Class Example

Manufacturing Cost Accounting

The ISA Company has the following account balances ($000)

For specific date

For the year

Direct materials, 1/1

$15 Purchase of direct materials

$325

Work in process, 1/1

10 Direct manufacturing labour

100

Finished goods, 1/1

70 Amortization plant building

& equipment
Plant supervisory salaries

80

20 Misc. plant overhead

35

Direct materials, 12/31

Work in process,12/31
Finished goods, 12/31

Store Control; Work In Process;

Finished Goods; ISA Company Income

5 Sales
55 Marketing, distribution &
customer service costs

5
950
240

Plant supplies used

10

Plant utilities

30

Indirect mfg labour

60

Required:

Determine the cost of goods

manufactured and cost of goods sold.
Determine the operating income.

Manufacturing Cost Accounting

Stores Control

Beg Inv

Purchase

End Inv

Used

Work in Process

Beg Inv
Mfg cost
incurred: Cost of
DM Used goods
DL
mfg
OH

End Inv

Finished Goods

Beg Inv
Cost of
goods
mfg

Cost of
goods
sold

End Inv

The ISA Company has the following

account balances ($000)

Store Control
Beg Inv 15

Purchases

320

Direct
Materials
Used

325

End Inv 20
DM Used = 15 + 325 20 = 320

WIP

The ISA Company has the following

account balances ($000)

Work In Process
Beg Inv
Mfg costs
DM used
DL
OH
End Inv

10
incurred
320
100
220

645

Cost of
goods
mfg

FG

OH= 80 + 5 + 35 + 10 + 30 + 60 = 220
Cost of goods mfg = 10 + 640 5 = 645

The ISA Company has the following

account balances ($000)

Finished Goods
Beg Inv

70

Cost of goods
manufactured

660

Cost of
goods
sold

645

End Inv

55

Cost of goods sold = 70 + 645 - 55 = 660

ISA Company
Cost of Good Manufactured Statement
For the Year Ended December 31
($000)

Direct materials, Jan 1

Add: Purchases
Direct materials available

Direct materials, Dec 1

Direct materials used
Direct mfg labour

Indirect mfg costs

Total mfg costs incurred
Add: Work in process, Jan 1
Less: Work in process, Dec 1
Cost of goods manufactured

ISA Company
Cost of Good Manufactured Statement
For the Year Ended December 31
($000)

Direct materials, Jan 1

$15

Add: Purchases

325

Direct materials available

340

Direct materials, Dec 31

20

Direct materials used

320

Direct mfg labour

100

Indirect mfg costs

220

Total mfg costs incurred

640

Add: Work in process, Jan 1

10

650
Less: Work in process, Dec 31
Cost of goods manufactured

5
645

ISA Company
Income Statement
For the Year Ended December 31
($000)

Sales
Cost of goods sold
Finished goods, Jan. 1
Add: Cost of goods manufactured
Total cost of goods available for sale
Finished goods, Dec. 31
Cost of goods sold
Gross profits
Marketing distribution & customer
services costs
Operating income

The ISA Company has the following

account balances ($000)

ISA Company
Income Statement
For the Year Ended December 31
($000)

Sales
Cost of goods sold
Finished goods, Jan. 1
Add: Cost of goods manufactured
Total cost of goods available for sale
Finished goods, Dec. 31
Cost of goods sold
Gross profits
Marketing distribution & customer
services costs
Operating income

$950
70
645

715
55
660
290

ISA Company
Income Statement
For the Year Ended December 31
($000)

Sales
Cost of goods sold
Finished goods, Jan. 1
Add: Cost of goods manufactured
Total cost of goods available for sale
Finished goods, Dec. 31
Cost of goods sold
Gross profits
Marketing distribution & customer
services costs
Operating income

$950
70
645

715
55
660
290

240
$50