Manufacturing Costs Mapping Cost Incurred Is this a cost incurred in order to manufacture products? Yes No Is this a cost incurred to sell Is this a cost directly traceable to the finished product? the product? Yes No No Yes Administrative Selling Direct Material Indirect Labor Indirect Material Direct Labor Miscellaneous Does this cost have future benefit? PRODUCT COSTS No Yes Asset Expense NON PRODUCT COST SELLING AND ADMINISTRATIVE Conversion Cyce Inventory Accounting Flow Exercise Instructions: Step 1: Classify the items in the table on the other page as either RM (this includes indirect and direct material), DL, MOH or S& A. Step 2: Populate the T-accounts with the amounts of the items based on how you classified each of the items. If you gave an itema RM classification, then it needs to go into the RM T-Account etc. Step 3: Only after completing step 2, Use the general journal below to create a general journal entry for each of the transfer events (see below the T-accounts the events) using the percentage information provided at the bottom of worksheet. Create the journal entry first, then post the amounts into the relevant T-accounts. Do both of these steps for each entry before you proceed to the next Event. Use class packet page 10-5 for an example (this page will not be just like this problem, but is an example). Step 4: Find the ending balance of each of the T-accounts. Accounts Event Dr. Cr. Record the transfer of 75 % of the Raw Materials to the WIP account. Event 1 Record the transfer of 100 % of the MOH to the WIP account. Event 2 Record the transfer of 82% of the WIP account that represents the COGM to the Event 3 Finished Goods account Record the transfer of the 96% of the Finished Goods that are sold. Event 4 Turkey Day Productions builds large turkey lawn ornaments in their production facility. Each chipboard lawn ornament has googly eyes, reflective tape borders, metal yard stake legs and is painted to look like a turkey. Using the following costs for Turkey Day Productions, fill in the appropriate T-accounts and determine the Cost of Goods Sold for this period. You should start by classifying each of the costs as Raw Material RM (assume that all materials are direct materials), DL, MOH or S&A in the space provided to the left of the cost (the first two ore done as on example). See additional instructions below. Every item will be classified as RM, DL, MOH or S & A Class Item of Cost S Amount Class Item of Cost S Amount Chipboard 25,580 40,000 RM Paint 12,000 MOH Supervisor Salary Freight In on Raw Materials 475 Nails 5,000 Facility Insurance Googly Eyes 23,500 Assembly Worker's Wages 67,500 7,000 Para 32,000 Quality Control Supervisor Salary Reflective Tape Painter's Wages 10,000 Depreciation Factory Equipment Construction Staples Factory Rent Utilities on the Factory Utilities on the Home Office 6,500 65,200 4,400 6,800 9,125 700 15,700 1,200 2,000 65,200 Glue Metal Yard Stake Legs Machine Maintenance Chipboard Cutter's Wages Finished Goods Inventory Work-In-Process Inventory Raw Materials Inventory BI 19,750 BI 23,000 B 17,350 Selling & Administrative Cost of Goods Sold Expense Manufacturing Overhead Transfer Events: Event 1: Assume that 75% of Raw Materials are used during the period. Event 2: 100% of the Manufacturing Overhead is applied to production during this period. Event 3: 82% of Work-In-Process is finished up during the period. Event 4: 96% of the Finished Goods are sold during the period. Round calculations to the nearest dollar (no cents)
