Based on the picture below, give yourinsights or opinion and make a reflection or key takeawaysabout the following topics:

• Accounting for materials

Accounting for Materials Learning Objectives is?) El Recognize the two Specify internal Amount for materials Ind basic aspects of control procedures relate materials accounting material control. for materials. to the general Iader. ll Account for inventories Account for scrap in a just-in time materials, spoiled goods, - system. and defective work. Effective Cost Control l. A specific assignment of duties and responsibilities. 2. A list of individuals who are authorized to approve expenditures. 3. An established plan of objectives and goals. 4. Regular reports showing the differences between goals and actual performance. 5. A plan or corrective action designed to prevent unfavorable differences from recurring. Follow-up procedures for corrective 5 measures. II The materials accounting system must be integrated with the general ledger. } II Purchases are recorded as debits to materials in the general ledger, Materials II Materials account is supported by a subsidiary stores or materials Accounting ledger in which there is an individual account for each item. Determining the Cost of Materials Issued Din selecting the method to be used, the company should review their accounting policies and the federal and state tax regulations. DThe flow of materials DOES NOT dictate the flow of costs. I Flow of materials - the order that materials are issued for use in the factory. I Flow of costs the order in which unit costs are assigned to materials. 'I7 El First In, First Out Method (FIFO) I Assumes that materials used in production are casted at the prices paid for the oldest materials and the ending inventory is costed at the prices paid for the most recent purchases. CI Last In, Last Out Method (LIFO) I Assumes that materials used in production are costed at the prices paid for the most recently purchased prices, and the ending inventory is costed at prices paid for the earliest purchases. CI Moving Average Method - Material issued and the ending inventory are casted at the average price. This average unit price is computed every time a new lot of materials is received and it continues to be used until another lot is purchased. CI The purpose ol materials accounting is to provide a summary from the general ledger of the total cost of materials purchased and used in manufacturing. ' Cl All materials issued during the month and materials returned to Accounting stock are recorded on a summary of materials Issued and returned Procedures m Accounting for Direct Labor 23 Learning Objectives S 19 Distinguish between features of hourly rate Specify procedures for Account for labor costs and piece-rate plans. controlling labor costs. and payroll taxes. ATTH Prepare accruals for Account for special payroll earnings and problems in labor taxes. costing. 24 Payroll Accounting System for a Manufacturer O Must record the hours worked or quantity of output by employees in total and by job, process, or department. O Must analyze the hours worked by employees to determine how labor time is to be charged. O Must charge payroll time to jobs, processes, departments, and factory overhead. O Must prepare the payroll. 25 O Costs are incurred for a variety of jobs that are related to the production process, but Direct Labor are not readily identifiable with the individual jobs worked on during the period. O Indirect labor costs are charged to factory overhead. ORepresents payroll costs that are traceable to individual jobs . worked on during the period. Indirect Labor ODirect labor costs are debitedAccounting for Actual Overhead 42 Learning Objectives S Identify Prepare a budget Account for actual Account for actual manufacturing for factory factory overhead and overhead. overhead costs. overhead costs. costs. 43 Manufacturing overhead costs are generally defined as those costs that are not conveniently identified with particular orders or units of products. Simply stated, manufacturing overhead includes all factory costs other than direct materials and direct lanor. 44 Oldentify cost behavior patterns. OBudget factory overhead costs. Accounting OAccumulate actual overhead costs. for Factory Overhead OApply factory overhead estimates to production.W Accounting for Finished Goods Finished Goods are goods that have undergone the manufacturing process, or goods that have been procured [or purposes of reselling, and are in the possession of the company, but have not been sold yet. This value of inventory is classified as a true value of inventory, and subsequently, record that value of the asset on the business balance sheet. From an accounting perspective, it is an extremely integral part oi the overall process because of the reason it is something that is directly reected on the nancial statements, and therefore, it is of high importance to all the - - - ders. The journal entry below can be seen as a baseline case lor when the entity is a manufacturing concern. Debit Credit Raw Materials Inventory $200.00 Accounts Payable $200.00 Debit Credit Work in Progress Inventory $200.00 Raw Material Inventory $200.00 Debit Credit Flnlshed Goods Inventory $200.00 Work In Process Inventory As for as Finished Goods Inventory is concerned, it should be recorded and maintained properly to ensure the company has clarity regarding the sellable goods that they have on hand, in addition to the fact that inventory is also important to be displayed as a current asset on the balance sheet cost of Goods sold is also known as "cost of sales" or its acronym "COGS." COGS refers to the cost of goods that are either manufactured or purchased and then sold. COGS counts as a business expense and affects how much profit a company makes on its products. Cost of goods sold is found on a business' income statement, one of the top financial reports in accounting. An income statement reports income for a certain accounting period, such as a year, quarter or month. COGS is usually found on an income statement directly beneath "sales" or \"income.\" An income statement is also called a \"profit and loss statement." Here's an example: Profit and Loss (USD) Frayhooks Support Vnn' ending Dncer-'ba' JI 2017 1017 III M \"A: la It. 1m M A. in on Ibv D: T Wrcm' 4'\\|.'.: I I 4 .4 I a uuuas I-uurII nod on: non mu IIYM \"o u use one one non ru II no I um L0\" hoot-u" RIFIMLI' no: we Inn Inn one on non one one no: \"I: coo mu 4, \"w.- - . - - -.I-,' I I - - . - m .I- fmnrllp-I'II' nou an: Inn Inn all non see one one am \"I: 000 nln MEI )lOfIH use. 7W \"W I\" '0' l\" "l '5'\" 3W I! I\" 0W 099 LII! ll 61 The items that make up costs of goods sold A higher cost of goods sold means a include: company pays less tax, but it also means u Cost of items intended for resale a company makes less profit. Something " COSt 0' raw materIals needs to change. Cost of goods should a cum ofparts used to makea product . . . . . . .1 Direct labor costs be mInImIzed In order to Increase prots. .1 Supplies used in either making or selling the product Cost of goods sold is calculated using the '4 Overhead costs. like utilities for the following formula: manufacturing site :1 Shipping or freight in costs (Beginning Inventory + Cost of Goods) - _ -_: Indirect costs, like distribution or sales force "' 4'19 Inventory = Cost of Goods Sold 6 2 COStS .1 Container costs Accounting for Non-Manufacturing Costs 63 Non-manufacturing costs are those costs that are not incurred to manufacture a product. Examples of such costs are salary of sales person and advertising expenses. Generally non-manufacturing costs are further classified into two categories: Non- manufacturing 0 Marketing and Selling Costs costs O Administrative Costs 64 Administrative costs include all executive, organizational, and clerical costs associated with general management of Marketing or an organization rather than with manufacturing, marketing, or selling. selling costs Examples of administrative costs include executive compensation, general accounting, secretarial, public relations, and similar costs involved in the overall, general administration of the organization Marketing or selling costs as a whole. include all costs necessary to secure customer orders and get the finished product into the hands of the customers. These costs are often called order getting or order filling costs. Administrative costs Examples of marketing or selling costs include 65 g costs, shipping costs, sales commission $ salary. Selling Expenses: Salaries paid to salespeople are a marketing cost, not a product cost; marketing expenditures are classified as period costs, which means they are directly charged to the period's expense account. Some Examples While depreciation on manufacturing equipment is of Non- considered a manufacturing cost, depreciation on the manufacturing warehouse in which products are held after they are Costs made is considered a period cost