Ch2 - Income Statements

Ch2 - Income Statements - Prepare income statements for...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Prepare income statements for manufacturing and service organizations.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Cost of Goods Manufactured + Overhead Direct Materials + Direct Labor Total product cost of goods completed during the current period Sounds simple enough. But there’s more to it than meets the eye.
Background image of page 2
3 Direct Materials Used Only the amount used on products produced during the current period Consider beginning and ending inventory levels Key point: Purchases do not equal Materials Used
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
HOW TO Calculate the Direct Materials Used in Production
Background image of page 4
5 Example Information: BlueDenim Company makes blue jeans. On May 1, BlueDenim had $68,000 of materials in inventory. During the month of May, the company purchased $210,000 of materials. On May 31, materials inventory equaled $22,000.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 Example Required: Calculate the direct materials used in production for the month of May
Background image of page 6
7 Direct Materials Beginning Materials Inventory + Purchases - Ending Materials Inventory = Materials Used in Production $68,000 $210,000 $22,000 - + = $256,000
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
8 Work in Process Let’s continue our example Second type of inventory Cost of partially completed goods that are still
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/28/2012 for the course ACCT 2361 taught by Professor Severance during the Spring '08 term at Texas State.

Page1 / 26

Ch2 - Income Statements - Prepare income statements for...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online