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.

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.

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.

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)

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)

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).

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)

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)

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)

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)

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)

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)

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)

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)

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