Manufacturing Costs Inputs Process Outputs Materials WIP Finished Goods Inventory Inventory Inventory Store RoomFactory Floor Warehouse Materials AssemblyFinished product available for sale Assign costs: 1. Direct materials 2. Direct labor 3. Overhead
Inventory Accounts Assets –Materials Inventory –Work in Process Inventory –Finished Goods Inventory Expense –Cost of Goods Sold –Matching Principle
Inventory Cost Flows Materials Inventory Beginning Balance Materials + Additions of Purchases of Materials – Ending Balance Materials = Materials used in Production Dr. Work in Process InventoryXX Cr. Materials InventoryXX To record materials used in production
Inventory Cost Flows Work in Process Inventory Beginning Balance WIP + Additions of DM, DL & O/H – Ending Balance WIP = Cost of Goods Manufactured Dr. Finished Goods InventoryXX Cr. Work in Process InventoryXX To record the cost of goods manufactured
Inventory Cost Flows Finished Goods Inventory Beginning Balance Finished Goods + Additions of Cost of Goods Manufactured – Ending Balance Finished Goods = Cost of Goods Sold Dr. Cost of Goods SoldXX Cr. Finished Goods Inventory XX To record the cost of goods sold
Accounting Schedules Schedule of Cost of Goods Manufactured –Exhibit 2-4 on page 48 Schedule of Cost of Goods Sold –Exhibit 2-2 on page 46 –Problem 2-26Problem 2-26
Coach Keen Says… Review all of Chapter 2 Try to get a good handle on the terms Be sure to review inventory cost flows, equations and handout Review Problem 2-26 Review Chapter 2 homework 7 & 19 Read Chapter 3 Attempt Chapter 3 homework 2 & 3
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