Manufacturing Accounting

1. ManufacturingAccounting Chapter 25

2. Preparing a cost of goods manufacturing schedule. Learning Objective 1

3. Learning Unit 25-1(Cost of Goods Manufactured) Manufacturing costs must be separated from all other selling and administrative costs. MANUFACTURING Raw material Direct labor Overhead ADMINISTRATIVE Management Sales personnel Administrative

4. Finished goods inventory WIP inventory Cost of goods sold Learning Unit 25-1(Cost of Goods Manufactured) Raw materials used Direct labor Manufacturing overhead

5. Learning Unit 25-1(Cost of Goods Manufactured) Merchandising Company Beginning merchandise inventory + Net purchases = Cost of merchandise available for sale – Ending merchandise inventory = Cost of goods sold

6. Learning Unit 25-1(Cost of Goods Manufactured) Manufacturing Company Beginning finished goods inventory + Cost of goods manufactured = Cost of goods available for sale – Ending finished goods inventory = Cost of goods sold

7. Learning Unit 25-1(Cost of Goods Manufactured) Direct materials: Beginning inventory + Net purchases – Ending inventory = Direct material cost Work-in-process inventory: Beginning inventory + Direct material cost + Direct labor + Manufacturing overhead = Total manufacturing costs – Ending inventory = Cost of goods manufactured

8. Journalizing transactions recording the manufacturing process. Learning Objective 2

9. Learning Unit 25-2 (The Flow of Manufacturing Costs) Source documents provide proof of transactions. Receiving reports acknowledge receipt of goods. Material requisitions are requests for materials from storage areas.

10. Learning Unit 25-2 (The Flow of Manufacturing Costs) RECEIVING REPORT Received from: Receiving Report No. 1031 Adams Company Date: 6/20x8 Quantity 50 Gals. Description Paint Unit Price $6.50/Gal. Total Price $325.00 • Revilo Manufacturing Co. • Inspected By MS • Received By BJ

11. Learning Unit 25-2 (The Flow of Manufacturing Costs) MATERIAL REQUISITION Department Requisition No. 3648 Finishing Date: 6/20x8 Quantity 8 Gals. Description White Paint Unit Price $6.50 Total Price $52.00 • Revilo Manufacturing Co. • Inspected By CY • Received By JA

12. Learning Unit 25-2 (The Flow of Manufacturing Costs) Clock card Lot tickets Labor distribution report Bills of lading

13. Learning Unit 25-2 (The Flow of Manufacturing Costs) Flow charts illustrate the movement of material, labor, and overhead through the operation. Overhead – Control is debited as costs are incurred. Overhead – Applied is credited when overhead is applied to products.

14. Learning Unit 25-2 (The Flow of Manufacturing Costs) Debit Work-in-Process Inventory Credit Raw Material Inventory Debit Work-in-Process Inventory Credit Payroll Debit Overhead – Control Credit Supplies Inventory

15. Learning Unit 25-2 (The Flow of Manufacturing Costs) Debit Overhead – Control Credit Payroll Debit Overhead – Control Credit Supervision Salaries Credit Rent Expense Credit Depreciation Expense Credit Electricity Expense

16. Learning Unit 25-2 (The Flow of Manufacturing Costs) Debit Work-in-Process Inventory Credit Overhead – Applied Debit Finished Goods Inventory Credit Work-in-Process Inventory Debit Cost of Goods Sold Credit Finished Goods Inventory

17. Preparing a worksheet for a manufacturing company. Learning Objective 3

18. Learning Unit 25-3(Worksheet) The worksheet for a manufacturing company is used to produce the following: Statement of cost of goods manufactured Income statement Statement of retained earnings Balance sheet

19. Statement of Cost of Goods Manufactured Income Statement Learning Unit 25-3(Worksheet) Trial Balance Adjustments Cost of Goods Manufactured Income Statement Balance Sheet Balance Sheet Statement of Retained Earnings

20. End of Chapter 25