VISUAL #15–1
Tracing Product Costs
Through a Cost Accounting System
Work in Process Finished Goods
Materials Inventory Inventory Inventory
(1) Buy Send (2) (2) Direct (7) Goods (7) Cost of (8) Goods
(Cr. A/P) materials material completed Finished Sold
to factory costs Goods
(4) Direct
labor
costs
(6) Overhead
costs
Factory Overhead Factory Payroll Cost of Goods Sold
(2) Indirect (6) Overhead (3) Labor (4) Labor (8)
material costs costs applied costs costs applied
or factory to production incurred
supplies (Cr
(4) Indirect payables)
labor costs
(5) Other
factory OH
costs incurred (Cr varies)
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VISUAL #15-2
Job Cost Sheet
Customer Build We Must, Inc. Job No. 114
Product Bracket-H3 Date Promised 10/1/xx
Quantity 200 Dates: Started 9/1/xx Completed 9/20/xx
Direct Material Direct Labor Cost Summary
Mat’l. Payroll Direct Material $ 900.00
Req’n. Summary
No. Amount Dated Dept. Amount Direct Labor 600.00
667 $ 340.00 9/2 A $ 70.00
673 180.00 9/9 A 240.00 Factory Overhead
691 200.00 9/16 B 190.00 (applied at):
623 180.00 9/23 B 100.00
150% of direct
labor cost 900.00
Total Cost $2,400.00
Totals $ 900.00 $ 600.00 Units Finished 200
Unit Cost $12.00
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Alternate Demo Problem 15
The following information is the Work in Process and Factory Overhead
Accounts for Superior Company:
Work in Process Inventory
Beg Inv. 302,000
Direct Materials 280,000
Direct Labor 120,000
Overhead Applied 96,000
Costs transferred to
Finished Goods Inv. 548,000
End Inv. 250,000
Factory Overhead
96,000 Applied Overhead
Required:
1. Prepare a manufacturing statement for Superior Company for 2015.
2. Prepare the entry to adjust for under or over applied overhead.
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Solution: Alternate Demo Problem 15
SUPERIOR MANUFACTURING COMPANY
Manufacturing Statement
For Year Ended December 31, 2015
Direct materials used …………………………………….
$280,000
Direct labor……………………………………………………
120,000
Factory Overhead Applied ……………………………..
96,000
Total manufacturing costs ……………………………..
496,000
Work in Process Inventory 1/1/15……………….
$302,000
302,000
Total goods in process during the year ………….
800,000
Work in process inventory, 12/31/15 ……………..
250,000
Cost of goods manufactured ………………………….
$548,000
Adjusting entry for under or over-applied overhead
Factory Overhead
96,000 Applied Overhead
Dec 31
Cost of Goods Sold
2,000
Factory Overhead
2,000
To adjust for under applied overhead costs