1 / 11

LESSON 19-2

LESSON 19-2. Maintaining Manufacturing Records. RECORDS FOR MATERIALS. page 565. 1. 2. 3. 4. A card should be prepared for each type of material kept in the storeroom The total value for all the materials ledger cards equals the balance of the materials general ledger account.

daviddhall
Download Presentation

LESSON 19-2

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. LESSON 19-2 Maintaining Manufacturing Records

  2. RECORDS FOR MATERIALS page 565 1 2 3 4 • A card should be prepared for each type of material kept in the storeroom • The total value for all the materials ledger cards equals the balance of the materials general ledger account 1. Open a materials ledger card. 2. Record orders placed. 3. Record orders received. 4. Record the new balance. LESSON 19-2

  3. RECORDING DIRECT MATERIALS ON A COST SHEET • During the manufacturing process, all costs of making a product must be recorded • All charges for direct materials, direct labor, & factory overhead applied (estimated) for a particular job are recorded on a cost sheet • When direct materials are needed for a job, they are requested from the storeroom using a materials requisition form • A materials requisition form is used to authorize transfer of items from the storeroom to the factory • When materials are issued to the factory from the storeroom, the materials ledger card is updated LESSON 19-2

  4. RECORDING DIRECT MATERIALS ON A COST SHEET page 566 1 4 2 1. Open a cost sheet for each job. 2. Prepare a materials requisition. 3. Update the materials ledger card. 4. Record the issuance of direct materials. 3 LESSON 19-2

  5. CALCULATING & RECORDING FACTORY OVERHEAD • Factory overhead expenses occur throughout a fiscal period • Factory overhead expenses are not known until the end of a fiscal period • Factory overhead expenses normally are charged to jobs by using an application rate based on a known cost such as direct labor • The estimated amount of factory overhead recorded on cost sheets is called applied overhead LESSON 19-2

  6. Estimated No. of Units (Fax Machines) Produced EstimatedDirect Labor Hours per Unit Estimated Salary Rate per Hour EstimatedTotal DirectLabor Cost × × = 10,000 × 8 × $12.50 = $1,000,000.00 CALCULATING AND RECORDING FACTORY OVERHEAD page 569 FaxaVision uses direct labor cost as a base unit because there is a close relationship between the amount of direct labor cost & factory overhead costs. FaxaVision estimates next year’s direct labor cost as $1,000,000.00 • Generally three factors are considered in estimating factory overhead • Amount of factory overhead for the past several fiscal periods • Number of products the factory expects to produce in the next fiscal period • Expected change in unit costs of factory overhead items LESSON 19-2

  7. Estimated Factory Overhead Estimated Direct Labor Cost Factory Overhead Applied Rate ÷ = $800,000.00 ÷ $1,000,000.00 = .80 or 80% CALCULATING AND RECORDING FACTORY OVERHEAD page 569 FaxaVision’s factory overhead applied rate is 80% of direct labor cost FaxaVision expects to product 10,000 fax machines during the coming year. Considering this volume, previous years’ overhead, and anticipated cost increases, FaxaVision estimates factory overhead as $800,000 • Estimate the number of base units that will be used in the next fiscal period. • Base units are usually cost items that can be identified easily • Direct labor cost, direct labor hours, & direct materials cost are common bases • A base unit should be selected that most closely relates to actual overhead costs. LESSON 19-2

  8. Total Direct Labor Costs (Job No. 791) Factory Overhead Applied Rate Applied Overhead (Job No. 791) × = $5,024.00 × 80% = $4,019.20 CALCULATING AND RECORDING FACTORY OVERHEAD page 569 Calculate and record the amount of applied overhead, $4,019.20, on the cost sheet for Job No. 791 (total direct labor for Job No. 791, $5,024.00, multiplied by the factory overhead rate, 80%) LESSON 19-2

  9. 4 5 Total Costs(Job No. 791) No. of Units Cost per Unit ÷ = $16,812.50 ÷ 50 = $336.25 COMPLETING A JOB COST SHEET page 570 1. Total direct materials. 2. Total direct labor. 3. Transfer amounts to Summary columns. 3 4. Calculate applied factory overhead. 5. Determine total job cost. 2 6. Determine cost per unit. 1 6 LESSON 19-2

  10. Quantity × Unit Cost = Total Cost FINISHED GOODS LEDGER CARD page 571 2 1 4 3 1. Complete the Manufactured/Received columns. 2. Enter existing inventory balance. 3. Extend data for Job 791. 110 × $339.30 = $37,323.00 50 × 336.25 = 16,812.50 $54,135.50 4. Calculate total cost. LESSON 19-2

  11. TERM REVIEW page 572 • applied overhead LESSON 19-2

More Related