Managerial accounting (MSSTATE)-ch. 3

Raw materials
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Terms in this set (23)
Raw materials
any materials that go into the final product
Work in process
consists of units of production that are only partially complete and will require further work before they are ready for sale to customers
Finished goods
consist of completed units of product that have not been sold to customers
Cost of Goods Manufactured
includes the manufacturing costs associated with the goods that were finished during the period
What is the flow of costs?
Costs: Raw materials purchases, direct labor, manufacturing OH, selling&admin period costs-->Balance sheet: raw materials inventory, WIP inventory, finished goods inventory-->Income statement: COGS, selling&admin expenses
Nonmanufacturing costs are not assigned to individual jobs, rather they are
expensed in the period incurred
Examples of nonmanufacturing costs:
1. Salary expense of employees who work in a marketing, selling, or administrative capacity are expensed in the period incurred.
2. Advertising expenses are expensed in the period incurred.
The schedules contain three types of costs:
1. direct labor
2. direct materials
3. manufacturing overhead
The schedules calculate:
1.the cost of raw material and direct labor used in production and the amount of manufacturing overhead applied to production.
2.the manufacturing costs associated with goods that were finished during the period.
The ending raw materials inventory is deducted to arrive at the
raw materials used in production
Direct labor used in production and manufacturing overhead applied to production are added to direct materials to arrive attotal manufacturing costsTotal manufacturing costs are added to the beginning work in process to arrive attotal work in processThe ending work in process inventory is deducted from the total work in process for the period to arrive at thecost of goods manufacturedThe cost of goods manufactured is added to the beginning finished goods inventory to arrive at cost of goods available for sale. The ending finished goods inventory is deducted from this figure to arrive atcost of goods soldBeginning 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.$276,000 b.$272,000 c.$280,000 d.$ 2,000c. $280, 000Direct materials used in production totaled $280,000. Direct labor was $375,000, and $180,000 of manufacturing overhead was added to production for the month. What were total manufacturing costs incurred for the month? a.$555,000 b.$835,000 c.$655,000 d.Cannot be determined.b. $835, 000Beginning work in process was $125,000. Manufacturing costs added to production 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.$1,160,000 b.$ 910,000 c.$ 760,000 d.Cannot be determined.c. $760, 000Beginning 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.$760,000b. $740, 000PearCo's actual overhead for the year was $650,000 with a total of 170,000 direct labor hours worked on jobs. PearCo's predetermined overhead rate is $4.00 per direct labor hour. What is the overhead applied during the period?Applied overhead=$4 per DLH x $170, 000 DLH = $680, 000Does PearCo have underapplied or overapplied overhead for the year?Overapplied by $30, 000Tiger, Inc. had actual manufacturing overhead costs of $1,210,000 and a predetermined overhead rate of $4.00 per machine hour. Tiger, Inc. worked 290,000 machine hours during the period. Tiger's manufacturing overhead is: a. $50,000 overapplied.b. $50,000 underapplied.c. $60,000 overapplied.d. $60,000 underapplied.b. $50, 000 underappliedWhat should PearCo do about the difference in overhead?1. It can be closed to COGS 2. It can be closed proportionally to Work in Process, Finished Goods, and COGSWhat effect will the overapplied overhead have on net operating income? a. Net operating income will increase. b. Net operating income will be unaffected. c. Net operating income will decrease.a. Net operating income will increase