Cost-Chapter-1-second-part.pdf - 2...

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2! ChapEg£r__1~Cos_t__€_cJpc_£p_I_s_,__fJl_agss!f!±:3±!£±3P±:ft€Countl!rl_g_€Y_±±!± Figure 1. The F`low of Costs Put.chase of Materials Pay (1ire`-t labol.el-s Inc.ur overhead To summarize the flo\i`. of costs through the three inventt)I.+-' acc`ounts (]f a manufacfuiing c(]mpaii},.,1et's take a lo(-tk a{ the foIlow'ing preseritation: Beg balance + Purchases + Freight iri' FJraT5iT:.-;Tin-;r Available for use - End Saiaiii`cl DM nlaterials useii cOsT Or` Got)Ds MANUFACTURE,D AN-D SOLD In addition tc> thi' tu'o ba.sid £`inancial stal.ements, the Balaiii`e Sheet. ancl the Income Statement, manufacturing c.ompanies ai.e required [o [ir€pare a Statement of Cctst of Goods Manufactured. 'I`his st-atement summarizes the-total produc+[ion cost, the direct lalior and the overhe€id that tr.ansfo].in the matei.ia}s int:a work in process inventory. When thi> w(irk in proc(?ss in`,'entoi.y is completed, it li€conie§ finisheil goods inv€n[-or}`. T!ie fiitisheii goods inventor}' is the t)!ily inveiit(>r}. that
DM DL I:;`+ frc w`P,to{4 - P„T`\wh pn( c`¢ rty) CGM fG'b€¢ - C>frFC, (FC,tnal) Chapter 1. I_I_ost Concepts, Classification and Accounting Cycle is ready to sen. The costs of the finished goods inventory become Cost of Goods Sold on the income statement. A pro-forma staLtement of Costs of Goods Manufactured and Sold is given below: Name of Company Statement of Cost of Goods Manufactured and Sold Pedod Direct Materials used: Direct Material, beginring Add: Purchases Freightin . Gross Purchases Less: Purchase "scounts Net Purchases Direst Materials Available Less: DM inventory, end Direst Materials used (b) DirectLahor (c) Manufacturing overhead . (d) Total Manufacturing costs Add: Work in Process, beg (e) Total cost of goods placed into process Less: Work in Process, End ® Costs of gcods manufactured Add: Finished Goods, beginning (g) Total goods available for sale Less: Finished Goods, end a) Cost of goods sold P000
NI4fup cm Cos+ _ /oo% - Cost Concepts, `Chaptrty C6ifn|,Sthes wcii(i lip cii sales . `oo% cof6A Classifilcation and Accounting Cyc_I_e_ REIHODS 0F ACCUMUIATING PRODUCT COSTS a,±:Li`-|r` Actual Costing System. Very because the overhead costs'cann cQF±paries adopt this method of costing aced=jlytoindividualjobs.Thismethod requiresthatallproduction6`V-eFht-ad_-`fi-i-Stbeavallablebeforeanycostallocation ou`be"detothe`}s>_fas_thp;][oaess.Urde5[thissvstem,thearfualcostsofdirect rmterialsused,directlaborandmj}p±±±±±±ngj¥z§iheadincurredinproduction are charged to the job. Cost accounting cycle: Actual Costing Method High Street Manufacturing Company has the fonowing account balances at the begirming of the current year: Raw materials inventory Work in process inventory Finished Goods P50,000 150,000 120,000 Below is the summary of transactions for the month of January: (a) Purchased of Raw Materials: On account, P200,000; Cash, P80,000 . 2gr\,Do.- q>) Issuance of Raw Materials to the production department, P180,000 of whichl0%isindirectmaterials. - I,}€;,:%i\ (c) Company payrou for the month: Factory payron consisted of P120,000 for direct labor and P25,000 for.-indirect laborers; Marketing and Adndnistrative payroll amounts to P40,000 and P80,000, respectively. (Use Marketing Expense

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