Supplementary Note COGM and COGS

Supplementary Note COGM and COGS - overhead or SUBTRACT the...

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Supplementary Note re Schedules of COGM and COGS in a “Normalized” Job Cost System Schedule of Cost of Goods Manufactured In a normal Job Cost System that uses a pre-determined overhead rate, the COGM schedule is similar the schedule we prepared in Chapter 2 for an actual cost system with two notable exceptions: 1. The Direct Materials account is now a Raw Materials account that contains both direct and indirect materials. As a result, the presentation of this part on the schedule appears as follows: RM, beginning xxxx Add: Purchases of RM xxxx RM available xxxx Less: RM ending xxxx RM used in production xxxx Less: indirect materials used (in MO) xxxx DM used xxxx 2. The MO applied is usually shown as one line (just like Direct Labour) and the actual MO amounts are not shown. However, if you wish to show all the actual MO amounts line by line, then you must list them and subtotal them (like we did on the COGM schedule in chapter 2), and then ADD back the overapplied
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Unformatted text preview: overhead or SUBTRACT the underapplied overhead to convert back to the MO-applied. Example Manufacturing Overhead: Indirect materials xxx Indirect labour xxx Factory depreciation xxx Total Actual MO xxx Add: MO overapplied xx MO applied to WIP xxx Schedule of Cost of Goods Sold The Schedule of COGS is the same as in chapter 2 except that the COGS must reflect the actual COGS. This requires that we add back any underapplied MO or subtract any overapplied MO (the exact opposite to what we did on the COGM schedule). This brings COGS back to the actual amount. Continued on back Example: FG, beginning xxxx Add: COGM xxxx COGAS xxxx Less, FG, ending xxxx COGS before adjustment xxxx Add: Underapplied MO xxx COGS as adjusted xxxx See example of combined Schedule of COGM and COGS in the format suggested above on p 96 Problem: E3-6, P3-27...
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This note was uploaded on 03/04/2012 for the course ACCT 2460 taught by Professor Farrar during the Winter '12 term at Conestoga.

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Supplementary Note COGM and COGS - overhead or SUBTRACT the...

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