Study Guide
Prepare a Schedule of Cost of Goods Manufactured
-
University:
Kentucky State University -
Course:
ECO 301 | Microeconomics Academic year:
2019
-
Views:
248
Pages:
25
Author:
topljenjeen9
2-21
Learning Objective 4
Prepare a schedule of cost
of goods manufactured.
. 2-22
Schedule of Cost of Goods Manufactured
Calculates the cost of raw
material, direct labor and
manufacturing overhead
used in production.
Calculates the manufacturing
costs associated with goods
that were finished during the
period.
. 2-23
Product Cost Flows
Raw Materials
+
=
–
=
Be ginning ra w
m a te ria ls inve ntory
Ra w m a te ria ls
purcha se d
Ra w m a te ria ls
a va ila ble for use
in production
Ending ra w m a te ria ls
inve ntory
Ra w m a te ria ls use d
in production
Manufacturing
Costs
Work
In Process
Dire ct m a te ria ls
As items are removed from raw
materials inventory and placed into
the production process, they are
called direct materials.
. 2-24
Product Cost Flows
Raw Materials
+
=
–
=
Be ginning ra w
m a te ria ls inve ntory
Ra w m a te ria ls
purcha se d
Ra w m a te ria ls
a va ila ble for use
in production
Ending ra w m a te ria ls
inve ntory
Ra w m a te ria ls use d
in production
Manufacturing
Costs
Work
In Process
Conversion
costs are costs
incurred to
convert the
direct material
into a finished
product.
Dire ct m a te ria ls
+ Dire ct la bor
+ Mfg. ove rhe a d
= Tota l m a nufa cturing
costs
. 2-25
Product Cost Flows
Raw Materials
+
=
–
=
Be ginning ra w
m a te ria ls inve ntory
Ra w m a te ria ls
purcha se d
Ra w m a te ria ls
a va ila ble for use
in production
Ending ra w m a te ria ls
inve ntory
Ra w m a te ria ls use d
in production
Manufacturing
Costs
Dire ct m a te ria ls
+ Dire ct la bor
+ Mfg. ove rhe a d
= Tota l m a nufa cturing
costs
Work
In Process
Be ginning w ork in
proce ss inve ntory
+ Tota l m a nufa cturing
costs
= Tota l w ork in
proce ss for the
pe riod
All manufacturing costs incurred
during the period are added to the
beginning balance of work in
process.
. 2-26
Product Cost Flows
Raw Materials
Manufacturing
Costs
Be ginning ra w
Dire ct m a te ria ls
m a te ria ls inve ntory
+ Dire ct la bor
+ Ra w m a te ria ls
+ Mfg. ove rhe a d
purcha se d
= Tota l m a nufa cturing
= Ra w m a te ria ls
costs
a va ila ble for use
in production
– Ending ra w m a te ria ls
inveassociated
ntory
Costs
with the goods that
= Ra w m a te ria ls use d
areincompleted
during the period are
production
Work
In Process
Be ginning w ork in
proce ss inve ntory
Tota l m a nufa cturing
costs
Tota l w ork in
proce ss for the
pe riod
Ending w ork in
proce ss inve ntory
Cost of goods
m a nufa cture d
+
=
–
=
transferred to finished goods
inventory.
. 2-27
Product Cost Flows
Work
In Process
+
=
–
=
Be ginning w ork in
proce ss inve ntory
M a nufa cturing costs
for the pe riod
Tota l w ork in proce ss
for the pe riod
Ending w ork in
proce ss inve ntory
Cost of goods
m a nufa cture d
Finished Goods
Be ginning finishe d
goods inve ntory
+ Cost of goods
m a nufa cture d
= Cost of goods
a va ila ble for sa le
- Ending finishe d
goods inve ntory
Cost of goods
sold
. 2-28
Manufacturing Cost Flows
Costs
Balance Sheet
Inventories
Material Purchases
Raw Materials
Direct Labor
Work in
Process
Manufacturing
Overhead
Selling and
Administrative
Income
Statement
Expenses
Cost of
Goods
Sold
Finished
Goods
Period Costs
Selling and
Administrative
. 2-29
Quick Check ✓
Beginning raw materials inventory was $32,000.
During the month, $276,000 of raw material was
purchased. A count at the end of the month
revealed that $28,000 of raw material was still
present. What is the cost of direct material used?
A.
B.
C.
D.
$276,000
$272,000
$280,000
$ 2,000
. 2-30
Quick Check ✓
Beginning raw materials inventory was $32,000.
During the month, $276,000 of raw material was
purchased. A count at the end of the month
revealed that $28,000 of raw material was still
present. What is the costBeg.
of direct
material used?
raw materials
$ 32,000
A.
B.
C.
D.
$276,000
$272,000
$280,000
$ 2,000
+ Raw materials
purchased
276,000
= Raw materials available
for use in production $ 308,000
– Ending raw materials
inventory
28,000
= Raw materials used
in production
$ 280,000
. 2-31
Quick Check ✓
Direct materials used in production totaled
$280,000. Direct labor was $375,000 and
factory overhead was $180,000. What were
total manufacturing costs incurred for the
month?
A.
B.
C.
D.
$555,000
$835,000
$655,000
Cannot be determined.
. 2-32
Quick Check ✓
Direct materials used in production totaled
$280,000. Direct labor was $375,000 and
Direct
Materials What
$ 280,000
factory overhead was
$180,000.
were
Direct Labor
375,000
total manufacturing+ costs
incurred for the
+ Mfg. Overhead
180,000
month?
= Mfg. Costs Incurred
A.
B.
C.
D.
$555,000 for the Month
$835,000
$655,000
Cannot be determined.
.
$ 835,000 2-33
Quick Check ✓
Beginning work in process was $125,000.
Manufacturing costs incurred for the month
were $835,000. There were $200,000 of
partially finished goods remaining in work
in process inventory at the end of the
month. What was the cost of goods
manufactured during the month?
A.
B.
C.
D.
$1,160,000
$ 910,000
$ 760,000
Cannot be determined.
. 2-34
Quick Check ✓
Beginning work in process was $125,000.
Manufacturing costs incurred for the month
were $835,000. There were $200,000 of
partially finished goods remaining in work
Beginning work in
in process inventory at the
end of the $ 125,000
process inventory
Mfg. costs
incurred
month. What was the +cost
of goods
for the period
835,00 0
manufactured during the
month?
= Total
work in process
A.
B.
C.
D.
during the period
$1,160,000 – Ending
work in
inventory
$ 910,000 = Costprocess
of goods
manufactured
$ 760,000
Cannot be determined.
.
$ 960,00 0
200,00 0
$ 760,00 0 2-35
Quick Check ✓
Beginning finished goods inventory was
$130,000. The cost of goods manufactured
for the month was $760,000. And the ending
finished goods inventory was $150,000.
What was the cost of goods sold for the
month?
A. $ 20,000.
B. $740,000.
C. $780,000.
D. $760,000.
. 2-36
Quick Check ✓
Beginning finished goods inventory was
$130,000. The cost of goods manufactured
for the month was $760,000. And the ending
finished goods inventory was $150,000.
What was the cost of goods sold for the
month?
A. $ 20,000. $130,000 + $760,000 = $890,000
B. $740,000. $890,000 - $150,000 = $740,000
C. $780,000.
D. $760,000.
. 2-37
Learning Objective 5
Understand the
differences between
variable costs and fixed
costs.
. 2-38
Cost Classifications for Predicting Cost
Behavior
How a cost will react to
changes in the level of
activity within the
relevant range.
Total variable costs
change when activity
changes.
Total fixed costs remain
unchanged when activity
changes.
. 2-39
Variable Cost
Total Long Distance
Telephone Bill
Your total long distance telephone bill is based
on how many minutes you talk.
Minutes Talked
. 2-40
Variable Cost Per Unit
Per Minute
Telephone Charge
The cost per long distance minute talked is
constant. For example, 10 cents per minute.
Minutes Talked
. 2-41
Fixed Cost
Monthly Basic
Telephone Bill
Your monthly basic telephone bill probably
does not change when you make more local
calls.
Number of Local Calls
. 2-42
Fixed Cost Per Unit
Monthly Basic Telephone
Bill per Local Call
The average fixed cost per local call decreases
as more local calls are made.
Number of Local Calls
. 2-43
Cost Classifications for Predicting Cost
Behavior
Behavior of Cost (within the relevant range)
Cost
In Total
Per Unit
Variable
Total variable cost changes
as activity level changes.
Variable cost per unit remains
the same over wide ranges
of activity.
Fixed
Total fixed cost remains
the same even when the
activity level changes.
Average fixed cost per unit goes
down as activity level goes up.
. 2-44
Quick Check ✓
Which of the following costs would be variable with
respect to the number of cones sold at a Baskins &
Robbins shop? (There may be more than one
correct answer.)
A. The cost of lighting the store.
B. The wages of the store manager.
C. The cost of ice cream.
D. The cost of napkins for customers.
. 2-45
Quick Check ✓
Which of the following costs would be variable with
respect to the number of cones sold at a Baskins &
Robbins shop? (There may be more than one
correct answer.)
A. The cost of lighting the store.
B. The wages of the store manager.
C. The cost of ice cream.
D. The cost of napkins for customers.
.
Prepare a Schedule of Cost of Goods Manufactured
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