Cost Accounting Cycle

14-1
 The Cost Accounting Cycle

Bryan Company produces

a plywood countertop
backing. Bryan had no
beginning inventories of
work in process.

14-2
 The Cost Accounting Cycle

Purchase of materials: Bryan bought 1,400,000 feet

of wood at $0.095 per foot.

1. Materials Inventory $133,000

Cash (or Accounts Payable) $133,000

14-3
 The Cost Accounting Cycle

Bryan used 1,300,000 feet of wood.

2. Work in Process $123,500

Materials Inventory $123,500

14-4
 The Cost Accounting Cycle

Direct laborers earned $344,400 for 41,000 hours of

work at $8.40 per hour.

3a. Payroll $344,400

Accrued Payroll $344,400
3b. Accrued Payroll $344,400
Cash $344,400
3b. Work in Process Inventory $344,400
Payroll $344,400
14-5
 The Cost Accounting Cycle

Bryan incurred various overhead costs.

4. Variable Manufacturing Overhead $251,300

Fixed Manufacturing Overhead 461,000
Cash, (Accrued
Expenses, Accumulated
Depreciation) $712,300

14-6
 The Cost Accounting Cycle

Bryan finished 40,000 square yards of plywood.

Another 2,000 square yards were still in process at
the end of 20X5.
5. Work in Process Inventory $251,300
Variable Mfg. Overhead $251,300
Work in Process Inventory $461,000
Fixed Mfg. Overhead $461,000

14-7
 The Cost Accounting Cycle

Materials $ 123,500
Direct labor 344,400
Variable overhead 251,300
Fixed overhead 461,000
Total $1,180,200
Divided by equivalent production 42,000
Equals cost per unit $ 28.10

14-8
 The Cost Accounting Cycle

The $28.10 cost per unit is used to transfer to

Finished Goods Inventory (40,000 units).

6. Finished Goods Inventory $1,124,000

Work in Process Inventory $1,124,000

14-9
 The Cost Accounting Cycle

Bryan sold 35,000 square yards that cost

$28.10 at $40 each.

7a. Cash or Accounts

Receivable $1,400,000
Sales $1,400,000
7b. Cost of Goods Sold $983,500
Finished Goods Inventory $983,500

14-10
 The Cost Accounting Cycle

The company incurred $340,000 in selling

and administrative expenses.

8. Selling and Administrative

Expenses $340,000
Cash (Accrued Expenses) $340,000

14-11
 The Cost Accounting Cycle
Work in Process Inventory
(2) $ 123,500
(3b) 344,400
(5) 251,300 $1,124,000 (6)
(5) 461,000
1,180,200 $1,124,000
Bal. $ 56,200

14-12
 The Cost Accounting Cycle
Finished Goods Inventory
(6) $1,124,000
$983,500 (7b)
Bal. $ 140,500

Cost of Goods Sold

(7b) $983,500

14-13
 The Cost Accounting Cycle
Income Statement for Bryan Company, Actual Process Costing
Sales $1,400,000
Cost of goods sold 983,500
Gross profit $ 416,500
Selling and administrative expenses
340,000
Income $ 76,500

14-14