BUS 254 Chapter Notes - Chapter 2: Subledger, Wallace And Gromit, Mass Production

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Hwee Cheng Tan

Document Summary

A manufacturing organization produces goods for sale. A retail organization purchases good for resale to customers. Usually a single inventory account that reflects the cost of goods available for resale. A service organization provides services to customers. Accumulates the costs incurred in a production process and assigns the cost to final products. Rate setting for governmental organisations and utilities. Product costing is not limited to manufacturing organizations. Service organization, government organization also require product costing system. Two major steps in product costing: accumulate the manufacturing costs incurred. Manufacturing overhead: assign the accumulated costs to the work done. If manufacturer, anything bought from suppliers is raw materials inventory. Assume raw materials inventory has an opening balance of 43,600. When indirect material are purchased, amount is debited to raw materials inventory. Some companies use a more precise description such as factory supplies inventory (or manufacturing supplies inventory) Issues of indirect materials are debited to manufacturing overhead instead of wip inventory.