Product costing (process costing) In Class Exercise makes stained glass lamps. Production process uses two departments: cutting department and assembly department where they are put together. Record the data in T-accounts. Prepare a schedule of cost of goods manufactured and sold, an income statement, a balance sheet, and a statement of cash flows for the first year.
Process Cost Flow (Classic Glass; Demonstration Problem) Product costs WIP Cutting WIP Assembly Finished goods inventory Income statement Materials Labor Overhead Materials Labor Overhead Transferredin costs Materials Labor Overhead Cost of goods available for sale Cost of goods sold
Job Process Cost System (Classic Glass) Cash WIP Cutting WIP Assembly Finished Goods Common Stock (1) 70,000 (2) 22,000 (4) 6,200 (8) 26,900 (5) 16,000 (10)39,000 (10)39,000 (11) 34,000 (1) 70,000 (11) 56,000 (3) 600 (5) 14,000 (6) 9,600 Bal 5,000 Bal 70,000 (5) 32,000 (6) 8,400 (8) 26,900 (7) 13,700 Bal 1,700 (9) 8,500 Retained Earnings (12)11,300 Bal 22,000 (cl) 12,520 Bal 46,400 Bal 12,520 Raw Materials (2) 22,000 (4) 6,200 (9) 8,500 Bal 7,300 Production Supplies (3) 600 (13) 480 Bal 120 Manuf. Overhead (5) 2,000 (6) 18,000 (7) 13,700 (13) 480 (14) 1,820 Bal 0 (6) Overhead Applied: Cutting $0.60 x $14,000 = $ 8,400 Assembly $0.60 x $16,000 = 9,600 Total $18,000 Sales Revenue (cl) 56,000 (11)56,000 Cost of Goods Sold (11)34,000 (14) 1,820 (cl) 32,180 G,S&A Expenses (12)11,300 (cl) 11,300
Cost of Goods Manufactured and Sold Beginning Raw Materials Inventory $ 0 Purchases 22,000 Raw Materials Available 22,000 Ending Raw Materials Inventory (7,300) Raw Materials Used 14,700 Direct Labor 30,000 Overhead 1 16,180 Total Manufacturing Costs 60,880 Beginning Work in Process Inventory 0 Total Work in Process Inventory 60,880 Ending Work in Process Inventory 2 (23,700) Cost of Goods Manufactured 37,180 Beginning Finished Goods Inventory 0 Goods Available for 37,180 Ending Finished Goods Inventory (5,000) Cost of Goods Sold $32,180
Balance Sheet At End of First Year of Operation ASSETS Cash $46,400 Production Supplies 120 Raw Materials Inventory 7,300 Work in Process Inventory 23,700 Finished Goods Inventory 5,000 Total Assets $82,520 EQUITY Common Stock $70,000 Retained Earnings 12,520 Total Equity $82,520
Outflow for Inventory 3 Outflow for G,S&A Expenses Net Outflow from Operating Activities INVESTING ACTIVITIES Inflow from Issuing Stock Net Change in Cash Beginning Cash Balance Ending Cash Balance
Outflow for Inventory 3 (68,300) Outflow for G,S&A Expenses Net Outflow from Operating Activities INVESTING ACTIVITIES Inflow from Issuing Stock Net Change in Cash Beginning Cash Balance Ending Cash Balance
Outflow for Inventory 3 (68,300) Outflow for G,S&A Expenses (11,300) Net Outflow from Operating Activities (23,600) INVESTING ACTIVITIES Inflow from Issuing Stock Net Change in Cash Beginning Cash Balance Ending Cash Balance
Outflow for Inventory 3 (68,300) Outflow for G,S&A Expenses (11,300) Net Outflow from Operating Activities (23,600) INVESTING ACTIVITIES 0 Inflow from Issuing Stock Net Change in Cash Beginning Cash Balance Ending Cash Balance
Outflow for Inventory 3 (68,300) Outflow for G,S&A Expenses (11,300) Net Outflow from Operating Activities (23,600) INVESTING ACTIVITIES 0 Inflow from Issuing Stock 70,000 Net Change in Cash 46,400 Beginning Cash Balance Ending Cash Balance
Outflow for Inventory 3 (68,300) Outflow for G,S&A Expenses (11,300) Net Outflow from Operating Activities (23,600) INVESTING ACTIVITIES 0 Inflow from Issuing Stock 70,000 Net Change in Cash 46,400 Beginning Cash Balance 0 Ending Cash Balance $46,400