Manufacturing Accounting Chapter 25 2

Preparing a cost of goods manufacturing schedule. Learning Objective 1 Preparing a cost of goods manufacturing schedule. 6

Learning Unit 25-1 (Cost of Goods Manufactured) Manufacturing costs must be separated from all other selling and administrative costs. MANUFACTURING Raw material Direct labor Overhead ADMINISTRATIVE Management Sales personnel Administrative

Learning Unit 25-1 (Cost of Goods Manufactured) Finished goods inventory Raw materials used WIP inventory Direct labor Cost of goods sold Manufacturing overhead 4

Learning Unit 25-1 (Cost of Goods Manufactured) Merchandising Company Beginning merchandise inventory + Net purchases = Cost of merchandise available for sale – Ending merchandise inventory = Cost of goods sold

Learning Unit 25-1 (Cost of Goods Manufactured) Manufacturing Company Beginning finished goods inventory + Cost of goods manufactured = Cost of goods available for sale – Ending finished goods inventory = Cost of goods sold

Learning Unit 25-1 (Cost of Goods Manufactured) Direct materials: Beginning inventory + Net purchases – Ending inventory = Direct material cost Work-in-process inventory: Beginning inventory + Direct material cost + Direct labor + Manufacturing overhead = Total manufacturing costs – Ending inventory = Cost of goods manufactured

Journalizing transactions manufacturing process. Learning Objective 2 Journalizing transactions recording the manufacturing process. 6

Learning Unit 25-2 (The Flow of Manufacturing Costs) Source documents provide proof of transactions. Receiving reports acknowledge receipt of goods. Material requisitions are requests for materials from storage areas.

Learning Unit 25-2 (The Flow of Manufacturing Costs) RECEIVING REPORT Received from: Receiving Report No. 1031 Adams Company Date: 6/20x8 Quantity 50 Gals. Description Paint Unit Price $6.50/Gal. Total Price $325.00 Revilo Manufacturing Co. Inspected By MS Received By BJ

Learning Unit 25-2 (The Flow of Manufacturing Costs) MATERIAL REQUISITION Department Requisition No. 3648 Finishing Date: 6/20x8 Quantity 8 Gals. Description White Paint Unit Price $6.50 Total Price $52.00 Revilo Manufacturing Co. Inspected By CY Received By JA

Learning Unit 25-2 (The Flow of Manufacturing Costs) Clock card Lot tickets Labor distribution report Bills of lading

Learning Unit 25-2 (The Flow of Manufacturing Costs) Flow charts illustrate the movement of material, labor, and overhead through the operation. Overhead – Control is debited as costs are incurred. Overhead – Applied is credited when overhead is applied to products.

Learning Unit 25-2 (The Flow of Manufacturing Costs) Debit Work-in-Process Inventory Credit Raw Material Inventory Debit Work-in-Process Inventory Credit Payroll Debit Overhead – Control Credit Supplies Inventory

Learning Unit 25-2 (The Flow of Manufacturing Costs) Debit Overhead – Control Credit Payroll Debit Overhead – Control Credit Supervision Salaries Credit Rent Expense Credit Depreciation Expense Credit Electricity Expense

Learning Unit 25-2 (The Flow of Manufacturing Costs) Debit Work-in-Process Inventory Credit Overhead – Applied Debit Finished Goods Inventory Credit Work-in-Process Inventory Debit Cost of Goods Sold Credit Finished Goods Inventory

Preparing a worksheet for a manufacturing company. Learning Objective 3 Preparing a worksheet for a manufacturing company. 6

Learning Unit 25-3 (Worksheet) The worksheet for a manufacturing company is used to produce the following: Statement of cost of goods manufactured Income statement Statement of retained earnings Balance sheet

Learning Unit 25-3 (Worksheet) Trial Balance Adjustments Cost of Goods Manufactured Income Statement Balance Sheet Statement of Cost of Goods Manufactured Income Statement Balance Sheet Statement of Retained Earnings

End of Chapter 25