1. Product Costing – Completing and Selling Products
Chapter 32
Managerial Accounting
Product Costing – Completing and Selling Products
Prepared by Diane Tanner
University of North Florida
Copyright ©2015. University of North Florida. All rights reserved.

2. Completing Products
The cost of completed products is transferred out of Work in Process Inventory
DR Finished Goods
Increase
CR Work in Process
Decrease
The cost transferred out is called Cost of Goods Manufactured

3. Selling Products
Revenue phase—the ‘sale’ is recognized for the amount of the selling price
DR Cash or Accounts Receivable
Increase
CR Sales Revenue
Expense phase—the ‘cost’ of the sale is recognized for the cost of the products sold
DR Cost of Goods Sold
CR Finished Goods
Decrease

4. Cost Flow Walk Through Problem
Arco provided the following from its June accounting records:
Direct materials used in production
$34,000
Indirect materials used in production
Ending Finished Goods Inventory
Raw materials purchased
1,000
18,000
32,000
Beginning Raw Materials Inventory
7,000
Beginning Work in Process Inventory
12,000
Beginning Finished Goods Inventory
15,000
Direct labor incurred
78,000
Manufacturing overhead incurred
65,000
Manufacturing overhead applied
63,000
Cost of goods manufactured
176,000
Calculate ending Raw Materials Inventory.
Raw Materials Inventory
Beginning ,000
Purchases ,000
34,000 DM used
1,000 IM used
Ending ,000

5. Cost Flow Walk Through Problem con’t
Arco provided the following from its June accounting records:
Direct materials used in production
$34,000
Indirect materials used in production
Ending Finished Goods Inventory
Raw materials purchased
1,000
18,000
32,000
Beginning Raw Materials Inventory
7,000
Beginning Work in Process Inventory
12,000
Beginning Finished Goods Inventory
15,000
Direct labor incurred
78,000
Manufacturing overhead incurred
65,000
Manufacturing overhead applied
63,000
Cost of goods manufactured
176,000
Calculate ending Work In Process Inventory.
Work in Process Inventory
Beginning ,000
DM used ,000
DL incurred ,000
176,000 CGM
MOH applied 63,000
Ending ,000

6. Cost Flow Walk Through Problem con’t
Arco provided the following from its June accounting records:
Direct materials used in production
$34,000
Indirect materials used in production
Ending Finished Goods Inventory
Raw materials purchased
1,000
18,000
32,000
Beginning Raw Materials Inventory
7,000
Beginning Work in Process Inventory
12,000
Beginning Finished Goods Inventory
15,000
Direct labor incurred
78,000
Manufacturing overhead incurred
65,000
Manufacturing overhead applied
63,000
Cost of goods manufactured
176,000
Calculate Cost of Goods Sold prior to adjustment for over or underapplied overhead.
Finished Goods Inventory
Beginning ,000
CGM ,000
173,000 CGS
Ending ,000

7. Cost Flow Walk Through Problem con’t
Arco provided the following from its June accounting records:
Direct materials used in production
$34,000
Indirect materials used in production
Ending Finished Goods Inventory
Raw materials purchased
1,000
18,000
32,000
Beginning Raw Materials Inventory
7,000
Beginning Work in Process Inventory
12,000
Beginning Finished Goods Inventory
15,000
Direct labor incurred
78,000
Manufacturing overhead incurred
65,000
Manufacturing overhead applied
63,000
Cost of goods manufactured
176,000
Calculate Cost of Goods Sold after adjustment for over or underapplied overhead.
Manufacturing Overhead
Cost of Goods Sold
From FG ,000
Actual 65,000
63,000 Applied
Adjustment ,000
Underapplied 2,000
Ending ,000

8. The End