Concept explainers
(a)
Introduction:
In cost accounting, various production stages of manufacturing a product are identified. Thus, manufacturing costs are recorded at such production processes to reflect appropriate apportionment of costs.
To record:
The transactions in T-shape accounts.
Explanation of Solution
Raw Materials Inventory:
Particulars | $ (Debit) | Particulars | $ (Credit) |
(a) Purchases | 20,000 | (b) Materials issued (job 201) | 12,000 |
(b) Materials issued (job 201) | 21,000 | ||
(b) Indirect materials | 3,200 |
Work in process Inventory
Particulars | $ (Debit) | Particulars | $ (Credit) |
(b) Materials issued (job 201) | 12,000 | ||
(b) Materials issued (job 202) | 21,000 | ||
(c) Direct labor (job 201) | 2,150 | ||
(c) Direct labor (job 202) | 10,750 | ||
(d) Applied overhead (600×$25) | 15,000 |
Finished Goods Inventory:
Particulars | $ (Debit) | Particulars | $ (Credit) |
Completed and transferred (job 201) | 16,650 |
Manufacturing Overhead:
Particulars | $ (Debit) | Particulars | $ (Credit) |
(b) Indirect materials | 3,200 | (d) Applied overhead (600×$25) | 15,000 |
(c) Factory supervision | 5,000 |
Sales Revenue:
Particulars | $ (Debit) | Particulars | $ (Credit) |
(i) Sales (job 200) | 31,000 |
(b)
Introduction:
Manufacturing Costs:
In cost accounting, various production stages of manufacturing a product are identified. Thus, manufacturing costs are recorded at such production processes to reflect appropriate apportionment of costs.
To prepare:
The T-accounts and calculate their ending balances.
Explanation of Solution
Raw Materials Inventory:
Particulars | $ (Debit) | Particulars | $ (Credit) |
Opening Balance | 32,000 | (b) Materials issued (job 201) | 12,000 |
(a) Purchases | 20,000 | (b) Materials issued (job 202) | 21,000 |
(b) Indirect materials | 3,200 | ||
Closing Balance | 15,800 | ||
52,000 | 52,000 | ||
Opening Balance | 15,800 |
Work in process Inventory
Particulars | $ (Debit) | Particulars | $ (Credit) |
Opening Balance | 15,500 | (f) Completed and transferred to finished goods (Job 201) | 16,650 |
(b) Materials issued (job 201) | 12,000 | Closing Balance | 59,750 |
(b) Materials issued (job 202) | 21,000 | ||
(c) Direct labor (job 201) | 2,150 | ||
(c) Direct labor (job 202) | 10,750 | ||
(d) Applied overhead (100×$25) | 2,500 | ||
(d) Applied overhead (500×$25) | 12,500 | ||
76,400 | 76,400 | ||
Opening Balance | 59,750 |
Finished Goods Inventory:
Particulars | $ (Debit) | Particulars | $ (Credit) |
Opening Balance | 20,000 | Closing Balance | 34,150 |
(f) Completed and transferred (job 201) | 14,150 | ||
34,150 | 34,150 | ||
Opening Balance | 34,150 |
Manufacturing Overhead:
Particulars | $ (Debit) | Particulars | $ (Credit) |
(b) Indirect materials | 3,200 | (d) Applied overhead (600×$25) | 15,000 |
(c) Factory supervision | 5,000 | ||
Closing Balance | 6,800 | ||
15,000 | 15,000 | ||
Over applied | 6,800 |
Cost of Goods Sold:
(As per the question, there are no details available regarding the cost of sale of Job 200. Hence, it has been left unbalanced based on the available information.)
Particulars | $ (Debit) | Particulars | $ (Credit) |
Over applied | 6,800 |
Miscellaneous Accounts:
Particulars | $ (Debit) | Particulars | $ (Credit) |
(e) Factory rent | 3,100 | (e) Factory insurance | 1,250 |
(e) |
2,500 | Closing Balance | 6,100 |
(e) Factory utilities | 1,750 | ||
7,350 | 7,350 | ||
Opening Balance | 6,100 |
Sales Revenue:
Particulars | $ (Debit) | Particulars | $ (Credit) |
Closing Balance | 31,000 | (g) Sales (job 200) | 31,000 |
31,000 | 31,000 | ||
Opening Balance | 31,000 |
(c)
Introduction:
Manufacturing Costs:
In cost accounting, various production stages of manufacturing a product are identified. Thus, manufacturing costs are recorded at such production processes to reflect appropriate apportionment of costs.
To calculate:
The cost of goods manufactured.
Explanation of Solution
Cost of Goods Manufactured (For Job 201 and 202)
(As per the question, the ratio of both the jobs isn’t available to segregate the purchases, use of indirect materials and various other factors. Thus, the question has been solved considering all the values equally for each job.)
Particulars | Job 201 ($) | Job 202 ($) |
Beginning raw material inventory | 32,000 | 32,000 |
(+) Raw material purchases | 10,000 | 10,000 |
(-) Indirect materials | (1,600) | (1,600) |
(-) Ending raw material inventory | (28,400) | (19,400) |
Direct material used | 20,400 | 21,000 |
Direct labor | 2,150 | 10,750 |
Manufacturing overhead applied | 2,500 | 12,500 |
Total current manufacturing costs | 26,650 | 44,750 |
(+) Beginning work in process inventory | 15,500 | 15,500 |
(-) Ending work in process inventory | (16,550) | (44,250) |
Cost of goods manufactured. | 14,000 | 16,000 |
The cost of goods manufactured are shown in the ‘cost of goods sold’ account to calculate the adjusted cost of goods sold and determine the profit, thereof.
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