Chapter 20 Part two. Accumulating Manufacturing Cost The subsidiary ledger consists of individual...
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Transcript of Chapter 20 Part two. Accumulating Manufacturing Cost The subsidiary ledger consists of individual...
Chapter 20
Part two
Accumulating Manufacturing Cost Accumulating Manufacturing Cost
The subsidiary ledger consists of individual records for each item of raw materials
May be accounts or manually/mechanically prepared cards
May be kept as computer data files
The records are referred to as materials inventory records or stores ledger cards
Raw Materials Costs - Continued
LO 2 Explain the flow of costs in a job order cost accounting system.
Accumulating Manufacturing Cost Accumulating Manufacturing Cost
Postings are made daily to the subsidiary ledger
After all postings, the sum of the balances in the raw materials subsidiary ledger equals the balance in the Raw Materials Inventory control account
Raw Materials Costs - Continued
LO 2: Explain the flow of costs in a job order cost accounting system.
Accumulating Manufacturing Cost Accumulating Manufacturing Cost
Procedures for accumulating factory labor costs similar to those for computing the payroll for a merchandising company
Consists ofGross earnings of factory workersEmployer payroll taxes on such earnings, andFringe benefits incurred by the employer
Factory Labor Costs
LO 2: Explain the flow of costs in a job order cost accounting system.
Accumulating Manufacturing Cost Accumulating Manufacturing Cost
Factory Labor Costs - Continued
LO 2: Explain the flow of costs in a job order cost accounting systems.
Debited to Factory Labor when incurred
Example:Wallace Manufacturing incurs $32,000 of factory labor costs, of which
$27,000 relates to wages payable and $5,000 relates to payroll taxes payable in January.
Accumulating Manufacturing Cost Accumulating Manufacturing Cost
Many types of overhead costs
For example, machinery repairs, indirect materials, and indirect labor
Debit to Manufacturing Overhead Daily as incurred orPeriodically through adjusting entries
Manufacturing overhead is a control account
Subsidiary ledger consists of individual accounts for each type of cost
Manufacturing Overhead Costs
LO 2 Explain the flow of costs in a job order cost accounting system.
Accumulating Manufacturing Cost Accumulating Manufacturing Cost
Example:The following is a summary entry to record the totals from multiple transactions that occurred during January for the Wallace Manufacturing Company.
Manufacturing Overhead Costs - Continued
LO 2 Explain the flow of costs in a job order cost accounting system.
When incurred, factory labor costs are debited to:
a. Work in Process.
b. Factory Wages Expense.
c. Factory Labor.
d. Factory Wages Payable.
Review Question
Accumulating Manufacturing CostsAccumulating Manufacturing Costs
LO 2 Explain the flow of costs in a job order cost accounting system.
Assigning Manufacturing Costs to Work In Process Assigning Manufacturing Costs to Work In Process
Manufacturing costs are assigned to Work in Process with
Debits to Work in Process Inventory
Credits to Raw Materials InventoryFactory LaborManufacturing Overhead
Entries assigning costs to Work in Process are usually made monthly
An essential accounting record in assigning costs to jobs is a job cost sheet
LO 3 Explain the nature and importance of a job cost sheet.
Assigning Manufacturing Costs to Work In Process Assigning Manufacturing Costs to Work In Process
Job cost sheet
Used to record costs of a specific job
Used to determine the total and unit costsof a completed job
Postings to job cost sheets are made daily
Each entry to a Work in Process Inventory must be accompanied by a corresponding posting to one or more job cost sheets.
LO 3 Explain the nature and importance of a job cost sheet.
Assigning Manufacturing Costs to Work In Process Assigning Manufacturing Costs to Work In Process
A Typical Job Cost Sheet
LO 3 Explain the nature and importance of a job cost sheet.
Assigning Manufacturing Costs to Work In ProcessAssigning Manufacturing Costs to Work In Process
Assigning Raw Materials Cost
Assigned to a job when materials are issued
A materials requisition slip
Written authorization for issuing raw
materials
May be directly issued to use on a job - direct
materials,
May be considered indirect materials – part of
manufacturing overheadLO 3 Explain the nature and importance of a job cost sheet.
Assigning Manufacturing Costs to Work In ProcessAssigning Manufacturing Costs to Work In Process
Materials Requisition Slip
LO 3 Explain the nature and importance of a job cost sheet.
Assigning Manufacturing Costs to Work In ProcessAssigning Manufacturing Costs to Work In Process
Assigning Raw Materials Cost
Requisition is prepared in duplicate
One copy stays in the storeroom as evidence of materials released
The original goes to accounting to determine the cost per unit and total cost of materials used
Posted daily to individual job cost sheets and periodically journalized
LO 3 Explain the nature and importance of a job cost sheet.
Example:Assume that $24,000 of direct materials and $6,000 of indirect materials are used by Wallace Company in January.
Assigning Manufacturing Costs to Work In ProcessAssigning Manufacturing Costs to Work In Process
LO 3 Explain the nature and importance of a job cost sheet.
Assigning Raw Materials Cost
The sum of the direct materials columns of the job cost sheets should equal the direct materials debited to Work in Process Inventory
Assigning Manufacturing Costs to Work In ProcessAssigning Manufacturing Costs to Work In Process
Assigning Factory Labor Cost
Assigned to jobs on the basis of time tickets
Time tickets are prepared when the work is performed
Time tickets indicateEmployeeHours workedAccount and job chargedTotal labor cost
LO 3 Explain the nature and importance of a job cost sheet.
Assigning Manufacturing Costs to Work In Process Assigning Manufacturing Costs to Work In Process
Time Ticket
LO 3 Explain the nature and importance of a job cost sheet.
Assigning Manufacturing Costs to Work In Process Assigning Manufacturing Costs to Work In Process
Assigning Factory Labor
Time tickets are sent to payroll to be sorted, totaled, and journalized
Work in Process is debited for direct labor costs
Manufacturing overhead is debited for indirect labor costs
Factory labor is left with a zero balance
LO 3 Explain the nature and importance of a job cost sheet.
Example:Assume that total factory labor cost is $32,000 of total factory labor cost which consists of $28,000 of direct labor cost and $4,000 of indirect labor cost.
Assigning Manufacturing Costs to Work In Process Assigning Manufacturing Costs to Work In Process
LO 3 Explain the nature and importance of a job cost sheet.
Job Cost Sheets After Posting
The sum of the direct labor columns of the job cost sheets should equal the direct labor debited to Work in Process Inventory.
The source documents for assigning material and factory labor costs to job cost sheets are:
a. Invoices and time tickets.
b. Invoices and payroll register.
c. Materials requisition slips and payroll register.
d. Materials requisition slips and time tickets.
Review Question
Assigning Manufacturing Costs to Work in Process
Assigning Manufacturing Costs to Work in Process
LO 3 Explain the nature and importance of a job cost sheet.