Accumulating Manufacturing Costs

Accumulating Manufacturing Costs - ACCUMULATING...

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ACCUMULATING MANUFACTURING COSTS To illustrate a job order cost system, we will use the January transactions of Wallace Manufacturing  Company, which makes machine tools. Raw Materials Costs When Wallace receives the raw materials it has purchased,  it debits the cost of the materials to  Raw Materials Inventory . The company would debit this account for the invoice cost of the raw  materials and freight costs chargeable to the purchaser. It would credit the account for purchase  discounts taken and purchase returns and allowances. Wallace makes  no effort at this point to  associate the cost of materials with specific jobs or orders . To illustrate, assume that Wallace Manufacturing purchases 2,000 handles (Stock No. AA2746) at $5  per unit ($10,000) and 800 modules (Stock No. AA2850) at $40 per unit ($32,000) for a total cost of  $42,000 ($10,000 + $32,000). The entry to record this purchase on January 4 is: 
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Accumulating Manufacturing Costs - ACCUMULATING...

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