Note re Changes from chp 2

Note re Changes from chp 2 - This account will always clear...

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Changes from Chapter 2 when we move to a Job Costing System 1. All costs are now charged to a specific job T-account . All the job T-accounts make up the WIP subsidiary ledger. The total of all the balances in the job T- accounts should agree with the balance in the WIP account in the general ledger. 2. Both direct materials and indirect materials will be now be included in RM Stores. When direct materials are removed from RM Stores, they will move to WIP (as in chapter 2) and indirect materials will be move to MO. There is no change in where the costs for materials end up. It is just that we now remove both kinds of materials from RM Stores. 3. We add a labour cost clearing account called Factory Labour.
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Unformatted text preview: This account will always clear out to zero and shows both the gross amount of the labour cost charged for both Direct Labour and Indirect Labour (credit side) and the gross labour cost paid (same amount, debit side). It will always clear out to a zero balance when the payroll gets paid. The costs for direct labour will still end up being charged to WIP and the indirect labour will still get charged to MO. 4. We will not longer charge actual manufacturing overhead to the jobs and WIP. This is discussed in a separate note. We will now use a pre-determined overhead rate based on an estimate and calculate mfg. overhead applied (MO-applied)....
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This note was uploaded on 03/03/2012 for the course ACCT 2460 taught by Professor Farrar during the Winter '12 term at Conestoga.

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