Vous êtes sur la page 1sur 71

Chapter 3

Systems Design:
Job-Order Costing

1
Types of Costing Systems Used to
Determine Product Costs

Process Job-order
Costing Costing

Chapter
Chapter44

Many
Manydifferent
differentproducts
productsare
areproduced
producedeach
eachperiod.
period.

Products
Productsare
aremanufactured
manufacturedto
toorder.
order.

Cost
Costare
aretraced
tracedor
orallocated
allocatedto
tojobs.
jobs.

Cost
Costrecords
recordsmust
mustbe
bemaintained
maintainedfor
foreach
eachdistinct
distinct
product
productororjob.
job.
2
Types of Costing Systems Used to
Determine Product Costs

Process Job-order
Costing Costing

Typical job order cost applications:


Special-order printing
Building construction
Also used in the service industry
Hospitals
Law firms 3
Quick Check 9

Which
Which of of the
the following
following companies
companies would
would bebe
likely
likely to
to use
use job-order
job-order costing
costing rather
rather than
than
process
process costing?
costing?
a.
a. Scott
Scott Paper
Paper Company
Company for
for kleenex.
kleenex.
b.
b. Architects.
Architects.
c.
c. Heinz
Heinz for
for ketchup.
ketchup.
d.
d. Caterer
Caterer forfor aa wedding
wedding reception.
reception.
e.
e. Builder
Builder of of commercial
commercial fishing
fishing vessels.
vessels.

4
Job-Order Costing
Manufacturing
Manufacturing
overhead
overhead(OH)
(OH)
Applied
Appliedto toeach
each
Direct
Direct Tra job
jobusing
usingaa
ced
material
material dire predetermined
predetermined
to e ctly
ach rate
rate
job

The
The Job
Job
c tl y
d ire
c e d b
Tr a jo
e a ch
Direct
Direct to
labor
labor
5
Sequence of Events in a Job-
Order Costing System

Receive
Receive
orders
ordersfrom
from Begin
Begin
customers
customers production
production

Schedule
Schedule Order
Order
jobs
jobs materials
materials

6
Sequence of Events in a Job-
Order Costing System

Direct
DirectMaterials
Materials
Charge
Charge
Job
JobNo.
No.11 direct
direct
material
material & &
Direct
DirectLabor
Labor direct
direct labor
labor
Job
JobNo.
No.22
costs
costs toto
each
each job
job as
as
Manufacturing
Manufacturing Job
JobNo.
No.33 work
work isis
Overhead
Overhead
performed.
performed.

7
Sequence of Events in a Job-
Order Costing System

Direct
DirectMaterials
Materials
Job
JobNo.
No.11 Apply
Apply
overhead
overhead to to
Direct
DirectLabor
Labor each
each job
job
Job
JobNo.
No.22
using
using aa
predeter-
predeter-
Manufacturing
Manufacturing Job
JobNo.
No.33 mined
mined rate.
rate.
Overhead
Overhead

8
Job-Order Cost Accounting

The primary
document for tracking
the costs associated
with a given job is the
job cost sheet.

Lets investigate

9
Job-Order Cost Accounting
PearCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-01
Date Completed
Department B3 Units Completed
Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount

Cost Summary Units Shipped


Direct Materials Date Number Balance
Direct Labor
Manufacturing Overhead
Total Cost
Unit Product Cost

10
Job-Order Cost Accounting
PearCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-01
Date Completed
Department B3 Units Completed
Item Wooden cargo crate A materials requisition
Direct Materials Direct Laborform Manufacturing
is used to Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount
authorize the use of
materials on a job.
Cost Summary Units Shipped
Direct Materials Date Number Balance
Direct Labor
Lets see one
Manufacturing Overhead
Total Cost
Unit Product Cost

11
Materials Requisition Form
PearCo Materials Requisition Form

Requisition No. X7 - 6890 Date 3-4-01


Job No. A - 143
Department B3

Description Quantity Unit Cost Total Cost


2 x 4, 12 feet 12 $ 3.00 $ 36.00
1 x 6, 12 feet 20 4.00 80.00
$ 116.00

Authorized
Signature Will E. Delite
12
Materials Requisition Form
PearCo Materials Requisition Form

Requisition No. X7 - 6890 Date 3-4-01


Job No. A - 143
Department B3
Cost
Costof
ofmaterial
materialis
is
charged
chargedtotojob
jobA-143.
A-143.
Description Quantity Unit Cost Total Cost
2 x 4, 12 feet 12 $ 3.00 $ 36.00
1 x 6, 12 feet 20 4.00 80.00
$ 116.00

Type,
Type,quantity,
quantity,&&
total
totalcost
costof
ofmaterial
material
charged
charged to
to job
job A-143.
A-143.
Authorized
Signature Will E. Delite
13
Job-Order Cost Accounting
PearCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-01
Date Completed
Department B3 Units Completed
Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount
X7-6890 $ 116

Cost Summary Units Shipped


Direct Materials $ 116 Date Number Balance
Direct Labor
Manufacturing Overhead
Total Cost
Unit Product Cost

14
Job-Order Cost Accounting
PearCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-01
Date Completed
Department B3 Units Completed
Item Wooden cargo crate
Direct Materials Direct Labor Workers
Manufacturing use
Overhead
Req. No. Amount Ticket Hours Amount Hours time
Rate tickets
Amount to
X7-6890 $ 116
record the time
spent on each
Cost Summary job.
Units Shipped
Direct Materials $ 116 Date Number Balance
Direct Labor
Manufacturing Overhead Lets see one
Total Cost
Unit Product Cost

15
Employee Time Ticket
PearCo Employee Time Ticket

Time Ticket No. 36 Date 3/5/01


Employee I. M. Skilled Station 42

Starting Ending Hours Hourly


Time Time Completed Rate Amount Job No.
0800 1600 8.00 $ 11.00 $ 88.00 A-143

Totals 8.00 $ 11.00 $ 88.00 A-143

Supervisor C. M. Workman

16
Job-Order Cost Accounting
PearCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-01
Date Completed
Department B3 Units Completed
Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount
X7-6890 $ 116 36 8 $ 88

Cost Summary Units Shipped


Direct Materials $ 116 Date Number Balance
Direct Labor $ 88
Manufacturing Overhead
Total Cost
Unit Product Cost

17
Job-Order Cost Accounting
PearCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-01
Date Completed 3-5-01
Department B3 Units Completed 2
Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount
X7-6890 $ 116 36 8 $ 88 8

Cost Summary Units Shipped


Apply
Direct manufacturing overhead
Materials $ 116 toDatejobs using
Number a
Balance
Direct Labor $ 88
predetermined overhead
Manufacturing Overhead $
rate
32
of $4 per direct
Total Cost labor hour$ (DLH).
236
Unit Cost $ 118 Lets do it

18
Job-Order Cost Accounting
PearCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-01
Date Completed 3-5-01
Department B3 Units Completed 2
Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount
X7-6890 $ 116 36 8 $ 88 8 $ 4 $ 32

Cost Summary Units Shipped


Direct Materials $ 116 Date Number Balance
Direct Labor $ 88
Manufacturing Overhead $ 32
Total Cost $ 236
Unit Product Cost $ 118

19
Application of Manufacturing Overhead

The predetermined overhead rate (POHR)


used to apply overhead to jobs is determined
before the period begins.
Estimated total manufacturing
overhead cost for the coming period
POHR =
Estimated total units in the
allocation base for the coming period

Ideally,
Ideally,the
theallocation
allocationbase
base
is
isaacost
costdriver
driverthat
thatcauses
causes
overhead.
overhead.
20
Application of Manufacturing Overhead

Based
Basedononestimates,
estimates,&&
determined
determinedbefore
beforethe
the
period
periodbegins.
begins.

Overhead applied = POHR Actual activity

Actual
Actualamount
amountof ofthe
theallocation
allocation
base
basesuch
suchasasunits
unitsproduced,
produced,
direct
directlabor
laborhours,
hours,orormachine
machine
hours
hours incurred
incurredduring
duringthe
the
period.
period.
21
Application of Manufacturing Overhead

PearCo Job Cost Sheet


Job Number A - 143 Date Initiated 3-4-01
Date Completed 3-5-01
Department B3 Units Completed 2
Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount
X7-6890 $ 116 36 8 $ 88 8 $ 4 $ 32

Overhead applied = POHR Actual activity


Recall the wooden crate example where:
Overhead applied = $4 per DLH 8 DLH = $32

22
The Need for a Predetermined
Manufacturing Overhead Rate
Using a predetermined rate makes it
possible to estimate total job costs sooner.

Actual overhead for the period is not


known until the end of the period.

23
Overhead Application Example

PearCo applies overhead based on direct labor


hours. Total estimated overhead for the year
is $640,000. Total estimated labor cost is
$1,400,000 & total estimated labor hours are
160,000.

What is PearCos predetermined overhead rate


per hour?

24
Overhead Application Example
Estimated total manufacturing
overhead cost for the coming period
POHR =
Estimated total units in the
allocation base for the coming period

$640,000
POHR =
160,000 direct labor hours (DLH)

POHR = $4.00 per DLH


For
For each
each direct
direct labor
labor hour
hour worked
worked on on aa job,
job,
$4.00
$4.00 of
of factory
factory overhead
overhead will
will be
be applied
applied to to
the
the job.
job.
25
Overhead Application Example
PearCo Job Cost Sheet
Job Number X - 32 Date Initiated 3-9-01
Date Completed 3-11-01
Department B3 Units Completed 6
Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount
X7-7456 $ 240 23 26 $ 286

Cost Summary Units Shipped


Direct Materials $ 240 Date Number Balance
Direct Labor $ 286
Manufacturing Overhead
Total Cost
Unit Product Cost

What amount of overhead will PearCo


apply to Job X-32? 26
Overhead Application Example
PearCo Job Cost Sheet
Job Number X - 32 Date Initiated 3-9-01
Date Completed 3-11-01
Department B3 Units Completed 6
Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount
X7-7456 $ 240 23 26 $ 286 26 $ 4 $ 104

Cost Summary Units Shipped


Direct Materials $ 240 Date Number Balance
Direct Labor $ 286
Manufacturing Overhead $ 104
Total Cost
Unit Product Cost

27
Overhead Application Example
PearCo Job Cost Sheet
Job Number X - 32 Date Initiated 3-9-01
Date Completed 3-11-01
Department B3 Units Completed 6
Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount
X7-7456 $ 240 23 26 $ 286 26 $ 4 $ 104

Cost Summary Units Shipped


Direct Materials $ 240 Date Number Balance
Direct Labor $ 286
Manufacturing Overhead $ 104
Total Cost $ 630
Unit Product Cost $ 105

28
Quick Check 9
IfIf the
the number
number of of wooden
wooden cratescrates in
in the
the order
order on on
the
the previous
previous pagepage isis increased
increased or or decreased
decreased by by
one
one unit,
unit, what
what would
would you you expect
expect toto happen
happen to to
the
the total
total spending
spending of of PearCo?
PearCo?
a.a. Total
Total spending
spending would would probably
probably change
change
by
by less
less than
than $105.
$105.
Total
Totalb.b. Total
Total
spending
spendingspending
spending
would would
would probably
would change
change probably
by
by $105
$105 onlychange
change
only ifif all
all
of
of thetheby
by about
about
costs
costs $105.
were
were$105.
variable
variable with
with respect
respect to to the
the
c.
number
number c. Total
of
Total spending
of units
spending
units would
produced.
produced.would probably
Direct materials
probably
Direct change
materials is
changeis
variable,
variable,by
by more
but
more than
but much
thanof
much $105.
the
the overhead
$105.
of overhead && perhaps
perhaps
even
even directdirect labor
labor may
may be be fixed.
fixed.
29
Quick Check 9
Job
Job WR53
WR53 at at NW
NW Fab,Fab, Inc.
Inc. required
required $200
$200 of of
direct
direct materials
materials && 10 10 direct
direct labor
labor hours
hours at at $15
$15
per
per hour.
hour. Estimated
Estimated total
total overhead
overhead for for the
the year
year
was
was $760,000
$760,000 && estimated
estimated direct
direct labor
labor hours
hours
were
were 20,000.
20,000. What
What would
would be be recorded
recorded as as the
the
cost
cost of
of job
job WR53?
WR53?
a.
a. $200.
$200. Pred. Pred.ovhd.
ovhd.rate
rate $760,000/20,000hours
$760,000/20,000hours $38
$38
b.
b. $350.
$350. DirectDirectmaterials
materials $200
$200
Direct
Directlabor $15
$15 xx 10
10hours
hours $150
c. $380. labor
c. $380. Manufacturing overhead $38 x 10 hours $380 $150
Manufacturing overhead $38 x 10 hours $380
d.
d. $730.
$730. Total Totalcost
cost $730
$730

30
Quick Check 9
Job
Job WR53
WR53 atat NW
NW Fab,
Fab, Inc.
Inc. required
required $200 $200 of of
direct
direct materials
materials & & 10
10 direct
direct labor
labor hours
hours at at
$15
$15 per
per hour.
hour. Estimated
Estimated total total overhead
overhead for for
the
the year
year was
was $760,000
$760,000 & & estimated
estimated directdirect
labor
labor hours
hours were
were 19,000.
19,000. WhatWhat would
would be be
recorded
recorded as as the
the cost
cost of of job
job WR53?
WR53?
a.
a. $200.
$200. Pred.
Pred.ovhd.
ovhd.rate
rate $760,000/19,000hours
$760,000/19,000hours $40
$40
b.
b. $350.
$350. Direct
Directmaterials
materials $200
$200
c.
c. $750.
$750. Direct
Directlabor
labor $15
$15 xx 10
10hours
hours $150
$150
Manufacturing
Manufacturingoverhead
overhead $40
$40 xx 10
10hours
hours $400
$400
d.
d. $730.
$730. Total
Totalcost
cost $750
$750

31
Quick Check 9
IfIf overhead
overhead contains
contains fixed
fixed costs,
costs, what
what will
will
happen
happen to to the
the predetermined
predetermined overhead
overhead rate
rate
ifif lower
lower unit
unit sales
sales volume
volume isis expected?
expected?
a.
a. The
The predetermined
predetermined overhead
overhead rate
rate will
will
likely
likely increase.
increase.
b.
b. The
The predetermined
predetermined overhead
overhead rate
rate would
would
be
be unaffected.
unaffected.
c.
c. The
The predetermined
predetermined overhead
overhead rate
rate will
will
likely
likely decrease.
decrease.

32
Quick Check 9

IfIf overhead
overhead contains
contains fixed
fixed costs,
costs, what
what will
will
happen
happen to to product
product costs
costs computed
computed by by the
the
accounting
accounting system
system ifif lower
lower unit
unit sales
sales
volume
volume is is expected?
expected?
a.
a. Product
Product costs
costs will
will likely
likely increase.
increase.
b.
b. Product
Product costs
costs would
would be be unaffected.
unaffected.
c.
c. Product
Product costs
costs will
will likely
likely decrease.
decrease.

33
Quick Check 9

If selling prices increase, what will happen to


unit sales volume?
a. Unit sales volume will likely increase.
b. Unit sales volume would be unaffected.
c. Unit sales volume will likely decrease.

34
Job-Order Costing
Document Flow Summary

Lets summarize
the document flow
in a job-order
costing system.

35
Job-Order Costing
Document Flow Summary
Materials
Materialsused
used
may
maybe
beeither
either Direct Job
JobCost
Cost
direct
director
or materials Sheets
Sheets
indirect.
indirect.

Materials
Materials
Requisition
Requisition

Manufacturing
Manufacturing
Indirect
Overhead
Overhead
materials
Account
Account

36
Job-Order Costing
Document Flow Summary
An
Anemployees
employees
time
timemay
maybebeeither
either Direct Job
JobCost
Cost
direct
director
orindirect.
indirect. Labor Sheets
Sheets

Employee
EmployeeTime
Time
Ticket
Ticket

Manufacturing
Manufacturing
Indirect
Overhead
Overhead
Labor
Account
Account

37
Job-Order Costing
Document Flow Summary

Employee
Employee Indirect
Time
TimeTicket
Ticket Labor

Other
Other Manufacturing
Manufacturing Applied Job
JobCost
Cost
Actual
ActualOH
OH Overhead
Overhead Overhead Sheets
Sheets
Charges
Charges Account
Account

Materials
Materials Indirect
Requisition
Requisition Material
38
Job-Order System Cost Flows

Lets examine the


cost flows in a
job-order costing
system..

39
Job-Order System Cost Flows

Raw Materials Work in Process


zMaterial zDirect (Job Cost Sheet)
Purchases Materials zDirect
zIndirect Materials
Materials

Mfg. Overhead
Actual Applied
zIndirect

Materials

40
Job-Order System Cost Flows

Next lets add


labor costs &
applied
manufacturing
overhead.

41
Job-Order System Cost Flows
Salaries & Wages Work in Process
Payable (Job Cost Sheet)
zDirect zDirect
Labor Materials
zIndirect zDirect
Labor Labor
zOverhead

Mfg. Overhead Applied


Actual Applied IfIfactual
actual&&applied
applied
zIndirect zOverhead manufacturing
manufacturingoverhead
overhead
Materials Applied to are
arenot notequal,
equal,aayear-end
year-end
zIndirect Work in adjustment
adjustmentis isrequired.
required.
Labor Process
42
Job-Order System Cost Flows

Now lets
complete the
goods & sell them.
Still with me?

43
Job-Order System Cost Flows
Work in Process Finished Goods
(Job Cost Sheet)
zDirect Cost of
z Cost of
z

Materials Cost of
z Goods Goods
Goods Mfd. Sold
zDirect
Mfd.
Labor
zOverhead

Applied Cost of Goods Sold


Cost of
z

Goods
Sold

44
Job-Order System Cost Flows

Lets return to PearCo


& see what we will do
if actual & applied
overhead are not
equal.

45
Overhead Application Example
PearCos
PearCos actual
actual overhead
overhead forfor the
the year
year was
was
$650,000
$650,000 forfor aa total
total of
of 170,000
170,000 direct
direct labor
labor
hours.
hours.
PearCo has overapplied
How
How much
much total
total overhead
overhead was
was applied
applied to
to PearCos
PearCos
overhead for the year
jobs
jobs during
during the
the year?
year? Use
Use PearCos
PearCos
by $30,000. What will
predetermined
predetermined overhead
overhead rate
rate of
of $4.00
$4.00 per
per direct
direct
PearCo do?
labor
labor hour.
hour.
SOLUTION
Applied Overhead = POHR Actual Direct Labor Hours
Applied Overhead = $4.00 per DLH 170,000 DLH = $680,000

46
Overapplied & Underapplied
Manufacturing Overhead
PearCos Method

$30,000 $30,000 may be


may be allocated closed directly to
to these accounts. cost of goods sold.
OR
Work in Finished
Process Goods

Cost of Cost of
Goods Sold Goods Sold

47
Overapplied & Underapplied
Manufacturing Overhead

PearCos Cost PearCos


of Goods Sold Mfg. Overhead
Unadjusted Actual Overhead
Balance overhead Applied
costs to jobs
$30,000
$650,000 $680,000
Adjusted $30,000 $30,000
Balance overapplied

48
Quick Check 9

What
What effect
effect will
will the
the overapplied
overapplied overhead
overhead
have
have on
on PearCos
PearCos cost
cost of
of goods
goods sold?
sold?
a.
a. Cost
Cost of
of goods
goods sold
sold will
will increase.
increase.
b.
b. Cost
Cost of
of goods
goods sold
sold will
will be
be unaffected.
unaffected.
c.
c. Cost
Cost of
of goods
goods sold
sold will
will decrease.
decrease.

49
Quick Check 9

What
What effect
effect will
will the
the overapplied
overapplied overhead
overhead
have
have on
on PearCos
PearCos net net operating
operating income?
income?
a.
a. Net
Net operating
operating income
income will
will increase.
increase.
b.
b. Net
Net operating
operating income
income will
will be
be unaffected.
unaffected.
c.
c. Net
Net operating
operating income
income will
will decrease.
decrease.

50
Overapplied & Underapplied
Manufacturing Overhead - Summary
PearCos
Method
Alternative 1 Alternative 2
If Manufacturing Close to Cost
Overhead is . . . of Goods Sold Allocation

UNDERAPPLIED INCREASE INCREASE


Cost of Goods Sold Work in Process
(Applied OH is less Finished Goods
than actual OH) Cost of Goods Sold

OVERAPPLIED DECREASE DECREASE


Cost of Goods Sold Work in Process
(Applied OH is greater Finished Goods
than actual OH) Cost of Goods Sold

51
Quick Check 9
Tiger,
Tiger,Inc.
Inc.had
hadactual
actualmanufacturing
manufacturingoverhead
overheadcosts
costsof
of
$1,210,000
$1,210,000&&aapredetermined
predeterminedoverhead
overheadrate
rateof
of$4.00
$4.00
per
permachine
machinehour.
hour. Tiger,
Tiger,Inc.
Inc.worked
worked290,000
290,000
machine
machinehours
hoursduring
duringthe
theperiod.
period. Tigers
Tigers
manufacturing
manufacturingoverhead
overheadis is
Overhead
OverheadApplied
Applied
a.
a. $50,000
$50,000overapplied.
overapplied. $4.00
$4.00per
perhour
hour290,000
290,000hours
hours
b.
b. $50,000
$50,000underapplied.
underapplied. == $1,160,000
$1,160,000
c.
c. $60,000
$60,000overapplied.
overapplied. Underapplied
UnderappliedOverhead
Overhead
$1,210,000
$1,210,000--$1,160,000
$1,160,000
d.
d. $60,000 underapplied.
$60,000 underapplied. = $50,000
= $50,000

52
Job-Order Costing Typical
Accounting Entries

Lets look at
summary journal
entries for a job-
order costing
system.

53
Cost Flows Material Purchases
Raw material purchases are recorded in an
inventory account.

GENERAL JOURNAL Page 3


Post.
Date Description Ref. Debit Credit
Raw Materials XXXXX
Accounts Payable XXXXX

54
Cost Flows Material Usage
Direct materials issued to a job increase Work in
Process & decrease Raw Materials. Indirect
materials used are charged to Manufacturing
Overhead & also decrease Raw Materials.

GENERAL JOURNAL Page 3


Post.
Date Description Ref. Debit Credit
Work in Process XXXXX
Manufacturing Overhead XXXXX
Raw Materials XXXXX

55
Cost Flows Labor

The cost of direct labor incurred increases Work


in Process & the cost of indirect labor increases
Manufacturing Overhead.

GENERAL JOURNAL Page 3


Post.
Date Description Ref. Debit Credit
Work in Process XXXXX
Manufacturing Overhead XXXXX
Salaries and Wages Payable XXXXX

56
Cost Flows Actual Overhead
In addition to indirect materials & indirect labor,
other manufacturing overhead costs are charged
to the Manufacturing Overhead account as they
are incurred.

GENERAL JOURNAL Page 3


Post.
Date Description Ref. Debit Credit
Manufacturing Overhead XXXXX
Accounts Payable XXXXX
Property Taxes Payable XXXXX
Prepaid Insurance XXXXX
Accumulated Depreciation XXXXX

57
Cost Flows Overhead Applied

Work in Process is increased when


Manufacturing Overhead is applied to jobs.

GENERAL JOURNAL Page 3


Post.
Date Description Ref. Debit Credit
Work in Process XXXXX
Manufacturing Overhead XXXXX

58
Cost Flows Period Expenses

Nonmanufacturing costs (period expenses)


are charged to expense as they are incurred.

GENERAL JOURNAL Page 3


Post.
Date Description Ref. Debit Credit
Salaries Expense XXXXX
Salaries and Wages Payable XXXXX

Advertising Expense XXXXX


Accounts Payable XXXXX
59
Cost Flows Cost of Goods
Manufactured
As jobs are completed, the Cost of Goods
Manufactured is transferred to Finished
Goods from Work in Process.

GENERAL JOURNAL Page 3


Post.
Date Description Ref. Debit Credit
Finished Goods XXXXX
Work in Process XXXXX

60
Cost Flows Sales
When finished goods are sold, two entries
are required: (1) to record the sale; & (2) to
record COGS & reduce Finished Goods.

GENERAL JOURNAL Page 3


Post.
Date Description Ref. Debit Credit
Accounts Receivable XXXXX
Sales XXXXX

Cost of Goods Sold XXXXX


Finished Goods XXXXX

61
Appendix 3a
The Predetermined
Overhead Rate &
Capacity

62
Quick Check 9

Crest
CrestWinery
WineryininWoodinville
Woodinville leases
leasesan anautomatic
automatic
corking
corkingmachine
machineforfor$100,000
$100,000per peryear.
year.IfIfrun
runatatfull
full
capacity,
capacity,ititcan
cancork
cork50,000
50,000cases
casesof ofwine
wineper peryear.
year.
The
Thecompany
companyhas hasestimated
estimated40,000
40,000cases casesof ofwine
wine
will
willbebeproduced
produced&&sold
soldnext
nextyear.
year.What Whatis isthe
the
predetermined
predeterminedoverhead
overheadrate
rateififititis
isbased
basedon onthe
the
estimated
estimated number
number of of cases
casesofofwine?
wine?
a.
a.$2.00
$2.00per
percase.
case.
b.
b.$2.50
$2.50per
percase.
case.
c.
c.$4.00
$4.00per
percase.
case.

63
Quick Check 9

Crest
CrestWinery
WineryininWoodinville
Woodinville leases
leasesan anautomatic
automatic
corking
corkingmachine
machineforfor$100,000
$100,000per peryear.
year.IfIfrun
runatatfull
full
capacity,
capacity,ititcan
cancork
cork50,000
50,000cases
casesof ofwine
wineper peryear.
year.
The
Thecompany
companyhas hasestimated
estimated40,000
40,000cases casesof ofwine
wine
will
willbebeproduced
produced&&sold
soldnext
nextyear.
year.What Whatis isthe
the
predetermined
predeterminedoverhead
overheadrate
rateififititis
isbased
basedon onthe
the
number
numberof ofcases
casesofofwine
wineat
atcapacity?
capacity?
a.
a.$2.00
$2.00per
percase.
case.
b.
b.$2.50
$2.50per
percase.
case.
c.
c.$4.00
$4.00per
percase.
case.

64
Quick Check 9

Crest
CrestWinery
WineryininWoodinville
Woodinville leases
leasesan anautomatic
automatic
corking
corkingmachine
machineforfor$100,000
$100,000per peryear.
year.IfIfrun
runatatfull
full
capacity,
capacity,ititcan
cancork
cork50,000
50,000cases
casesof ofwine
wineper peryear.
year.
The
Thecompany
companyhas hasestimated
estimated25,000
25,000 casescasesof ofwine
wine
will
willbebeproduced
produced&&sold
soldnext
nextyear.
year.What Whatis isthe
the
predetermined
predeterminedoverhead
overheadrate
rateififititis
isbased
basedon onthe
the
estimated
estimated number
number of of cases
casesofofwine?
wine?
a.
a.$2.00
$2.00per
percase.
case.
b.
b.$2.50
$2.50per
percase.
case.
c.
c.$4.00
$4.00per
percase.
case.

65
Quick Check 9

Crest
CrestWinery
WineryininWoodinville
Woodinville leases
leasesan anautomatic
automatic
corking
corkingmachine
machineforfor$100,000
$100,000per peryear.
year.IfIfrun
runatatfull
full
capacity,
capacity,ititcan
cancork
cork50,000
50,000cases
casesof ofwine
wineper peryear.
year.
The
Thecompany
companyhas hasestimated
estimated25,000
25,000 casescasesof ofwine
wine
will
willbebeproduced
produced&&sold
soldnext
nextyear.
year.What Whatis isthe
the
predetermined
predeterminedoverhead
overheadrate
rateififititis
isbased
basedon onthe
the
number
numberof ofcases
casesofofwine
wineat
atcapacity?
capacity?
a.
a.$2.00
$2.00per
percase.
case.
b.
b.$2.50
$2.50per
percase.
case.
c.
c.$4.00
$4.00per
percase.
case.

66
Quick Check 9

When
Whencapacity
capacityisis used
used in
inthe
thedenominator
denominatorin inthe
the
predetermined
predeterminedrate,rate,what
whathappens
happenstotothe
the
predetermined
predeterminedoverhead
overheadrate
rateas
asestimated
estimatedactivity
activity
decreases?
decreases?
a.
a.The
Thepredetermined
predeterminedoverhead
overheadrate
rategoes
goesup upwhen
when
activity
activitygoes
goesdown.
down.
b.
b.The
Thepredetermined
predeterminedoverhead
overheadrate
ratestays
staysthe
the
same;
same;ititis
isnot
notaffected
affectedbybychanges
changesin inactivity.
activity.
c.
c.The
Thepredetermined
predeterminedoverhead
overheadrate
rategoes
goesdown
down
when
whenactivity
activitygoes
goesdown.
down.

67
Quick Check 9
When
Whenestimated
estimated activity
activity is
is used
used in
in the
the denominator
denominator
in
inthe
thepredetermined
predeterminedrate,
rate,what
whathappens
happensto tothe
the
predetermined
predeterminedoverhead
overheadrate rateas
asestimated
estimatedactivity
activity
decreases?
decreases?
a.The
a.Thepredetermined
predeterminedoverhead
overheadrate rategoes
goesupupwhen
when
activity
activitygoes
goesdown.
down.
b.The
b.Thepredetermined
predeterminedoverhead
overheadrate ratestays
staysthe
thesame;
same;
ititis
isnot
notaffected
affectedbybychanges
changesin inactivity.
activity.
c.The
c.Thepredetermined
predeterminedoverhead
overheadrate rategoes
goesdown
down
when
whenactivity
activitygoes
goesdown.
down.

68
Basing the rate on capacity

Actual volume 40,000 cases


Selling price $40.00 per case
Variable production cost $24.00 per case
Fixed manufacturing overhead $100,000 per year
Capacity 50,000 cases
Predetermined overhead rate $2.00 per case
Fixed selling and admin. expense $500,000 per year

Revenue $ 1,600,000
Cost of goods sold 1,040,000
Gross margin 560,000
Cost of idle capacity 20,000
Selling and admin. expense 500,000
Net operating income $ 40,000
69
Basing the rate on expected
volume
Actual volume 40,000 cases
Selling price $40.00 per case
Variable production cost $24.00 per case
Fixed manufacturing overhead $100,000 per year
Expected volume 40,000 cases
Predetermined overhead rate $2.50 per case
Fixed selling and admin. expense $500,000 per year

Revenue $ 1,600,000
Cost of goods sold 1,060,000
Gross margin 540,000
Cost of idle capacity -
Selling and admin. expense 500,000
Net operating income $ 40,000
70
71

Vous aimerez peut-être aussi