Chapter 1 : Managerial Accounting Concepts and Principles
A. Determine Product Costs:
Fixed Cost: unchanged regardless of how many units produced. Ex: Rent Expense, Salary
Variable Cost: increase when more units produced. Ex: Raw Material, Hourly Wage, Utilities
PRODUCT COSTS
Direct Material (DM)
Direct Labor (DL)
Factory Overhead (FO) :
+ Indirect Labor ( IL)
+ Indirect Material (IM)
+ Other Overhead Expenses
PERIOD COSTS
Advertising Expense
Sale Commision
Admin & General Expense
Income Tax
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B. Schedule Cost of Goods Manufacturing (COGM):
Ex: Prepare a Schedule Cost of Goods Manufacturing (COGM) based on the following information:
Beginning Raw Materials Inventory
Ending Raw Materials Inventory
Beginning Work in Process Inventory
Ending Work in Process Inventory
Beginning Finished Goods Inventory
Ending Finished Goods Inventory
$15,000
10,600
29,000
44,000
24,000
37,400
Raw material purchased
Direct Labor Used
Total Factory Overhead used
66,000
38,000
80,000
How much is Direct Material Used ………………………………………………………….
How much is Direct Labor ……………………………………………………………….
How much is Factory Overhead ………………………………………………………..
How much is Cost of Goods Manafactured (COGM) ………………………………………
How much is Cost of Goods Sold (COGS) …………………………………………………………………
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Practice:
ASSET
Expense
BB
COGS
Avail for Use:
Direct Material Used
EB
BB
Avail. For Mfg:
COGM
EB
BB
Avail. For Sale:
COGS
EB.
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Chapter 1 : Practice
Product Cost
ACCOUNT TITLE
Product Cost
Factory Overhead Cost
Period Cost
Direct
Material
(DM)
Avertising Expense
85,000
Total
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1. Total Direct Material Cost
Total Direct Labor
Total Factory Overhead
Total Selling Expense
Total Admin & General
ASSET:
= ……………………………………………………….
= ………………………………………………………..
= ………………………………………………………..
= …………………………………………………………
= ………………………………………………………..
EXPENSE:
…….
…….
……………..
………………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………………
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AMOUNTS:
DIRECT MATERIAL (DM):
……..
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DIRECT LABOR (DL):
……………………………………………
FACTORY OVERHEAD (FOH)
……………………………………………
Total Manufacturing Cost
……………………………………………
Add Work in Progress Begin Balance BB Dec 31, 2014
……………………………………………
Total Cost of Work In Progress during 2015
……………………………………………
Less Work In Progress Ending Balance EB Dec 31, 2015
……………………………………………
COST OF GOODS MANUFACTURED (COGM) DURING 2015
……………………………………………
………………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………………
SALES:
……..
……..
AMOUNTS:
Cost of Goods Sold (COGS) :
……………..
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GROSS PROFIT :
……………………………………………
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OPERATING EXPENSE :
………………………………………………………
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INCOME BEFORE INCOME TAX :
……………………………………………
INCOME TAX :
……………………………………………
NET INCOME :
……………………………………………
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