ACCT 203 Lecture Notes - Lecture 9: Total Quality Management

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brownduck883

22 May 2018

School

George Mason University

Department

Accounting

Course

ACCT 203

Professor

Harley

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GMU ACCOUNTING 203 Lecture 9

Direct Labor

Refers to the efforts of employees who physically convert materials into a finished

product.

Direct Labor costs

The wages and salaries for direct labor that are separately and readily traced

through the manufacturing process to finished goods.

Factory Overhead

Consists of all manufacturing costs that are not direct materials or direct labor.

Factory Overhead costs

CANNOT be separately or readily traced to finished goods. Include indirect

materials and indirect labor.

Prime Costs

Expenditures directly associated with the manufacture of finished goods.

(includes direct materials and direct labor costs).

Conversion costs

Expenditures occurred in the process of converting raw materials into finished

goods. (includes direct labor costs and overhead costs)

Raw materials inventory

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Document Summary

Refers to the efforts of employees who physically convert materials into a finished product. The wages and salaries for direct labor that are separately and readily traced through the manufacturing process to finished goods. Consists of all manufacturing costs that are not direct materials or direct labor. Cannot be separately or readily traced to finished goods. Expenditures directly associated with the manufacture of finished goods. (includes direct materials and direct labor costs). Expenditures occurred in the process of converting raw materials into finished goods. (includes direct labor costs and overhead costs) Refers to the goods a company acquires to use in making products. It uses raw materials in two ways: direct and indirect. direct materials. Other materials used to support production processes and are sometimes not as clearly identified with specific units or batches of product. Consists of products in the process of being manufactured but not yet complete. Similar to merchandise inventory of a merchandising company.

Related Questions

1.) When products held in inventory are sold:

A.)Cost of Goods Sold is credited.

B.)Work in Process Inventory is credited.

C.)Finished Goods Inventory is credited.

D.)Finished Goods Inventory is debited.

2.)Since manufacturing costs (direct materials, direct labor,and overhead) are incurred in the process of manufacturing units ofproduct, these costs are credited t

A.)	The Direct Materials Inventory, Direct Labor, and ManufacturingOverhead accounts respectively.
B.)	Liability accounts.
C.)	The Work in Process Inventory account.
D.)	The Cost of Goods Sold account.

3.)Management accounting systems are designed to assistorganizations in the performance of all of the following functionsexcept:

A.)	The assignment of decision-making authority over companyassets.
B.)	Planning and decision-making.
C.)	Monitoring, evaluating, and rewarding performance.
D.)	The preparation of income tax returns.

4.)In a schedule of cost of finished goods manufactured, thefigure for total manufacturing costs:

	A.) May be less than the cost of direct materials used.
	B.) May be less than the direct labor costs assigned toproduction.
	C.) May be less than the manufacturing overhead applied toproduction.
	D.) May be less than the cost of finished goodsmanufactured.

5.) When a manufacturing company purchases raw materials orcomponent parts to be used in manufacturing finished goods, thesecosts are initially debited to:

	A.) Expense accounts.
	B.) Raw Materials Inventory.
	C.) Finished Goods Inventory.
	D.) Manufacturing Overhead.

6.) The wages paid to employees working directly on a company'sproducts would be shown as a:

	A.) Credit to Direct Labor.
	B.) Debit to Direct Labor.
	C.) Credit to Work in Process.
	D.) Debit to Manufacturing Overhead.

7.) Amounts credited to the Work in Process inventory accountmay best be described as:

	A.) The cost of finished goods manufactured.
	B.) Total manufacturing costs charged to production.
	C.) The cost of goods sold.
	D.) Direct materials purchased, direct labor costs paid, andpayments for items classified as manufacturing overhead.

chocolatetiger413

Crawford Corporation incurred the following transactions:

1. Purchased raw materials on account $46,300.

2. Raw Materials of $36,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,800 was classified as indirect materials.

3. Factory labor costs incurred were $59,900, of which $51,000 pertained to factory wages payable and $8,900 pertained to employer payroll taxes payable.

4. Time tickets indicated that $54,000 was direct labor and $5,900 was indirect labor.

5. Manufacturing overhead costs incurred on account were $80,500.

6. Depreciation on the company’s office building was $8,100.

7. Manufacturing overhead was applied at the rate of 150% of direct labor cost.

8. Goods costing $88,000 were completed and transferred to finished goods.

9. Finished goods costing $75,000 to manufacture were sold on account for $103,000.

Journalize the transactions.

sapphireguinea-pig506

Problem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4

[The following information applies to the questions displayed below.]

Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $580,000, and factory payroll cost in April is $381,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $25,000; factory rent, $31,000; factory utilities, $24,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $650,000 cash in April. Costs of the three jobs worked on in April follow.

	Job 306			Job 307			Job 308
Balances on March 31
Direct materials		$	28,000		$	36,000
Direct labor			24,000			15,000
Applied overhead			12,000			7,500
Costs during April
Direct materials			139,000			205,000		$	100,000
Direct labor			103,000			152,000			101,000
Applied overhead			?			?			?
Status on April 30	Finished (sold)			Finished (unsold)				In process

rev: 03_15_2018_QC_CS-121813

Problem 15-1A Part 1

Required:
1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).

	Job 306	Job 307	Job 308	April Total
From March
Direct Materials	$28,000	$36,000		$64,000
Direct Labor	24,000	15,000		39,000
Applied overhead	12,000	7,500		19,500
Beginning goods in process
For April
Direct Materials	139,000	205,000	100,000	444,000
Direct Labor	103,000	152,000	101,000	356,000
Applied overhead
Total costs added in April
Total costs (April 30)
Status on April 30	Finished (sold)	Finished (unsold)	In process
April 30 cost included in:

Problem 15-1A Part 2

Materials purchases (on credit).
Direct materials used in production.
Direct labor paid and assigned to Work in Process Inventory.
Indirect labor paid and assigned to Factory Overhead.
Overhead costs applied to Work in Process Inventory.
Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
Transfer of Jobs 306 and 307 to Finished Goods Inventory.
Cost of goods sold for Job 306.
Revenue from the sale of Job 306.
Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

2. Prepare journal entries for the month of April to record the above transactions.

Problem 15-1A Part 3

3. Prepare a schedule of cost of goods manufactured.

MARCELINO COMPANY
Schedule of Cost of Goods Manufactured
For Month Ended April 30
Total manufacturing costs
Total cost of work in process
Cost of goods manufactured

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ACCT 203 Lecture Notes - Lecture 9: Total Quality Management

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