Professional Documents
Culture Documents
Examples includes:
• Indirect materials
• Indirect labor
• Machinery and equipment costs
Finished
Goods
To distinguish
between
direct and indirect
costs
Direct Labour
• Machinery depreciation
• Factory insurance
• Utilities bills
• etc
To review and
distinguish between
product and period
costs
Freight-out 6,000
Total $153,000
Foam liners for pools 32,000 What dollar amount of these costs would be
Pool worker’s wages 46,000 considered Product costs?
Rent, factory building 10,000
$97,000
Freight-out 6,000
Total $153,000
Freight-out 6,000
Total $153,000
Total $153,000
Freight-out 6,000
Total $153,000
To describe how
manufacturing costs
flow through
inventory
accounts
Work in process -
Finished goods- partially
completed goods completed goods.
awaiting sale.
Cost of goods
manufactured
Finished Goods Cost of
Inventory Goods Sold
$$$ $$$ $$$
Cost Classifications PAGE 26
Flow of Costs Associated With Production
Pure-Ice Inc. had $52,000 of inventory in direct materials inventory on January
1, of this year. During the year, Pure-Ice purchased $586,000 of additional
direct materials. At December 31 of this year $78,000 of the direct materials
were still on hand.
How much direct material was placed into production during the year?
Beginning materials
inventory $
+ Materials purchased
Materials available to b
=
placed into product
Materials place
–
production
Ending
?
= inv
Beginning materials
inventory $ 52,000
!
+ Materials purchased 586,000
Materials available to be
=
placed into production 638,000
Materials placed into
?
production 560,000
Ending materials
=
inventory $ 78,000
!
added 1,590,000
= To t a l c o s t s in p r o c e s s
d u r i n g t h e year 1,722,000
– Cost of g o o d s
completed during the
year 1,480,000
= E n d i n g w o r k in p r o c e s s
inventory $ 2 4 2 , 0 00
To prepare a schedule
of the cost of finished
goods manufactured.
Current Assets:
Cash and Cash Equivalents
Accounts Receivable, net
Inventories
Materials
Work in P
Finish
T
To