ACC 406 Lecture : Basic Concepts

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magentazebra767

17 May 2011

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Resources used in order to actualize a specific object. In general, cost refers to value forgone to achieve a purpose. In specific, cost refers to economic resources paid for goods or services. In manufacturing accounting, manufacturing companies have 3 inventory accounts: raw materials inventory, work in process inventory, & finished goods inventory. Manufacturing cost = direct materials (dm) + direct labor (dl) + overhead (oh) Manufacturing cost in process e. g. ,000 + ,000 = ,000: total manufacturing cost in process - ending work in process inventory = cogs manufactured e. g. ,000 - ,000 = ,000. Equations 1 5 can be represented by the cost of goods manufactured statement . Equations 6 & 7 can be represented by the income statement www. notesolution. com. Cost (total cost is kept constant within a relevant range [in terms of activity volume or time length]) Cost behaviour: relationship between cost and activity volume. Product cost (inventoriable cost) vs period cost (noninventoriable cost)

Related Questions

1.) When products held in inventory are sold:

A.)Cost of Goods Sold is credited.

B.)Work in Process Inventory is credited.

C.)Finished Goods Inventory is credited.

D.)Finished Goods Inventory is debited.

2.)Since manufacturing costs (direct materials, direct labor,and overhead) are incurred in the process of manufacturing units ofproduct, these costs are credited t

A.)	The Direct Materials Inventory, Direct Labor, and ManufacturingOverhead accounts respectively.
B.)	Liability accounts.
C.)	The Work in Process Inventory account.
D.)	The Cost of Goods Sold account.

3.)Management accounting systems are designed to assistorganizations in the performance of all of the following functionsexcept:

A.)	The assignment of decision-making authority over companyassets.
B.)	Planning and decision-making.
C.)	Monitoring, evaluating, and rewarding performance.
D.)	The preparation of income tax returns.

4.)In a schedule of cost of finished goods manufactured, thefigure for total manufacturing costs:

	A.) May be less than the cost of direct materials used.
	B.) May be less than the direct labor costs assigned toproduction.
	C.) May be less than the manufacturing overhead applied toproduction.
	D.) May be less than the cost of finished goodsmanufactured.

5.) When a manufacturing company purchases raw materials orcomponent parts to be used in manufacturing finished goods, thesecosts are initially debited to:

	A.) Expense accounts.
	B.) Raw Materials Inventory.
	C.) Finished Goods Inventory.
	D.) Manufacturing Overhead.

6.) The wages paid to employees working directly on a company'sproducts would be shown as a:

	A.) Credit to Direct Labor.
	B.) Debit to Direct Labor.
	C.) Credit to Work in Process.
	D.) Debit to Manufacturing Overhead.

7.) Amounts credited to the Work in Process inventory accountmay best be described as:

	A.) The cost of finished goods manufactured.
	B.) Total manufacturing costs charged to production.
	C.) The cost of goods sold.
	D.) Direct materials purchased, direct labor costs paid, andpayments for items classified as manufacturing overhead.

chocolatetiger413

Problem 2

Smith Carlson Corporation provided the following list of costdata to its manufacturing operations for the month of October20X5.

Beginning raw materials inventory	2,416,000
Raw materials purchased (net)	5,863,750
Ending raw materials inventory	2,045,500
Direct labor costs	805,750
Indirect materials	313,750
Indirect labor	222,250
Factory utilities and maintenance	1,140,000
Factory depreciation	141,500
Other factory relatedoverhead	61,000
Beginning work in process	1,942,500
Ending work in process	1,792,500

Arrange the cost data into a statement of cost of goodsmanufactures.

If Smith Carlson Corporation cost of goods sold for the monthwas $10,000,000, how much was the increase or decrease in finishedgoods inventory for the month of October

WORKSHEET #2

SMITH CARLSON CORPORATION
SCHEDULE OF COST OF GOODS MANUFACTURED
For the month ending October 31, 20X5

Direct materials:
	$ -
	-
	$ -
	-
Raw materials transferred to production		$ -
Direct labor		-
Factory overhead
	$ -
	-
	-
	-
	-	-
Total manufacturing costs		$ -
		-
		$ -
		-
Cost of goods manufactured		$ -

periwinklewhale348

The Pacific Manufacturing Company operates a job-ordercosting system and applies overhead cost to jobs on the basis ofdirect labor cost. Its predetermined overhead rate was based on acost formula that estimated $113,100 of manufacturing overhead foran estimated allocation base of $87,000 direct labor dollars. Thecompany has provided the following data:

Inventories Beginning Ending

Raw materials $ 27,000 $ 10,000

Work in process $ 49,000 $ 36,000

Finished goods $ 74,000 $ 55,000

The following actual costs were incurred during theyear:

Purchase of raw materials (all direct) $ 131,000

Direct labor cost $ 83,000

Actual manufacturing overhead costs:

Insurance, factory $ 8,700

Depreciation of equipment $ 18,000

Indirect labor $ 27,200

Property taxes $ 8,700

Maintenance $ 15,000

Rent, building $ 34,000

________________________________________

Compute the predetermined overhead rate for theyear.

Predetermined overhead rate %

Compute the amount of underapplied or overapplied overheadfor the year. (Input the amount as a positive value.)

overhead $

Prepare a schedule of cost of goods manufactured for theyear. Assume all raw materials are used in production as directmaterials. (Input all amounts as positive values.)

Pacific Manufacturing Company

Schedule of Cost of Goods Manufactured

Direct materials:

Total raw materials available

Raw materials used in production $

Total manufacturing cost

Cost of goods manufactured $

Compute the unadjusted cost of goods sold for the year. (Donot include any underapplied or overapplied overhead in your costof goods sold figure.

Unadjusted cost of goods sold $

Job 137 was started and completed during the year. What pricewould have been charged to the customer if the job required $3,600in materials and $4,000 in direct labor cost, and the companypriced its jobs at 50% above the job%u2019s cost according to theaccounting system?

Price to customer $

Direct labor made up $8,500 of the $36,000 ending Work inProcess inventory balance. Supply the information missingbelow:

Direct materials $

Direct labor 8,500

Manufacturing overhead

Work in process inventory $ 36,000

**how to compute price to customer?

beigekoala601

ACC 406 Lecture : Basic Concepts

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