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    Finished Goods Control

    Uploaded by

    Mohammad Fadil solhin
    1) The document shows various manufacturing accounts including direct materials control, work in process control, finished goods control, and manufacturing overhead control for the year ending December 31, 2014. 2) It provides information on direct materials issued, direct manufacturing labor hours, manufacturing overhead allocated, work in process inventory, cost of goods completed and transferred to finished goods, finished goods inventory, and cost of goods sold. 3) There is $50,000 of underallocated manufacturing overhead that needs to be disposed of either by writing it off to cost of goods sold or prorating it across the work in process, finished goods, and cost of goods sold account balances.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd

    Finished Goods Control

    Uploaded by

    Mohammad Fadil solhin
    29 views7 pages
    1) The document shows various manufacturing accounts including direct materials control, work in process control, finished goods control, and manufacturing overhead control for the year ending December 31, 2014. 2) It provides information on direct materials issued, direct manufacturing labor hours, manufacturing overhead allocated, work in process inventory, cost of goods completed and transferred to finished goods, finished goods inventory, and cost of goods sold. 3) There is $50,000 of underallocated manufacturing overhead that needs to be disposed of either by writing it off to cost of goods sold or prorating it across the work in process, finished goods, and cost of goods sold account balances.

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    akuntasi

    Original Title

    Ivan

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    1) The document shows various manufacturing accounts including direct materials control, work in process control, finished goods control, and manufacturing overhead control for the year ending December 31, 2014. 2) It provides information on direct materials issued, direct manufacturing labor hours, manufacturing overhead allocated, work in process inventory, cost of goods completed and transferred to finished goods, finished goods inventory, and cost of goods sold. 3) There is $50,000 of underallocated manufacturing overhead that needs to be disposed of either by writing it off to cost of goods sold or prorating it across the work in process, finished goods, and cost of goods sold account balances.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    29 views7 pages

    Finished Goods Control

    Uploaded by

    Mohammad Fadil solhin
    1) The document shows various manufacturing accounts including direct materials control, work in process control, finished goods control, and manufacturing overhead control for the year ending December 31, 2014. 2) It provides information on direct materials issued, direct manufacturing labor hours, manufacturing overhead allocated, work in process inventory, cost of goods completed and transferred to finished goods, finished goods inventory, and cost of goods sold. 3) There is $50,000 of underallocated manufacturing overhead that needs to be disposed of either by writing it off to cost of goods sold or prorating it across the work in process, finished goods, and cost of goods sold account balances.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 7

    Nama : Muhammad Ivan Abubekar 023001701040

    Nama : Fulgensius F D Watu 023001701165


    Direct Material Control
    1/1/2014 $ 25,000.00
    $ 240,000.00
    P.4-37 12/31/2014 $ 31,000.00

    Work-in Process Control


    1/1/2014 $ 44,000.00 Trasfered to Finish
    direct manufact. Goods
    labor $ 348,000.00
    Direct material $ 234,000.00
    Manuf. Overhead
    Allocated $ 464,000.00
    12/31/2014 $ 165,000.00

    Finished Goods Control


    1/1/2014 $ 10,000.00
    Transferred in
    From WIP $ 925,000.00
    12/31/2014 $ 55,000.00

    Manufacturing Overhead Control


    Manufacturing
    overhead
    Cost $ 514,000.00

    Manufacturng Overhead Allocated


    Manufacuring
    overhead allocated
    to WIP

    Cost of Good Sold


    Finishied Goods
    Sold $ 880,000.00
    ntrol
    $ 234,000.00 1
    From Direct Materials Control T-account, Direct materials issued to production =

    2
    Direct manufacturing labor-hours

    Manufacturing overhead allocated

    ntrol 3 From the debit entry to Finished Goods T-account,


    Cost of jobs completed and transferred from WIP
    $ 925,000.00 4 From Work-in-Process T-account,Work in process inventory on 12/31/2014

    5 From the credit entry to Finished Goods Control T-account, Cost of goods sold
    (before proration)
    6
    Manufacturing overhead underallocated

    ntrol
    $ 880,000.00
    7
    a ).
    Write-off to Cost of Goods Sold will increase (debit) Cost of Goods Sold by $50,000. H

    b ).
    Proration based on ending balances (before proration) in Work in Process, Finished G

    d Control

    Account (1)

    Work in Process
    Finished Goods
    Allocated Cost of Goods Sold

    ad allocated
    $ 464,000.00 8
    Revenues
    Cost of goods sold
    d Gross margin
    Marketing and distributioncost
    Operating income/(loss)

    9 If the purpose is to report the most accurate inventory and cost of goods sold figures
    inventory and cost of goods sold accounts. Proration based on the balances in Work i
    overhead allocated component if the proportions of direct costs to manufacturing ov
    this is not the case, the prorations based on Work in Process, Finished Goods, and Co
    to Cost of Goods Sold method.
    Another consideration in Needham’s decision about how to dispose of underallocate
    will lead to an operating loss. Proration based on the balances in Work in Process, Fin
    The main merit of the write-off to Cost of Goods Sold method is its simplicity. Howev
    als Control T-account, Direct materials issued to production = $234,000 that appears as a credit
    Direct manufacturing labor costs
    ng labor-hours =
    Direct manufacturing wage rate per hour

    rhead allocated = Direct manufacturing labor hours × Manufacturing overhe

    ry to Finished Goods T-account,


    = $925,000
    eted and transferred from WIP
    ess T-account,Work in process inventory on 12/31/2014 $44,000 + $234,000 + $348,000
    =

    ry to Finished Goods Control T-account, Cost of goods sold


    = $880,000
    (before proration)

    Manufacturing overhead underallocated = Debits to Manufacturing Overhea

    = $514,000 – $464,000

    = $50,000 underallocated

    Goods Sold will increase (debit) Cost of Goods Sold by $50,000. Hence, Cost of Goods Sold = $880,000 + $50,000 = $930,000.

    ending balances (before proration) in Work in Process, Finished Goods, and Cost of Goods Sold.

    Account Balance (Before Proration) (2) Proration of $50,000 Underallocated Manufacturing Overh
    $ 165,000 (15%) 0.15 × $50,000 = $ 7,500
    55,000 ( 5%) 0.05 × $50,000 = 2,500
    880,000 (80%)
    1100.000 (100%) $

    Write-off to Cost of Goods Sold Proration Based on Ending Balances


    $1,050,000 $1,050,000
    930,000 920,000
    120,000 130,000
    125,000 125,000
    ($5,000) $ 5,000

    report the most accurate inventory and cost of goods sold figures, the preferred method is to prorate based on the manufacturing overhea
    of goods sold accounts. Proration based on the balances in Work in Process, Finished Goods, and Cost of Goods Sold will equal the proratio
    component if the proportions of direct costs to manufacturing overhead costs are constant in the Work in Process, Finished Goods, and Co
    the prorations based on Work in Process, Finished Goods, and Cost of Goods Sold will better approximate the results if actual cost rates ha
    old method.
    tion in Needham’s decision about how to dispose of underallocated manufacturing overhead is the effects on operating income. The write-
    ating loss. Proration based on the balances in Work in Process, Finished Goods, and Cost of Goods Sold will help Needham avoid the loss a
    he write-off to Cost of Goods Sold method is its simplicity. However, accuracy and the effect on operating income favor the preferred and r
    $ 348,000
    = = 29,000 hours
    $ 12 / hours

    s × Manufacturing overhead rate = 29,000 hours × $16 per hour = $464,000

    00 + $234,000 + $348,000 + $464,000 –$925,000 = $165,000

    to Manufacturing Overhead Control – Credit to Manufacturing Overhead Allocated

    00 = $930,000.

    ated Manufacturing Overhead (3) Account Balance (After Proration) (4) = (2) + (3)

    000 = $ 7,500
    000 = 2,500 57500
    $920,000
    50,000 $ 1,150,000.00

    he manufacturing overhead allocated component in the


    Sold will equal the proration based on the manufacturing
    ess, Finished Goods, and Cost of Goods Sold accounts. Even if
    esults if actual cost rates had been used rather than the write-off

    erating income. The write-off to Cost of Goods Sold


    Needham avoid the loss and show an operating income.
    e favor the preferred and recommended proration approach.

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