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COST ACCOUNTING

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by

irene armenion

on 8 June 2015

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Transcript of COST ACCOUNTING

Journal Entry:
Example: Payroll amounted to P32,000.
The distribution is as follows:
Mixing Dept. ................................... P11,000
Brewing Dept. ................................ 9,000
Finishing Dept. ............................... 8,000
Service Departments .................... 4,000
LABOR COST
The cost of wages paid to workers during an accounting period on daily, weekly, monthly, or job basis, plus payroll and related taxes and benefits.
Labor Cost is subsequently charged to the different departments where they are incurred as indicated on summary of daily time tickets or daily clock cards.
Work in Process - Mixing Dept. 11,000
Work in Process - Brewing Dept. 9,000
Work in Process - Finishing Dept. 8,000
Factory Overhead Control 6,000
Payroll 32,000
FACTORY OVERHEAD
The costs incurred during the manufacturing process,
excluding
the costs of direct labor & materials.
Factory Overhead is accumulated in the factory overhead account supported by the subsidiary record - factory overhead analysis sheet.
Charged to production at its actual amount at a predetermined rate based on normal capacity
Factory Overhead:
Actual amount used if overhead per unit is expected to remain at more or less the same level & this holds true when:
(a) production volume is more or less constant

(b) factory overhead (particularly, fixed overhead)
is not significant portion of cost.

If production volume

fluctuates
significantly & fixed factory overhead is a significant portion of cost, application of factory overhead is preferably by the use of predetermined rates based on normal capacity.
Example: Applied factory overhead is P33,800 while factory overhead as accumulated amounts to P35,000.
Factory Overhead applied:
Mixing Department .................... P13,500
Brewing Department ................. 9,200
Finishing Department ................ 11,100
Total P33,800
Factory Overhead control ................... P35,000
Distribution:


Mixing Department .................... P15,000
Brewing Department ................. 9,000
Finishing Department ................ 11,000
Journal Entries:


Overhead charged to production.
Work in Process - Mixing Dept. 13,500
Work in Process - Brewing Dept. 9,200
Work in Process - Finishing Dept. 11,100
Factory Overhead - Mixing Dept. 13,500
Factory Overhead - Brewing Dept. 9,200
Factory Overhead - Finishing Dept. 11,100



Actual Factory Overhead
Factory Overheaad Control 35,000
Cash and other credits 35,000
Distribution of Actual Overhead.

Factory Overhead - Mixing Dept. 15,000
Factory Overhead - Brewing Dept. 9,000
Factory Overhead - Fiishing Dept. 11,000
Factory Overhead Control 35,000
The balance of the factory overhead account for each department must be
equal
to the departmental factory overhead variance.
Ex a mple: Goods completed in Dept. A (cost, P38,000) are transferred to Dept. B. During the same period, Dept. B completed goods with accumulated cost of P64,200 and transferred these to the finished goods stockroom.
The entries would be as follows:


Goods completed and transferred out by
Dept. A

Work in Process - Dept B 38,000
Work in Process - Dept A 38,000


Goods completed and transferred out by
Dept. B

Finished Goods 64,200
Work in Process - Dept. B 64,200
THANKS FOR WATCHING!
DALAYGON ANG DIYOS :D
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