is also used in standard costing to establish a standard cost for the upcoming year. After the standard is set for individual items from purchase orders, the standard is compared to purchase orders received during the year to calculate the materials price variance. An additional purpose of the purchase order is to provide support (match) for the invoice received from the supplier, which forms the basis for the Accounts Payable account. Job Cost Sheet : The job cost sheet accumulates the direct materials, direct labor, and manufacturing overhead charged to a specific job. There are references to other source documents (e.g. materials requisition), start and end dates, and the number of units to be completed. For purposes of this simulation, each line of detail represents the transactions for a period. The job cost sheet is the supporting document for the Work in Process account.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture