MGMT 30B Lecture Notes - Lecture 7: Finished Good
8 Jun 2016
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Absorption costing, process costing (company that produces one product) Differences: looking at processes required to create a product. Separate product manufacturing into various processing departments (a. 2. b) Accumulate direct materials, direct labor and overhead costs by department (a. 2. b. i) Use pre-determined overhead rate to allocate manufacturing overhead for each department (a. 2. b. ii) Each department transfers its own work in process (wip) to the next department"s wip (a. 2. b. iii) Accumulate a department"s costs: debit work in process (dep a), credit raw material, salaries. Transfer costs to next department: debit work in process (dep b), credit work in process (dep. Completion of manufacturing: debit finished goods, credit work in process (dep b) Sales of products: debit cost of goods sold, credit finished goods, debit cash/accounts receivable, credit sales revenue. Calculate equivalent units of production by department (a. 2. c) (a. 2. c. i) Identify units completed and transferred out of the department: units completed/transferred out = beginning work in. Process + units started in production ending work in.
