Manufacturing
The Three Types of Manufacturing Costs
DL, DM, MO
The purchase of raw materials is a debit to
Raw Materials Inventory
A radio for a car in assembly
Direct Material
Cost Driver Example
Machine Hours, Labor Hours, Labor Costs, ect.
The debit side of MO is ______
The credit side of MO is ______
Actual
Applied
Annual Overhead = 800,000
Direct Labor Cost = 1,000,000
Activity Base is Direct Labor Cost
MO per unit?
$0.80 MO per unit
Labor from the assembly line of a vehicle goes into ____. The labor of a factory supervisor goes into _____. Labor from the company's corporate accounting goes into ______.
Work in Process
Manufacturing Overhead
Admin Expenses
Irregularly used materials such as loose thread is (direct/indirect) materials
Indirect materials
What is the Relevant Range?
The range of activities will costs will be the same. Fixed costs remain the same
Applied MO > Actual MO
Overapplied
Job Order Costing
Credit to MO
Debit to _____
Work in Process
Cost of Goods Manufactured
WIP -> FG
When you Credit WIP to transfer into Finished Goods
Cost of production
A cost that has already occurred, irrelevant to your current decisions
Sunk Cost
Fixed Cost per unit _____ for more units produced
Variable Costs per unit ____ for more units produced
decreases
What do you do when you have underapplied overhead?
Method 1: Into WIP
Allocate the rest of the MO account by allocating the amount by debiting WIP and crediting MO
How is Overhead applied to a job?
By the means of predetermined overhead rates
Cost of Goods Sold
When you sell FG
Credit side of FG
FG -> COGS
Pay of the Administrative Buildings Janitor
Period Costs
Costs that can be quickly and conveniently traced to a unit of product or other cost object.
Direct Costs
What three accounts can you allocate under/over applied overhead?
Work in Process
Finished Goods
Cost of Goods Sold
Assigning overhead using ABC will usually
Increase the cost per unit for low-volume products compared to a traditional overhead allocation.
Gordon Tires, Inc. has a $20,000 ending finished goods inventory as of December 31. 2011. If the beginning finished goods inventory was S10,000 and the cost of goods sold was S40,000, how much would Kushman report the cost of goods manufactured?
$50,000
End Bal FG + COGS - Beg Bal FG
(20,000+40,000) - 10,000 = 50,000
Prime Costs
Conversion Costs
Prime: DL, DM
Conversion: DL, MO
Difference between a product cost and a period costs
product costs are expensed into the value of the product, period costs are expensed when occurred and are directly expensed on the income statement
Est MO = 10,000
Est Labor Hours = 5,000
Act MO = 11,000
Act Labor Hours = 4,950
What is the rate, Applied OH, and under/overallocation?
Rate = $2MO/LH
Applied OH = $9,900
End Bal = $1,100 Underapplied