Chapter 30. Actual Product Costing. Prepared by Diane Tanner University of North Florida. Methods of Costing Products. Three methods Actual costing Normal costing Standard costing How they differ
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Actual Product Costing
University of North Florida
Costs in departments correlate to inventory accounts.
Ready for Sale
The Purchasing Manager fills out a purchase order to order materials from a supplier
When materials are received, the Materials Storeroom Clerk records and stocks the materials in the storeroom.
The Materials Storeroom Clerk sends the receiving report to Accounting for payment.
Purchase Materials for Cash
Purchase Materials on Account
Pay for materials previously purchased on account
Will E. Delite
The production supervisor fills out a materials requisition form.
The materials storeroom clerk delivers the requested materials to the production area.
the use of
The processed form is sent to Accounting.
Why do we bother with a materials requisition form every time production needs materials for a job?
Internal control of assets
Tracing material costs to particular products/ services
To mitigate theft and waste, and prevent overstocking of unneeded inventory which can tie up cash.
To determine the cost of products to set selling prices and make other management decisions
Requisition of Direct Materials to Production
Requisition Indirect Materials to Production
Employees fill out time tickets to record the time spent on each product/service
Incur Direct Labor Costs
Incur Indirect Labor Costs
Includes indirect materials, indirect labor, and factory (production facility) related costs
Incur Indirect Labor or Factory Related Costs
Incur Indirect Material Costs