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McGraw-Hill/Irwin
Learning Objective 1
McGraw-Hill/Irwin
Financial Accounting
Product costs are used to value inventory and to compute cost of goods sold.
Learning Objective 2
McGraw-Hill/Irwin
Work-in-Process Inventory Direct material cost Direct labor cost Manufacturing overhead Product cost transferred when product is finished
Cost of Goods Sold Expense closed into Income Summary at end of accounting period
Income Summary
3-5
Learning Objective 3
McGraw-Hill/Irwin
Batch-production operations
Multiple products in batches of relatively small quantity.
3-7
Date 11/1
Cost $12,000
Date 11/30
Manufacturing Overhead Requisition Number Quantity Direct Labor Hours 600 Cost Summary Cost Item
Cost $18,000
Total direct material Total direct labor Total manufacturing overhead Total cost Unit cost
Date
Cost Balance
3-8
Learning Objective 4
McGraw-Hill/Irwin
Learning Objective 5
McGraw-Hill/Irwin
Mfg. Overhead
Indirect Material
3-12
Mfg. Overhead
Indirect Material Indirect Labor
3-13
Mfg. Overhead
Indirect Overhead Material Applied to Indirect Work in Process Labor
Finished Goods
Cost of Goods Mfd. Cost of Goods Sold
3-16
Learning Objective 6
McGraw-Hill/Irwin
$xxx xxx xxx $xxx xxx xxx $xxx xxx $xxx xxx $xxx
3-18
3-19
Actual direct material and direct labor combined with actual overhead.
Actual direct material and direct labor combined with predetermined overhead.
Using a predetermined rate makes it possible to estimate total job costs sooner.
Actual overhead for the period is not known until the end of the period.
3-20
Learning Objective 7
McGraw-Hill/Irwin
Indirect Labor
Indirect Materials
Other Overhead
Cost pools
Stage Two: Costs applied to products
Department 1
Direct Labor Hours
Department 2
Machine Hours
Department 3
Raw Materials Cost
Products
Departmental Allocation Bases
3-22
Learning Objective 8
McGraw-Hill/Irwin
Job-Order Costing
CAN BE USED IN NONMANUFACTURING ORGANIZATIONS
THE JOB
Cases Programs Contracts Missions
3-24
End of Chapter 3
3-25