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    HO.03 - Cost Accounting Cycle

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    Chrizelyne Mercado
    The document discusses cost accounting concepts including manufacturing inventory accounts, elements of manufacturing cost, and a statement of cost of goods manufactured and sold. It then provides an illustration of applying these concepts to a company that manufactures and sells dining tables and chairs. The illustration details materials purchases, manufacturing costs, overhead allocations, production quantities, and sales for the period.

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    HO.03 - Cost Accounting Cycle

    Uploaded by

    Chrizelyne Mercado
    105 views11 pages
    The document discusses cost accounting concepts including manufacturing inventory accounts, elements of manufacturing cost, and a statement of cost of goods manufactured and sold. It then provides an illustration of applying these concepts to a company that manufactures and sells dining tables and chairs. The illustration details materials purchases, manufacturing costs, overhead allocations, production quantities, and sales for the period.

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    Cost-Accounting-Cycle

    Original Title

    HO.03_Cost-Accounting-Cycle

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    The document discusses cost accounting concepts including manufacturing inventory accounts, elements of manufacturing cost, and a statement of cost of goods manufactured and sold. It then provides an illustration of applying these concepts to a company that manufactures and sells dining tables and chairs. The illustration details materials purchases, manufacturing costs, overhead allocations, production quantities, and sales for the period.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    105 views11 pages

    HO.03 - Cost Accounting Cycle

    Uploaded by

    Chrizelyne Mercado
    The document discusses cost accounting concepts including manufacturing inventory accounts, elements of manufacturing cost, and a statement of cost of goods manufactured and sold. It then provides an illustration of applying these concepts to a company that manufactures and sells dining tables and chairs. The illustration details materials purchases, manufacturing costs, overhead allocations, production quantities, and sales for the period.

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    © All Rights Reserved
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    COST ACCOUNTING

    CYCLE
    MANUFACTURING INVENTORY ACCOUNTS

    • Materials Inventory
    • Work in Process Inventory
    • Finished goods inventory
    ELEMENTS OF MANUFACTURING COST

    • Direct materials
    • Direct labor
    • Overhead
    Statement of Cost of Goods Manufactured and Sold
    Direct Materials
    Beginning Raw Materials Inventory xxx
    Add: Net Purchases of Raw Materials xxx
    Raw Materials Available for Use xxx
    Less: Ending Raw Materials Inventory xxx
    Materials Used in Production xxx
    Direct Labor xxx
    Manufacturing Overhead xxx
    Total Manufacturing Costs xxx
    Add: Beginning, Work in Process xxx
    Cost of Goods to be Manufactured xxx
    Less: Ending, Work in Process xxx
    Cost of Goods Manufactured xxx
    Add: Beginning, Finished Goods xxx
    Goods Available for Sales xxx
    Less: Ending, Finished Goods xxx
    Cost of Goods Sold xxx
    ILLUSTRATION

    • The Noeled Product company is a small newly organized company that


    manufactures dining tables and chairs. The company’s products are sold to
    jobbers or wholesale distributors, who in turn sell them to retailers. The
    basic steps in the company’s manufacturing process are as follows:
    • Lumber is cut to size for table tops, legs seats, arms and backs
    • The individual pieces of cut lumber are painted in various bright colors
    • The pieces are assembled into tables and chairs
    ILLUSTRATION

    • The beginning balance sheet for the company on January 1 of the current
    year is presented below:

    ASSET Liab.And Equity


    • Cash 80,000 • Liabilities 0
    • Building 750,000 • Capital stock 980,000
    • Machinery & Equip. 150,000
    ILLUSTRATION

    • Materials are purchased on account at a cost of P50,000.


    • During the month, direct materials costing P40,000 and indirect materials
    costing P1,900 are issued to the factory.
    • Total payroll for the month amounted to P36,000, consisting of P20,000
    earned by laborers working on the product; P7,000 for factory
    supervision and P9,000 for sales and admin employees.
    • The entry to record the distribution or classification would be.
    ILLUSTRATION

    • Depreciation expense for the building is 6% per year. The office occupies
    one-tenth of the total building and the factory operation is in the other
    ninety percent.The depreciation expense for one month is…
    • The depreciation expense for the machinery and equipment is 20% per
    year. All machinery and equipment is used in the factory for production
    purposes, so the depreciation is charged to Factory overhead control.
    • The cost of heat, light and power for the month was P3,000.
    ILLUSTRATION

    • Miscellaneous expenses for telephone, office supplies, travel and rental of


    office furniture and equipment totaled P1,500
    • Factory overhead is charged to production at 85% of direct labor cost.
    • Assume that all goods started in process have been finished and 1,000
    tables were produced during the month.
    ILLUSTRATION

    • Cost of materials, utilities, and selling and administrative expenses paid


    amounted to P34,000.
    • 800 tables are sold to jobbers at a net price of P86,240 on account.
    • Cash totaling P55,000 is collected on accounts receivable.

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