Product Costing and Cost Accumulation in a Batch Production Environment
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Transcript of Product Costing and Cost Accumulation in a Batch Production Environment
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Product and Service Costing1-*Financial AccountingProduct costs are used to value inventory and to compute cost ofgoods sold. Managerial Accounting and Cost ManagementProduct costs are used for planning, control, directing, and management decision making.
Our focus changes from financial statement costs to operations:Financial Accounting Products costs are used to value inventory and to compute cost of goods sold.Managerial Accounting and Cost Management Product costs are used for planning, control, directing and management decision making.
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Learning Objective2
Learning Objective 2. Diagram and explain the flow of costs through the manufacturing accounts used in product costing.
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Flow of Costs in Manufacturing Firm1-*
Sheet1
Work-in-Process InventoryFinished Goods Inventory
Direct material costProduct cost transferred
Direct labor cost
Manufacturing overheadwhen product is finished
Cost of Goods SoldIncome Summary
Expense closed into
Income Summary at end
of accounting period
Sheet2
Sheet3
Manufacturing costs consist of direct material, direct labor, and manufacturing overhead. As production takes place, all manufacturing costs are added to the Work-in-Process Inventory account with a debit. As soon as products are completed, their product costs are transferred from Work-in-Process Inventory to Finished-Goods Inventory with a credit to Work in Process and a debit to Finished Goods. During the time period when products are sold, the product cost of the inventory sold is removed from Finished Goods and added to Cost of Goods Sold, which is an expense of the period in which the sale occurred. A credit to Finished Goods and a debit to Cost of Goods Sold completes this step. Cost of Goods Sold is closed into the Income Summary account at the end of the accounting period, along with all other expenses and revenues of the period. (LO2)
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Learning Objective3
Learning Objective 3. Distinguish between job-order costing and process costing.
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Types of Product-Costing Systems1-*ProcessCostingJob-OrderCosting
Job-order costing is used by companies with job-shop operations or batch-production operations. In a job-shop environment, products are manufactured in very low volumes or one at a time. In job-order costing, each distinct batch of production is called a job or job order. The cost-accounting procedures are designed to assign costs to each job. Then the costs assigned to each job are averaged over the units of production in the job to obtain an average cost per unit. (LO3)
In a batch-production environment, multiple products are produced in batches of relatively small quantity. Examples include furniture manufacture, printing, agricultural equipment, and pleasure boat production.
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Types of Product-Costing Systems1-*
Typical job-order cost applications: Special-order printing Building construction Also used in service industry Hospitals Law firms
ProcessCostingJob-OrderCosting
Examples of a job-shop environment include feature film production, custom house building, ship building, aircraft manufacture, and custom machining operations. Job-order costing is also used in the service industry. (LO3)
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Types of Product-Costing Systems1-*ProcessCostingJob-OrderCosting
Process costing is used by companies that produce large numbers of identical units. A process-costing system accumulates all the production costs for a large number of units of output, and then these costs are averaged over all of the units. (LO3)
Firms that produce chemicals, microchips, gasoline, beer, fertilizer, textiles, processed food, and electricity are among those using process costing. In these kinds of firms, there is no need to trace costs to specific batches of production, because the products in the different batches are identical. (LO3)
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Accumulating Costs in aJob-Order Costing System1-*The primary document for tracking the costs associated with a given job is the job-cost record.
Lets investigate using the AFB Company
In a job-order costing system, costs of direct material, direct labor, and manufacturing overhead are assigned to each production job. These costs comprise the inputs of the product-costing system. As costs are incurred, they are added to the Work-in-Process Inventory account in the ledger. To keep track of the manufacturing costs assigned to each job, a subsidiary ledger is maintained. The subsidiary ledger account assigned to each job is a document called a job-cost record. (LO3) Let look at the Aluminum Fishing Boat Company (AFB).
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Job-Order Cost Accounting1-*
Sheet1
Managerial AccountingFinancial Accounting
Users of InformationManagers, within the organization.Interested parties, outside the organization.
RegulationNot required and unregulated, since it is intended only for management.Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission.
Source of DataThe organization's basic accounting system, plus various other sources, such as rates of effective products manufactured, physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delaysAlmost exclusively drawn from the organization's basic accounting system, which accumulates financial information.
Nature of Reports and ProceduresReports often focus on subunits within the organization, such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events.Reports focus on the enterprise in its entirety. Based almost exclusively on historical transaction data.
Sheet2
One Production Department
Work-in-ProcessFinished Goods
InventoryInventoryCost of Goods Sold
Direct materialCost of goods completedCost of goods sold
Direct laborTwo Sequential Production Departments
Applied manufacturingand transferred toWork-in-Process InventoryWork-in-Process Inventory
overheadfinished goodsProduction Department AProduction Department B
Direct materialCost of goods completed in department A andCost of goods completed
Direct labor
Applied manufacturingtransferred toand transferred to
overheaddepartment Bfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Finished Goods InventoryCost of Goods Sold
Cost of goods sold
during current period
One Production Department
Work-in-Process InventoryFinished Goods Inventory
Direct materialCost of goods completedCost of goods completed
Direct labor
Applied manufacturingand transferred toand transferred to
overheadFinished goodsfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Sheet3
Cost of goods completed and transferred during MarchCost of goods completed and transferred during MarchCost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31
Direct Material:Direct Material:Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,000
Convserion:Convserion:Convserion:
5,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300
Total costs accounted for340,700Total costs accounted for340,700Total costs accounted for340,700
Cost of goods completed and transferred out of Stitching Dept. during March
30,000 units x $12.228 per equivalent unit366,840
Costs remaining in work-in-process in Stitching Dept. on March 31
Direct Material:
20,000 equivalent units x $7.028 per equivalent unit140,560
Convserion:
18,000 equivalent units x $4.95 per equivalent unit89,100
Total cost of March 31 work-in-process229,660
Total costs accounted for596,500
Sheet4
Conversion
PhysicalPhysicalPercentageTransferredDirect
UnitsUnitsCompletionInMaterialConversion
Work in process, March 110,000Work in process, March 110,00020%
Units transferred in during March40,000Units transferred in during March40,000
Total units to account for50,000Total units to account for50,000
Units completed and transferred out during March30,000Units completed and transferred out during March30,00030,00030,00030,000
Work in process, March 3120,000Work in process, March 3120,00090%20,000-0-$ 18,000
Total units accounted for50,000Total units accounted for50,000
Total equivalent units50,00030,00048,000
Physical
Units
Work in process, March 110,000
Units transferred in during March40,000
Total units to account for50,000
Units completed and transferred out during March30,000
Work in process, March 3120,000
Total units accounted for50,000
Sheet5
Work-in-Process Inventory:Work-in-Process Inventory:
TransferredDirectCutting DepartmentStitching Department
InMaterialConversionTotalDirect materialCost of goodsTransferred-
completed andin costs
Work in Process, March 1$ 61,000-0-$ 7,600$ 68,600Conversion:transferred out
Costs incurred during March290,4007,500230,000527,900Direct laborDirect material
Total costs to account for$ 351,400$ 7,500$ 237,600$ 596,500Manufacturing
overheadConversion:
Equivalent units50,00030,00048,000Direct labor
Cost per equivalent unit$ 7.028$ 0.25$ 4.95$ 12.228Manufacturing
overhead
$351,400$7,500$237,600$ 7.028
50,00030,00048,000+ $.25
+ $4.95
Sheet6
MVP SPORTS EQUIPMENT COMPANY
Production Report: Cutting Department
Percentage of
CompletionEquivalent Units
Physicalwith Respect toDirect
UnitsConversionMaterialConversion
Work in process, March 120,00010%
Units started during March30,000
Total units to account for50,000
Units completed and transferred40,000100%40,00040,000
Work in process, March 3110,00050%10,0005,000
Total units accounted for50,000
Total equivalent units50,00045,000
Direct
MaterialConversionTotal
Work in Process, March 1$ 50,000$ 7,200$ 57,200
Costs incurred during March90,000193,500283,500
Total costs to account for$ 140,000$ 200,700$ 340,700
Equivalent units50,00045,000
Cost per equivalent unit$ 2.80$ 4.46$ 7.26
Cost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,000
Conversion:
5,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300
Total costs accounted for340,700
Sheet7
JOB-COST RECORD
Job NumberF16Description80 deluxe alum. fishing boats
Date StartedNov. 1, 20x1Date CompletedNov. 22, 20x1
Number of Units Completed80
Direct Material
DateRequisition NumberQuantityUnit PriceCost
Direct Labor
DateRequisition NumberQuantityUnit PriceCost
Manufacturing Overhead
DateRequisition NumberQuantityUnit PriceCost
Cost Summary
Cost ItemAmount
Total direct material
Total direct labor
Total manufacturing overhead
Total cost
Unit cost
Shipping Summary
DateUnits ShippedUnits Remaining in InventoryCost Balance
MBD000FE9F8.xls
Sheet1
Cost of goods completed and transferred during March
40,000 units $7.26 per equivalent unit$ 290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units $2.80 per equivalent unit$ 28,000
Conversion:
5,000 equivalent units $4.46 per equivalent unit22,300
Total cost of March 31 work in process50,300
Total costs accounted for$ 340,700
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Three major sections on the job-cost record are used to accumulate the costs of direct material, direct labor, and manufacturing overhead assigned to the job. The other two sections are used to record the total cost and average unit cost for the job, and to keep track of units shipped to customers. A job-cost record may be a paper document upon which the entries for direct material, direct labor, and manufacturing overhead are written. Increasingly, it is a computer file where entries are made using a computer. (LO3)
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Job-Order Cost Accounting1-*
Sheet1
Managerial AccountingFinancial Accounting
Users of InformationManagers, within the organization.Interested parties, outside the organization.
RegulationNot required and unregulated, since it is intended only for management.Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission.
Source of DataThe organization's basic accounting system, plus various other sources, such as rates of effective products manufactured, physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delaysAlmost exclusively drawn from the organization's basic accounting system, which accumulates financial information.
Nature of Reports and ProceduresReports often focus on subunits within the organization, such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events.Reports focus on the enterprise in its entirety. Based almost exclusively on historical transaction data.
Sheet2
One Production Department
Work-in-ProcessFinished Goods
InventoryInventoryCost of Goods Sold
Direct materialCost of goods completedCost of goods sold
Direct laborTwo Sequential Production Departments
Applied manufacturingand transferred toWork-in-Process InventoryWork-in-Process Inventory
overheadfinished goodsProduction Department AProduction Department B
Direct materialCost of goods completed in department A andCost of goods completed
Direct labor
Applied manufacturingtransferred toand transferred to
overheaddepartment Bfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Finished Goods InventoryCost of Goods Sold
Cost of goods sold
during current period
One Production Department
Work-in-Process InventoryFinished Goods Inventory
Direct materialCost of goods completedCost of goods completed
Direct labor
Applied manufacturingand transferred toand transferred to
overheadFinished goodsfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Sheet3
Cost of goods completed and transferred during MarchCost of goods completed and transferred during MarchCost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31
Direct Material:Direct Material:Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,000
Convserion:Convserion:Convserion:
5,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300
Total costs accounted for340,700Total costs accounted for340,700Total costs accounted for340,700
Cost of goods completed and transferred out of Stitching Dept. during March
30,000 units x $12.228 per equivalent unit366,840
Costs remaining in work-in-process in Stitching Dept. on March 31
Direct Material:
20,000 equivalent units x $7.028 per equivalent unit140,560
Convserion:
18,000 equivalent units x $4.95 per equivalent unit89,100
Total cost of March 31 work-in-process229,660
Total costs accounted for596,500
Sheet4
Conversion
PhysicalPhysicalPercentageTransferredDirect
UnitsUnitsCompletionInMaterialConversion
Work in process, March 110,000Work in process, March 110,00020%
Units transferred in during March40,000Units transferred in during March40,000
Total units to account for50,000Total units to account for50,000
Units completed and transferred out during March30,000Units completed and transferred out during March30,00030,00030,00030,000
Work in process, March 3120,000Work in process, March 3120,00090%20,000-0-$ 18,000
Total units accounted for50,000Total units accounted for50,000
Total equivalent units50,00030,00048,000
Physical
Units
Work in process, March 110,000
Units transferred in during March40,000
Total units to account for50,000
Units completed and transferred out during March30,000
Work in process, March 3120,000
Total units accounted for50,000
Sheet5
Work-in-Process Inventory:Work-in-Process Inventory:
TransferredDirectCutting DepartmentStitching Department
InMaterialConversionTotalDirect materialCost of goodsTransferred-
completed andin costs
Work in Process, March 1$ 61,000-0-$ 7,600$ 68,600Conversion:transferred out
Costs incurred during March290,4007,500230,000527,900Direct laborDirect material
Total costs to account for$ 351,400$ 7,500$ 237,600$ 596,500Manufacturing
overheadConversion:
Equivalent units50,00030,00048,000Direct labor
Cost per equivalent unit$ 7.028$ 0.25$ 4.95$ 12.228Manufacturing
overhead
$351,400$7,500$237,600$ 7.028
50,00030,00048,000+ $.25
+ $4.95
Sheet6
MVP SPORTS EQUIPMENT COMPANY
Production Report: Cutting Department
Percentage of
CompletionEquivalent Units
Physicalwith Respect toDirect
UnitsConversionMaterialConversion
Work in process, March 120,00010%
Units started during March30,000
Total units to account for50,000
Units completed and transferred40,000100%40,00040,000
Work in process, March 3110,00050%10,0005,000
Total units accounted for50,000
Total equivalent units50,00045,000
Direct
MaterialConversionTotal
Work in Process, March 1$ 50,000$ 7,200$ 57,200
Costs incurred during March90,000193,500283,500
Total costs to account for$ 140,000$ 200,700$ 340,700
Equivalent units50,00045,000
Cost per equivalent unit$ 2.80$ 4.46$ 7.26
Cost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,000
Conversion:
5,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300
Total costs accounted for340,700
Sheet7
JOB-COST RECORD
Job NumberF16Description80 deluxe alum. fishing boats
Date StartedNov. 1, 20x1Date CompletedNov. 22, 20x1
Number of Units Completed80
Direct Material
DateRequisition NumberQuantityUnit PriceCost
Direct Labor
DateRequisition NumberQuantityUnit PriceCost
Manufacturing Overhead
DateRequisition NumberQuantityUnit PriceCost
Cost Summary
Cost ItemAmount
Total direct material
Total direct labor
Total manufacturing overhead
Total cost
Unit cost
Shipping Summary
DateUnits ShippedUnits Remaining in InventoryCost Balance
MBD000FE9F8.xls
Sheet1
Cost of goods completed and transferred during March
40,000 units $7.26 per equivalent unit$ 290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units $2.80 per equivalent unit$ 28,000
Conversion:
5,000 equivalent units $4.46 per equivalent unit22,300
Total cost of March 31 work in process50,300
Total costs accounted for$ 340,700
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As raw materials are needed for the production process, they are transferred from the warehouse to the production department. To authorize the release of materials, the production department supervisor completes a material requisition form and presents it to the warehouse supervisor. (LO3)
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Job-Order Cost Accounting1-*Timothy Williams
Sheet1
RoseCo Materials Requisition Form
Requisition No. 352Date 11/1/x1
Job Number to Be Charged F16Dept. Painting
Department Supervisor Timothy Williams
ItemQuantityUnit CostAmount
Aluminum7,200 sq ft$ 2.50$ 18,000.00
Authorized
Signature
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A copy of the material requisition form goes to the cost accounting department. (LO3)
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Job-Order Cost Accounting1-*
Sheet1
Managerial AccountingFinancial Accounting
Users of InformationManagers, within the organization.Interested parties, outside the organization.
RegulationNot required and unregulated, since it is intended only for management.Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission.
Source of DataThe organization's basic accounting system, plus various other sources, such as rates of effective products manufactured, physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delaysAlmost exclusively drawn from the organization's basic accounting system, which accumulates financial information.
Nature of Reports and ProceduresReports often focus on subunits within the organization, such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events.Reports focus on the enterprise in its entirety. Based almost exclusively on historical transaction data.
Sheet2
One Production Department
Work-in-ProcessFinished Goods
InventoryInventoryCost of Goods Sold
Direct materialCost of goods completedCost of goods sold
Direct laborTwo Sequential Production Departments
Applied manufacturingand transferred toWork-in-Process InventoryWork-in-Process Inventory
overheadfinished goodsProduction Department AProduction Department B
Direct materialCost of goods completed in department A andCost of goods completed
Direct labor
Applied manufacturingtransferred toand transferred to
overheaddepartment Bfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Finished Goods InventoryCost of Goods Sold
Cost of goods sold
during current period
One Production Department
Work-in-Process InventoryFinished Goods Inventory
Direct materialCost of goods completedCost of goods completed
Direct labor
Applied manufacturingand transferred toand transferred to
overheadFinished goodsfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Sheet3
Cost of goods completed and transferred during MarchCost of goods completed and transferred during MarchCost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31
Direct Material:Direct Material:Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,000
Convserion:Convserion:Convserion:
5,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300
Total costs accounted for340,700Total costs accounted for340,700Total costs accounted for340,700
Cost of goods completed and transferred out of Stitching Dept. during March
30,000 units x $12.228 per equivalent unit366,840
Costs remaining in work-in-process in Stitching Dept. on March 31
Direct Material:
20,000 equivalent units x $7.028 per equivalent unit140,560
Convserion:
18,000 equivalent units x $4.95 per equivalent unit89,100
Total cost of March 31 work-in-process229,660
Total costs accounted for596,500
Sheet4
Conversion
PhysicalPhysicalPercentageTransferredDirect
UnitsUnitsCompletionInMaterialConversion
Work in process, March 110,000Work in process, March 110,00020%
Units transferred in during March40,000Units transferred in during March40,000
Total units to account for50,000Total units to account for50,000
Units completed and transferred out during March30,000Units completed and transferred out during March30,00030,00030,00030,000
Work in process, March 3120,000Work in process, March 3120,00090%20,000-0-$ 18,000
Total units accounted for50,000Total units accounted for50,000
Total equivalent units50,00030,00048,000
Physical
Units
Work in process, March 110,000
Units transferred in during March40,000
Total units to account for50,000
Units completed and transferred out during March30,000
Work in process, March 3120,000
Total units accounted for50,000
Sheet5
Work-in-Process Inventory:Work-in-Process Inventory:
TransferredDirectCutting DepartmentStitching Department
InMaterialConversionTotalDirect materialCost of goodsTransferred-
completed andin costs
Work in Process, March 1$ 61,000-0-$ 7,600$ 68,600Conversion:transferred out
Costs incurred during March290,4007,500230,000527,900Direct laborDirect material
Total costs to account for$ 351,400$ 7,500$ 237,600$ 596,500Manufacturing
overheadConversion:
Equivalent units50,00030,00048,000Direct labor
Cost per equivalent unit$ 7.028$ 0.25$ 4.95$ 12.228Manufacturing
overhead
$351,400$7,500$237,600$ 7.028
50,00030,00048,000+ $.25
+ $4.95
Sheet6
MVP SPORTS EQUIPMENT COMPANY
Production Report: Cutting Department
Percentage of
CompletionEquivalent Units
Physicalwith Respect toDirect
UnitsConversionMaterialConversion
Work in process, March 120,00010%
Units started during March30,000
Total units to account for50,000
Units completed and transferred40,000100%40,00040,000
Work in process, March 3110,00050%10,0005,000
Total units accounted for50,000
Total equivalent units50,00045,000
Direct
MaterialConversionTotal
Work in Process, March 1$ 50,000$ 7,200$ 57,200
Costs incurred during March90,000193,500283,500
Total costs to account for$ 140,000$ 200,700$ 340,700
Equivalent units50,00045,000
Cost per equivalent unit$ 2.80$ 4.46$ 7.26
Cost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,000
Conversion:
5,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300
Total costs accounted for340,700
Sheet7
JOB-COST RECORD
Job NumberF16Description80 deluxe alum. fishing boats
Date StartedNov. 1, 20x1Date CompletedNov. 22, 20x1
Number of Units Completed80
Direct Material
DateRequisition NumberQuantityUnit PriceCost
11/1/x13527,200 sq ft$2.50$18,000
Direct Labor
DateRequisition NumberQuantityUnit PriceCost
Manufacturing Overhead
DateRequisition NumberQuantityUnit PriceCost
Cost Summary
Cost ItemAmount
Total direct material$18,000
Total direct labor
Total manufacturing overhead
Total cost
Unit cost
Shipping Summary
DateUnits ShippedUnits Remaining in InventoryCost Balance
MBD000FE9F8.xls
Sheet1
Cost of goods completed and transferred during March
40,000 units $7.26 per equivalent unit$ 290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units $2.80 per equivalent unit$ 28,000
Conversion:
5,000 equivalent units $4.46 per equivalent unit22,300
Total cost of March 31 work in process50,300
Total costs accounted for$ 340,700
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There it is used as the basis for transferring the cost of the requisitioned material from the Raw-Material Inventory account to the Work-in-Process Inventory account, and for entering the direct-material cost on the job-cost record for the production job in process. (LO3)
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Job-Order Cost Accounting1-*
Accumulate direct labor costs by means of a work record, such as a time ticket, for each employee.
Lets see one
Sheet1
Managerial AccountingFinancial Accounting
Users of InformationManagers, within the organization.Interested parties, outside the organization.
RegulationNot required and unregulated, since it is intended only for management.Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission.
Source of DataThe organization's basic accounting system, plus various other sources, such as rates of effective products manufactured, physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delaysAlmost exclusively drawn from the organization's basic accounting system, which accumulates financial information.
Nature of Reports and ProceduresReports often focus on subunits within the organization, such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events.Reports focus on the enterprise in its entirety. Based almost exclusively on historical transaction data.
Sheet2
One Production Department
Work-in-ProcessFinished Goods
InventoryInventoryCost of Goods Sold
Direct materialCost of goods completedCost of goods sold
Direct laborTwo Sequential Production Departments
Applied manufacturingand transferred toWork-in-Process InventoryWork-in-Process Inventory
overheadfinished goodsProduction Department AProduction Department B
Direct materialCost of goods completed in department A andCost of goods completed
Direct labor
Applied manufacturingtransferred toand transferred to
overheaddepartment Bfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Finished Goods InventoryCost of Goods Sold
Cost of goods sold
during current period
One Production Department
Work-in-Process InventoryFinished Goods Inventory
Direct materialCost of goods completedCost of goods completed
Direct labor
Applied manufacturingand transferred toand transferred to
overheadFinished goodsfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Sheet3
Cost of goods completed and transferred during MarchCost of goods completed and transferred during MarchCost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31
Direct Material:Direct Material:Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,000
Convserion:Convserion:Convserion:
5,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300
Total costs accounted for340,700Total costs accounted for340,700Total costs accounted for340,700
Cost of goods completed and transferred out of Stitching Dept. during March
30,000 units x $12.228 per equivalent unit366,840
Costs remaining in work-in-process in Stitching Dept. on March 31
Direct Material:
20,000 equivalent units x $7.028 per equivalent unit140,560
Convserion:
18,000 equivalent units x $4.95 per equivalent unit89,100
Total cost of March 31 work-in-process229,660
Total costs accounted for596,500
Sheet4
Conversion
PhysicalPhysicalPercentageTransferredDirect
UnitsUnitsCompletionInMaterialConversion
Work in process, March 110,000Work in process, March 110,00020%
Units transferred in during March40,000Units transferred in during March40,000
Total units to account for50,000Total units to account for50,000
Units completed and transferred out during March30,000Units completed and transferred out during March30,00030,00030,00030,000
Work in process, March 3120,000Work in process, March 3120,00090%20,000-0-$ 18,000
Total units accounted for50,000Total units accounted for50,000
Total equivalent units50,00030,00048,000
Physical
Units
Work in process, March 110,000
Units transferred in during March40,000
Total units to account for50,000
Units completed and transferred out during March30,000
Work in process, March 3120,000
Total units accounted for50,000
Sheet5
Work-in-Process Inventory:Work-in-Process Inventory:
TransferredDirectCutting DepartmentStitching Department
InMaterialConversionTotalDirect materialCost of goodsTransferred-
completed andin costs
Work in Process, March 1$ 61,000-0-$ 7,600$ 68,600Conversion:transferred out
Costs incurred during March290,4007,500230,000527,900Direct laborDirect material
Total costs to account for$ 351,400$ 7,500$ 237,600$ 596,500Manufacturing
overheadConversion:
Equivalent units50,00030,00048,000Direct labor
Cost per equivalent unit$ 7.028$ 0.25$ 4.95$ 12.228Manufacturing
overhead
$351,400$7,500$237,600$ 7.028
50,00030,00048,000+ $.25
+ $4.95
Sheet6
MVP SPORTS EQUIPMENT COMPANY
Production Report: Cutting Department
Percentage of
CompletionEquivalent Units
Physicalwith Respect toDirect
UnitsConversionMaterialConversion
Work in process, March 120,00010%
Units started during March30,000
Total units to account for50,000
Units completed and transferred40,000100%40,00040,000
Work in process, March 3110,00050%10,0005,000
Total units accounted for50,000
Total equivalent units50,00045,000
Direct
MaterialConversionTotal
Work in Process, March 1$ 50,000$ 7,200$ 57,200
Costs incurred during March90,000193,500283,500
Total costs to account for$ 140,000$ 200,700$ 340,700
Equivalent units50,00045,000
Cost per equivalent unit$ 2.80$ 4.46$ 7.26
Cost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,000
Conversion:
5,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300
Total costs accounted for340,700
Sheet7
JOB-COST RECORD
Job NumberF16Description80 deluxe alum. fishing boats
Date StartedNov. 1, 20x1Date CompletedNov. 22, 20x1
Number of Units Completed80
Direct Material
DateRequisition NumberQuantityUnit PriceCost
11/18037,200 sq ft$2.50$18,000
Direct Labor
DateRequisition NumberQuantityUnit PriceCost
Manufacturing Overhead
DateRequisition NumberQuantityUnit PriceCost
Cost Summary
Cost ItemAmount
Total direct material$18,000
Total direct labor
Total manufacturing overhead
Total cost
Unit cost
Shipping Summary
DateUnits ShippedUnits Remaining in InventoryCost Balance
MBD000FE9F8.xls
Sheet1
Cost of goods completed and transferred during March
40,000 units $7.26 per equivalent unit$ 290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units $2.80 per equivalent unit$ 28,000
Conversion:
5,000 equivalent units $4.46 per equivalent unit22,300
Total cost of March 31 work in process50,300
Total costs accounted for$ 340,700
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The assignment of direct-labor costs to jobs is based on time records filled out by employees. (LO3)
-
Employee Time Ticket1-*
Sheet1
EmployeeRon BradleyDate 11/5/20x1
Employee Number 12Department Painting
Station
Time StartedTime StoppedJob Number
8:0011:30F16
11:3012:00Shop cleanup
1:005:00A26
Totals8.00$ 11.00$ 88.00A-143
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A time record is a form that records the amount of time an employee spends on each production job. (LO3)
-
Job-Order Cost Accounting1-*
Sheet1
Managerial AccountingFinancial Accounting
Users of InformationManagers, within the organization.Interested parties, outside the organization.
RegulationNot required and unregulated, since it is intended only for management.Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission.
Source of DataThe organization's basic accounting system, plus various other sources, such as rates of effective products manufactured, physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delaysAlmost exclusively drawn from the organization's basic accounting system, which accumulates financial information.
Nature of Reports and ProceduresReports often focus on subunits within the organization, such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events.Reports focus on the enterprise in its entirety. Based almost exclusively on historical transaction data.
Sheet2
One Production Department
Work-in-ProcessFinished Goods
InventoryInventoryCost of Goods Sold
Direct materialCost of goods completedCost of goods sold
Direct laborTwo Sequential Production Departments
Applied manufacturingand transferred toWork-in-Process InventoryWork-in-Process Inventory
overheadfinished goodsProduction Department AProduction Department B
Direct materialCost of goods completed in department A andCost of goods completed
Direct labor
Applied manufacturingtransferred toand transferred to
overheaddepartment Bfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Finished Goods InventoryCost of Goods Sold
Cost of goods sold
during current period
One Production Department
Work-in-Process InventoryFinished Goods Inventory
Direct materialCost of goods completedCost of goods completed
Direct labor
Applied manufacturingand transferred toand transferred to
overheadFinished goodsfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Sheet3
Cost of goods completed and transferred during MarchCost of goods completed and transferred during MarchCost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31
Direct Material:Direct Material:Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,000
Convserion:Convserion:Convserion:
5,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300
Total costs accounted for340,700Total costs accounted for340,700Total costs accounted for340,700
Cost of goods completed and transferred out of Stitching Dept. during March
30,000 units x $12.228 per equivalent unit366,840
Costs remaining in work-in-process in Stitching Dept. on March 31
Direct Material:
20,000 equivalent units x $7.028 per equivalent unit140,560
Convserion:
18,000 equivalent units x $4.95 per equivalent unit89,100
Total cost of March 31 work-in-process229,660
Total costs accounted for596,500
Sheet4
Conversion
PhysicalPhysicalPercentageTransferredDirect
UnitsUnitsCompletionInMaterialConversion
Work in process, March 110,000Work in process, March 110,00020%
Units transferred in during March40,000Units transferred in during March40,000
Total units to account for50,000Total units to account for50,000
Units completed and transferred out during March30,000Units completed and transferred out during March30,00030,00030,00030,000
Work in process, March 3120,000Work in process, March 3120,00090%20,000-0-$ 18,000
Total units accounted for50,000Total units accounted for50,000
Total equivalent units50,00030,00048,000
Physical
Units
Work in process, March 110,000
Units transferred in during March40,000
Total units to account for50,000
Units completed and transferred out during March30,000
Work in process, March 3120,000
Total units accounted for50,000
Sheet5
Work-in-Process Inventory:Work-in-Process Inventory:
TransferredDirectCutting DepartmentStitching Department
InMaterialConversionTotalDirect materialCost of goodsTransferred-
completed andin costs
Work in Process, March 1$ 61,000-0-$ 7,600$ 68,600Conversion:transferred out
Costs incurred during March290,4007,500230,000527,900Direct laborDirect material
Total costs to account for$ 351,400$ 7,500$ 237,600$ 596,500Manufacturing
overheadConversion:
Equivalent units50,00030,00048,000Direct labor
Cost per equivalent unit$ 7.028$ 0.25$ 4.95$ 12.228Manufacturing
overhead
$351,400$7,500$237,600$ 7.028
50,00030,00048,000+ $.25
+ $4.95
Sheet6
MVP SPORTS EQUIPMENT COMPANY
Production Report: Cutting Department
Percentage of
CompletionEquivalent Units
Physicalwith Respect toDirect
UnitsConversionMaterialConversion
Work in process, March 120,00010%
Units started during March30,000
Total units to account for50,000
Units completed and transferred40,000100%40,00040,000
Work in process, March 3110,00050%10,0005,000
Total units accounted for50,000
Total equivalent units50,00045,000
Direct
MaterialConversionTotal
Work in Process, March 1$ 50,000$ 7,200$ 57,200
Costs incurred during March90,000193,500283,500
Total costs to account for$ 140,000$ 200,700$ 340,700
Equivalent units50,00045,000
Cost per equivalent unit$ 2.80$ 4.46$ 7.26
Cost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,000
Conversion:
5,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300
Total costs accounted for340,700
Sheet7
JOB-COST RECORD
Job NumberF16Description80 deluxe alum. fishing boats
Date StartedNov. 1, 20x1Date CompletedNov. 22, 20x1
Number of Units Completed80
Direct Material
DateRequisition NumberQuantityUnit PriceCost
11/18037,200 sq ft$2.50$18,000
Direct Labor
DateTime CardsQuantityUnit PriceCost
Various datesVarious time cards600$20$12,000
Manufacturing Overhead
DateRequisition NumberQuantityUnit PriceCost
Cost Summary
Cost ItemAmount
Total direct material$18,000
Total direct labor12,000
Total manufacturing overhead
Total cost
Unit cost
Shipping Summary
DateUnits ShippedUnits Remaining in InventoryCost Balance
MBD000FE9F8.xls
Sheet1
Cost of goods completed and transferred during March
40,000 units $7.26 per equivalent unit$ 290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units $2.80 per equivalent unit$ 28,000
Conversion:
5,000 equivalent units $4.46 per equivalent unit22,300
Total cost of March 31 work in process50,300
Total costs accounted for$ 340,700
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The time record is the source document used in the cost-accounting department as the basis for adding direct-labor costs to Work-in-Process Inventory and to the job-cost records for the various jobs in process. (LO3)
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Job-Order Cost Accounting1-*
Apply manufacturing overhead to jobs using a predetermined overhead rate based on direct labor hours (DLH).
Lets do it
Sheet1
Managerial AccountingFinancial Accounting
Users of InformationManagers, within the organization.Interested parties, outside the organization.
RegulationNot required and unregulated, since it is intended only for management.Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission.
Source of DataThe organization's basic accounting system, plus various other sources, such as rates of effective products manufactured, physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delaysAlmost exclusively drawn from the organization's basic accounting system, which accumulates financial information.
Nature of Reports and ProceduresReports often focus on subunits within the organization, such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events.Reports focus on the enterprise in its entirety. Based almost exclusively on historical transaction data.
Sheet2
One Production Department
Work-in-ProcessFinished Goods
InventoryInventoryCost of Goods Sold
Direct materialCost of goods completedCost of goods sold
Direct laborTwo Sequential Production Departments
Applied manufacturingand transferred toWork-in-Process InventoryWork-in-Process Inventory
overheadfinished goodsProduction Department AProduction Department B
Direct materialCost of goods completed in department A andCost of goods completed
Direct labor
Applied manufacturingtransferred toand transferred to
overheaddepartment Bfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Finished Goods InventoryCost of Goods Sold
Cost of goods sold
during current period
One Production Department
Work-in-Process InventoryFinished Goods Inventory
Direct materialCost of goods completedCost of goods completed
Direct labor
Applied manufacturingand transferred toand transferred to
overheadFinished goodsfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Sheet3
Cost of goods completed and transferred during MarchCost of goods completed and transferred during MarchCost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31
Direct Material:Direct Material:Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,000
Convserion:Convserion:Convserion:
5,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300
Total costs accounted for340,700Total costs accounted for340,700Total costs accounted for340,700
Cost of goods completed and transferred out of Stitching Dept. during March
30,000 units x $12.228 per equivalent unit366,840
Costs remaining in work-in-process in Stitching Dept. on March 31
Direct Material:
20,000 equivalent units x $7.028 per equivalent unit140,560
Convserion:
18,000 equivalent units x $4.95 per equivalent unit89,100
Total cost of March 31 work-in-process229,660
Total costs accounted for596,500
Sheet4
Conversion
PhysicalPhysicalPercentageTransferredDirect
UnitsUnitsCompletionInMaterialConversion
Work in process, March 110,000Work in process, March 110,00020%
Units transferred in during March40,000Units transferred in during March40,000
Total units to account for50,000Total units to account for50,000
Units completed and transferred out during March30,000Units completed and transferred out during March30,00030,00030,00030,000
Work in process, March 3120,000Work in process, March 3120,00090%20,000-0-$ 18,000
Total units accounted for50,000Total units accounted for50,000
Total equivalent units50,00030,00048,000
Physical
Units
Work in process, March 110,000
Units transferred in during March40,000
Total units to account for50,000
Units completed and transferred out during March30,000
Work in process, March 3120,000
Total units accounted for50,000
Sheet5
Work-in-Process Inventory:Work-in-Process Inventory:
TransferredDirectCutting DepartmentStitching Department
InMaterialConversionTotalDirect materialCost of goodsTransferred-
completed andin costs
Work in Process, March 1$ 61,000-0-$ 7,600$ 68,600Conversion:transferred out
Costs incurred during March290,4007,500230,000527,900Direct laborDirect material
Total costs to account for$ 351,400$ 7,500$ 237,600$ 596,500Manufacturing
overheadConversion:
Equivalent units50,00030,00048,000Direct labor
Cost per equivalent unit$ 7.028$ 0.25$ 4.95$ 12.228Manufacturing
overhead
$351,400$7,500$237,600$ 7.028
50,00030,00048,000+ $.25
+ $4.95
Sheet6
MVP SPORTS EQUIPMENT COMPANY
Production Report: Cutting Department
Percentage of
CompletionEquivalent Units
Physicalwith Respect toDirect
UnitsConversionMaterialConversion
Work in process, March 120,00010%
Units started during March30,000
Total units to account for50,000
Units completed and transferred40,000100%40,00040,000
Work in process, March 3110,00050%10,0005,000
Total units accounted for50,000
Total equivalent units50,00045,000
Direct
MaterialConversionTotal
Work in Process, March 1$ 50,000$ 7,200$ 57,200
Costs incurred during March90,000193,500283,500
Total costs to account for$ 140,000$ 200,700$ 340,700
Equivalent units50,00045,000
Cost per equivalent unit$ 2.80$ 4.46$ 7.26
Cost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,000
Conversion:
5,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300
Total costs accounted for340,700
Sheet7
JOB-COST RECORD
Job NumberF16Description80 deluxe alum. fishing boats
Date StartedNov. 1, 20x1Date CompletedNov. 22, 20x1
Number of Units Completed80
Direct Material
DateRequisition NumberQuantityUnit PriceCost
11/18037,200 sq ft$2.50$18,000
Direct Labor
DateRequisition NumberQuantityUnit PriceCost
Various datesVarious time cards600$20$12,000
Manufacturing Overhead
DateRequisition NumberQuantityUnit PriceCost
Cost Summary
Cost ItemAmount
Total direct material$18,000
Total direct labor12,000
Total manufacturing overhead
Total cost
Unit cost
Shipping Summary
DateUnits ShippedUnits Remaining in InventoryCost Balance
MBD000FE9F8.xls
Sheet1
Cost of goods completed and transferred during March
40,000 units $7.26 per equivalent unit$ 290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units $2.80 per equivalent unit$ 28,000
Conversion:
5,000 equivalent units $4.46 per equivalent unit22,300
Total cost of March 31 work in process50,300
Total costs accounted for$ 340,700
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Manufacturing overhead is a pool of indirect production costs, such as indirect material, indirect labor, utility costs, and depreciation. These costs often bear no obvious relationship to individual jobs or units of product, but they must be incurred for production to take place. (LO3)
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Job-Order Cost Accounting1-*
Sheet1
Managerial AccountingFinancial Accounting
Users of InformationManagers, within the organization.Interested parties, outside the organization.
RegulationNot required and unregulated, since it is intended only for management.Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission.
Source of DataThe organization's basic accounting system, plus various other sources, such as rates of effective products manufactured, physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delaysAlmost exclusively drawn from the organization's basic accounting system, which accumulates financial information.
Nature of Reports and ProceduresReports often focus on subunits within the organization, such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events.Reports focus on the enterprise in its entirety. Based almost exclusively on historical transaction data.
Sheet2
One Production Department
Work-in-ProcessFinished Goods
InventoryInventoryCost of Goods Sold
Direct materialCost of goods completedCost of goods sold
Direct laborTwo Sequential Production Departments
Applied manufacturingand transferred toWork-in-Process InventoryWork-in-Process Inventory
overheadfinished goodsProduction Department AProduction Department B
Direct materialCost of goods completed in department A andCost of goods completed
Direct labor
Applied manufacturingtransferred toand transferred to
overheaddepartment Bfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Finished Goods InventoryCost of Goods Sold
Cost of goods sold
during current period
One Production Department
Work-in-Process InventoryFinished Goods Inventory
Direct materialCost of goods completedCost of goods completed
Direct labor
Applied manufacturingand transferred toand transferred to
overheadFinished goodsfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Sheet3
Cost of goods completed and transferred during MarchCost of goods completed and transferred during MarchCost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31
Direct Material:Direct Material:Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,000
Convserion:Convserion:Convserion:
5,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300
Total costs accounted for340,700Total costs accounted for340,700Total costs accounted for340,700
Cost of goods completed and transferred out of Stitching Dept. during March
30,000 units x $12.228 per equivalent unit366,840
Costs remaining in work-in-process in Stitching Dept. on March 31
Direct Material:
20,000 equivalent units x $7.028 per equivalent unit140,560
Convserion:
18,000 equivalent units x $4.95 per equivalent unit89,100
Total cost of March 31 work-in-process229,660
Total costs accounted for596,500
Sheet4
Conversion
PhysicalPhysicalPercentageTransferredDirect
UnitsUnitsCompletionInMaterialConversion
Work in process, March 110,000Work in process, March 110,00020%
Units transferred in during March40,000Units transferred in during March40,000
Total units to account for50,000Total units to account for50,000
Units completed and transferred out during March30,000Units completed and transferred out during March30,00030,00030,00030,000
Work in process, March 3120,000Work in process, March 3120,00090%20,000-0-$ 18,000
Total units accounted for50,000Total units accounted for50,000
Total equivalent units50,00030,00048,000
Physical
Units
Work in process, March 110,000
Units transferred in during March40,000
Total units to account for50,000
Units completed and transferred out during March30,000
Work in process, March 3120,000
Total units accounted for50,000
Sheet5
Work-in-Process Inventory:Work-in-Process Inventory:
TransferredDirectCutting DepartmentStitching Department
InMaterialConversionTotalDirect materialCost of goodsTransferred-
completed andin costs
Work in Process, March 1$ 61,000-0-$ 7,600$ 68,600Conversion:transferred out
Costs incurred during March290,4007,500230,000527,900Direct laborDirect material
Total costs to account for$ 351,400$ 7,500$ 237,600$ 596,500Manufacturing
overheadConversion:
Equivalent units50,00030,00048,000Direct labor
Cost per equivalent unit$ 7.028$ 0.25$ 4.95$ 12.228Manufacturing
overhead
$351,400$7,500$237,600$ 7.028
50,00030,00048,000+ $.25
+ $4.95
Sheet6
MVP SPORTS EQUIPMENT COMPANY
Production Report: Cutting Department
Percentage of
CompletionEquivalent Units
Physicalwith Respect toDirect
UnitsConversionMaterialConversion
Work in process, March 120,00010%
Units started during March30,000
Total units to account for50,000
Units completed and transferred40,000100%40,00040,000
Work in process, March 3110,00050%10,0005,000
Total units accounted for50,000
Total equivalent units50,00045,000
Direct
MaterialConversionTotal
Work in Process, March 1$ 50,000$ 7,200$ 57,200
Costs incurred during March90,000193,500283,500
Total costs to account for$ 140,000$ 200,700$ 340,700
Equivalent units50,00045,000
Cost per equivalent unit$ 2.80$ 4.46$ 7.26
Cost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,000
Conversion:
5,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300
Total costs accounted for340,700
Sheet7
JOB-COST RECORD
Job NumberF16Description80 deluxe alum. fishing boats
Date StartedNov. 1, 20x1Date CompletedNov. 22, 20x1
Number of Units Completed80
Direct Material
DateRequisition NumberQuantityUnit PriceCost
11/18037,200 sq ft$2.50$18,000
Direct Labor
DateRequisition NumberQuantityUnit PriceCost
Various datesVarious time cards600$20$12,000
Manufacturing Overhead
DateRequisition NumberQuantityUnit PriceCost
11/30Direct Labor Hours600$30.00$18,000
Cost Summary
Cost ItemAmount
Total direct material$18,000
Total direct labor12,000
Total manufacturing overhead18,000
Total cost
Unit cost
Shipping Summary
DateUnits ShippedUnits Remaining in InventoryCost Balance
MBD000FE9F8.xls
Sheet1
Cost of goods completed and transferred during March
40,000 units $7.26 per equivalent unit$ 290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units $2.80 per equivalent unit$ 28,000
Conversion:
5,000 equivalent units $4.46 per equivalent unit22,300
Total cost of March 31 work in process50,300
Total costs accounted for$ 340,700
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Therefore, it is necessary to assign manufacturing-overhead costs to jobs in order to have a complete picture of product costs. This process of assigning manufacturing-overhead costs to production jobs is called overhead application. A predetermined overhead rate is used to apply overhead on the job-cost record. (LO3)
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Job-Order Cost Accounting1-*
Sheet1
Managerial AccountingFinancial Accounting
Users of InformationManagers, within the organization.Interested parties, outside the organization.
RegulationNot required and unregulated, since it is intended only for management.Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission.
Source of DataThe organization's basic accounting system, plus various other sources, such as rates of effective products manufactured, physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delaysAlmost exclusively drawn from the organization's basic accounting system, which accumulates financial information.
Nature of Reports and ProceduresReports often focus on subunits within the organization, such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events.Reports focus on the enterprise in its entirety. Based almost exclusively on historical transaction data.
Sheet2
One Production Department
Work-in-ProcessFinished Goods
InventoryInventoryCost of Goods Sold
Direct materialCost of goods completedCost of goods sold
Direct laborTwo Sequential Production Departments
Applied manufacturingand transferred toWork-in-Process InventoryWork-in-Process Inventory
overheadfinished goodsProduction Department AProduction Department B
Direct materialCost of goods completed in department A andCost of goods completed
Direct labor
Applied manufacturingtransferred toand transferred to
overheaddepartment Bfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Finished Goods InventoryCost of Goods Sold
Cost of goods sold
during current period
One Production Department
Work-in-Process InventoryFinished Goods Inventory
Direct materialCost of goods completedCost of goods completed
Direct labor
Applied manufacturingand transferred toand transferred to
overheadFinished goodsfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Sheet3
Cost of goods completed and transferred during MarchCost of goods completed and transferred during MarchCost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31
Direct Material:Direct Material:Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,000
Convserion:Convserion:Convserion:
5,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300
Total costs accounted for340,700Total costs accounted for340,700Total costs accounted for340,700
Cost of goods completed and transferred out of Stitching Dept. during March
30,000 units x $12.228 per equivalent unit366,840
Costs remaining in work-in-process in Stitching Dept. on March 31
Direct Material:
20,000 equivalent units x $7.028 per equivalent unit140,560
Convserion:
18,000 equivalent units x $4.95 per equivalent unit89,100
Total cost of March 31 work-in-process229,660
Total costs accounted for596,500
Sheet4
Conversion
PhysicalPhysicalPercentageTransferredDirect
UnitsUnitsCompletionInMaterialConversion
Work in process, March 110,000Work in process, March 110,00020%
Units transferred in during March40,000Units transferred in during March40,000
Total units to account for50,000Total units to account for50,000
Units completed and transferred out during March30,000Units completed and transferred out during March30,00030,00030,00030,000
Work in process, March 3120,000Work in process, March 3120,00090%20,000-0-$ 18,000
Total units accounted for50,000Total units accounted for50,000
Total equivalent units50,00030,00048,000
Physical
Units
Work in process, March 110,000
Units transferred in during March40,000
Total units to account for50,000
Units completed and transferred out during March30,000
Work in process, March 3120,000
Total units accounted for50,000
Sheet5
Work-in-Process Inventory:Work-in-Process Inventory:
TransferredDirectCutting DepartmentStitching Department
InMaterialConversionTotalDirect materialCost of goodsTransferred-
completed andin costs
Work in Process, March 1$ 61,000-0-$ 7,600$ 68,600Conversion:transferred out
Costs incurred during March290,4007,500230,000527,900Direct laborDirect material
Total costs to account for$ 351,400$ 7,500$ 237,600$ 596,500Manufacturing
overheadConversion:
Equivalent units50,00030,00048,000Direct labor
Cost per equivalent unit$ 7.028$ 0.25$ 4.95$ 12.228Manufacturing
overhead
$351,400$7,500$237,600$ 7.028
50,00030,00048,000+ $.25
+ $4.95
Sheet6
MVP SPORTS EQUIPMENT COMPANY
Production Report: Cutting Department
Percentage of
CompletionEquivalent Units
Physicalwith Respect toDirect
UnitsConversionMaterialConversion
Work in process, March 120,00010%
Units started during March30,000
Total units to account for50,000
Units completed and transferred40,000100%40,00040,000
Work in process, March 3110,00050%10,0005,000
Total units accounted for50,000
Total equivalent units50,00045,000
Direct
MaterialConversionTotal
Work in Process, March 1$ 50,000$ 7,200$ 57,200
Costs incurred during March90,000193,500283,500
Total costs to account for$ 140,000$ 200,700$ 340,700
Equivalent units50,00045,000
Cost per equivalent unit$ 2.80$ 4.46$ 7.26
Cost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,000
Conversion:
5,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300
Total costs accounted for340,700
Sheet7
JOB-COST RECORD
Job NumberF16Description80 deluxe alum. fishing boats
Date StartedNov. 1, 20x1Date CompletedNov. 22, 20x1
Number of Units Completed80
Direct Material
DateRequisition NumberQuantityUnit PriceCost
11/18037,200 sq ft$2.50$18,000
Direct Labor
DateRequisition NumberQuantityUnit PriceCost
Various datesVarious time cards600$20$12,000
Manufacturing Overhead
DateRequisition NumberQuantityUnit PriceCost
11/30Direct Labor Hours600$30.00$18,000
Cost Summary
Cost ItemAmount
Total direct material$18,000
Total direct labor12,000
Total manufacturing overhead18,000
Total cost$48,000
Unit cost$600
Shipping Summary
DateUnits ShippedUnits Remaining in InventoryCost Balance
11/306020$12,000
MBD000FE9F8.xls
Sheet1
Cost of goods completed and transferred during March
40,000 units $7.26 per equivalent unit$ 290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units $2.80 per equivalent unit$ 28,000
Conversion:
5,000 equivalent units $4.46 per equivalent unit22,300
Total cost of March 31 work in process50,300
Total costs accounted for$ 340,700
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Once manufacturing overhead has been applied, the cost summary can be completed. Total direct material costs, total direct labor costs and total manufacturing overhead costs are added together to determine total costs. These costs are divided by the number of units completed to arrive at the unit cost. (LO3)
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Job-Order Cost Accounting1-*
Sheet1
Managerial AccountingFinancial Accounting
Users of InformationManagers, within the organization.Interested parties, outside the organization.
RegulationNot required and unregulated, since it is intended only for management.Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission.
Source of DataThe organization's basic accounting system, plus various other sources, such as rates of effective products manufactured, physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delaysAlmost exclusively drawn from the organization's basic accounting system, which accumulates financial information.
Nature of Reports and ProceduresReports often focus on subunits within the organization, such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events.Reports focus on the enterprise in its entirety. Based almost exclusively on historical transaction data.
Sheet2
One Production Department
Work-in-ProcessFinished Goods
InventoryInventoryCost of Goods Sold
Direct materialCost of goods completedCost of goods sold
Direct laborTwo Sequential Production Departments
Applied manufacturingand transferred toWork-in-Process InventoryWork-in-Process Inventory
overheadfinished goodsProduction Department AProduction Department B
Direct materialCost of goods completed in department A andCost of goods completed
Direct labor
Applied manufacturingtransferred toand transferred to
overheaddepartment Bfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Finished Goods InventoryCost of Goods Sold
Cost of goods sold
during current period
One Production Department
Work-in-Process InventoryFinished Goods Inventory
Direct materialCost of goods completedCost of goods completed
Direct labor
Applied manufacturingand transferred toand transferred to
overheadFinished goodsfinished goods
Direct material
Direct labor
Applied manufacturing
overhead
Sheet3
Cost of goods completed and transferred during MarchCost of goods completed and transferred during MarchCost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,40040,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31Costs remaining in work-in-process on March 31
Direct Material:Direct Material:Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,00010,000 equivalent units x $2.80 per equivalent unit28,000
Convserion:Convserion:Convserion:
5,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,3005,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300Total cost of March 31 work-in-process50,300
Total costs accounted for340,700Total costs accounted for340,700Total costs accounted for340,700
Cost of goods completed and transferred out of Stitching Dept. during March
30,000 units x $12.228 per equivalent unit366,840
Costs remaining in work-in-process in Stitching Dept. on March 31
Direct Material:
20,000 equivalent units x $7.028 per equivalent unit140,560
Convserion:
18,000 equivalent units x $4.95 per equivalent unit89,100
Total cost of March 31 work-in-process229,660
Total costs accounted for596,500
Sheet4
Conversion
PhysicalPhysicalPercentageTransferredDirect
UnitsUnitsCompletionInMaterialConversion
Work in process, March 110,000Work in process, March 110,00020%
Units transferred in during March40,000Units transferred in during March40,000
Total units to account for50,000Total units to account for50,000
Units completed and transferred out during March30,000Units completed and transferred out during March30,00030,00030,00030,000
Work in process, March 3120,000Work in process, March 3120,00090%20,000-0-$ 18,000
Total units accounted for50,000Total units accounted for50,000
Total equivalent units50,00030,00048,000
Physical
Units
Work in process, March 110,000
Units transferred in during March40,000
Total units to account for50,000
Units completed and transferred out during March30,000
Work in process, March 3120,000
Total units accounted for50,000
Sheet5
Work-in-Process Inventory:Work-in-Process Inventory:
TransferredDirectCutting DepartmentStitching Department
InMaterialConversionTotalDirect materialCost of goodsTransferred-
completed andin costs
Work in Process, March 1$ 61,000-0-$ 7,600$ 68,600Conversion:transferred out
Costs incurred during March290,4007,500230,000527,900Direct laborDirect material
Total costs to account for$ 351,400$ 7,500$ 237,600$ 596,500Manufacturing
overheadConversion:
Equivalent units50,00030,00048,000Direct labor
Cost per equivalent unit$ 7.028$ 0.25$ 4.95$ 12.228Manufacturing
overhead
$351,400$7,500$237,600$ 7.028
50,00030,00048,000+ $.25
+ $4.95
Sheet6
MVP SPORTS EQUIPMENT COMPANY
Production Report: Cutting Department
Percentage of
CompletionEquivalent Units
Physicalwith Respect toDirect
UnitsConversionMaterialConversion
Work in process, March 120,00010%
Units started during March30,000
Total units to account for50,000
Units completed and transferred40,000100%40,00040,000
Work in process, March 3110,00050%10,0005,000
Total units accounted for50,000
Total equivalent units50,00045,000
Direct
MaterialConversionTotal
Work in Process, March 1$ 50,000$ 7,200$ 57,200
Costs incurred during March90,000193,500283,500
Total costs to account for$ 140,000$ 200,700$ 340,700
Equivalent units50,00045,000
Cost per equivalent unit$ 2.80$ 4.46$ 7.26
Cost of goods completed and transferred during March
40,000 units x $7.26 per equivalent unit290,400
Costs remaining in work-in-process on March 31
Direct Material:
10,000 equivalent units x $2.80 per equivalent unit28,000
Conversion:
5,000 equivalent units x $4.46 per equivalent unit22,300
Total cost of March 31 work-in-process50,300
Total costs accounted for340,700
Sheet7
JOB-COST RECORD
Job NumberF16Description80 deluxe alum. fishing boats
Date StartedNov. 1, 20x1Date CompletedNov. 22, 20x1
Number of Units Completed80
Direct Material
DateRequisition NumberQuantityUnit PriceCost
11/18037,200 sq ft$2.50$18,000
Direct Labor
DateRequisition NumberQuantityUnit PriceCost
Various datesVarious time cards600$20$12,000
Manufacturing Overhead
DateRequisition NumberQuantityUnit PriceCost
11/30Direct Labor Hours600$30.00$18,000
Cost Summary
Cost ItemAmount
Total direct material$18,000
Total direct labor12,000
Total manufacturing overhead18,000
Total cost$48,000
Unit cost$600
Shipping Summary
DateUnits ShippedUnits Remaining in InventoryCost Balance
11/306020$12,000
MBD000FE9F8.xls
Sheet1
Cost of goods completed and transferred during March
40,000 units $7.26 per equivalen