Manufacturing Accounting

1. Manufacturing Accounting Chapter 26

2. Preparing a cost of goods manufacturing schedule. Learning Objective 1

3. Learning Unit 26-1 • Manufacturing costs must be separated from all other selling and administrative costs. Administrative Management Sales Personnel Administrative Manufacturing Raw material Direct Labor Overhead

4. Direct Materials: Beginning inventory Net purchases Ending inventory Direct material cost Work-in-Process Inventory: Beginning inventory Direct material cost Direct labor Manufacturing overhead Total manufacturing costs Ending inventory Cost of goods manufactured Learning Unit 26-1

5. Learning Unit 26-1 Raw materials used Finished Goods Inventory Direct labor WIP Inventory Cost of goods sold Manufacturing overhead

6. Learning Unit 26-1 Merchandising Co. Beginning merchandise inventory + Net purchases = Cost of merchandise available for sale – Ending merchandise inventory = Cost of goods sold

7. Learning Unit 26-1 Manufacturing Co. Beginning finished goods inventory + Cost of goods manufactured = Cost of goods available for sale – Ending finished goods inventory = Cost of goods sold

8. Journalizing transactions recording the manufacturing process. Learning Objective 2

9. Learning Unit 26-2 • Source documents provide proof of transactions. • Receiving reports acknowledge receipt of goods. • Material requisitions are requests for materials from storage areas.

10. Receiving Report Received from Adams Company Receiving Report #1031 Date Received: 6/20/0x QuantityDescriptionUnit PriceTotal Price 50 Gals. Paint $6.50/Gallon $325.00 Inspected By______________________ Received By______________________

11. Materials Requisition Materials Requisition Date: June 20, 200x Number: 3648 From: Finishing Department QuantityDescriptionUnit PriceTotal Price 8Gal. White Paint $6.50/Gallon $52.00 Inspected By _______________________ Received By________________________

12. Learning Unit 26-2 • Clock cards list time worked for each employee for specific activities. • Lot tickets reflect movement of products through the manufacturing floor. • Labor distribution reports track the hours and dollars of labor to departments and products. • Bills of lading are shipping documents.

13. Learning Unit 26-2 • Flow charts illustrate the movement of the material, labor, and overhead through the operation. • They support journal entries. • Overhead – Control is debited as costs are incurred. • Overhead – Applied is credited when overhead is applied to products.

14. Learning Unit 26-2 Debit Work-in-Process Inventory Credit Raw Material Inventory Debit Work-in-Process Inventory Credit Payroll Debit Overhead – Control Credit Supplies Inventory

15. Learning Unit 26-2 Debit Overhead – Control Credit Payroll Debit Overhead – Control Credit Supervision Salaries Rent Expense Depreciation Expense Electricity Expense

16. Learning Unit 26-2 Debit Work-in-Process Inventory Credit Overhead – Applied Debit Finished Goods Inventory Credit Work-in-Process Inventory Debit Cost of Goods Sold Credit Finished Goods Inventory

17. Preparing a worksheet for a manufacturing company. Learning Objective 3

18. Learning Unit 26-3 • The worksheet for a manufacturing company is used to produce the following: • Statement of cost of goods manufactured • Income statement • Statement of retained earnings • Balance sheet

19. Learning Unit 26-3 Cost of Trial Adjust. Goods Income Balance Balance Manufactured Statement Sheet Statement of Cost of Goods Manufactured Balance Sheet Income Statement Statement of Retained Earnings

20. End of Chapter 26