Costing

Process
Elements of Manufacturing
Cost/Product Cost
 Direct Materials
Direct Labor
Manufacturing Overhead
 Direct Materials

Materials Inventory - Beginning Pxxx

Add: Net Cost of Purchase
Purchases - Raw Materials Pxx
Less: Purchase Returns xx
Purchase Discount xx xx
Net Purchases Pxx
Add: Transportation In xx xxx
Materials Available for Use Pxxx
Less: Materials Inventory - Ending xxx
Cost of Materials Issued Pxxx
 Debit Credit

16-May Materials ₱ 15,000.00

Accounts Payable ₱ 15,000.00

 Debit Credit

16-May Work in Process ₱ 5,000.00

Accounts Payable ₱ 5,000.00

 Debit Credit

16-May Factory Overhead Control ₱ 5,600.00

Accounts Payable ₱ 5,600.00

 Debit Credit

16-May Accounts Payable ₱ 5,000.00

Materials ₱ 5,000.00
 Debit Credit

16-May Work in Process ₱ 10,000.00

Materials ₱ 10,000.00
 Debit Credit

16-May Factory Overhead Control ₱ 10,000.00

Materials ₱ 10,000.00
 Debit Credit

16-May Materials ₱ 5,000.00

Work in Process ₱ 5,000.00

 Direct Labor

Debit Credit
16-MayPayroll ₱ 30,000.00
Withholding Tax Payable ₱ 4,812.58
SSS Premium Payable ₱ 833.30
PhilHealth Contributions Payable ₱ 375.00
Pag-ibig Funds Contributions Payable ₱ 200.00
Vouchers Payable ₱ 23,779.12
 Debit Credit

16-May Vouchers Payable ₱ 23,779.12

Cash ₱ 23,772.12
 Debit Credit
Work in Process ₱ 30,000.00

Payroll ₱ 30,000.00
Clock Cards
Employee’s Earning Records
 Payroll
Summary
 Manufacturing Overhead

• Factory Overhead
Control

• Factory Overhead
Applied
 Base to be Used

• Physical Output
• Direct labor hours
• Direct labor cost
• Machine hours
• Direct material cost
 Debit Credit
16-May Work in Process ₱ 9,500.00

Applied Factory Overhead ₱ 9,500.00

 Debit Credit

16-May Indirect Materials ₱ 5,600.00

Indirect Labor ₱ 4,400.00

Accounts Payable ₱ 10,000.00

 Debit Credit
16-May Factory Overhead Control ₱ 10,000.00

Indirect Materials ₱ 5,600.00

Indirect Labor ₱ 4,400.00

 Debit Credit
16-May Factory Overhead Control ₱ 10,000.00

Indirect Materials ₱ 5,600.00

Indirect Labor ₱ 4,400.00

 Debit Credit

16-May Factory Overhead Applied ₱ 5,600.00

Under-applied Overhead ₱ 4,400.00

Factory Overhead Control ₱ 10,000.00

 Debit Credit
16-May Cost of Goods Sold ₱ 500.00

Under-applied Overhead ₱ 500.00

Perpetual Inventory System

• Manufacturing Costs
• Work in Process
• Finished Goods
• Cost of Goods Sold
Direct Materials Direct Labor Factory Overhead

Work in Process

Finished Goods

Cost of Goods Sold

 Journal Entries
Direct Materials

Debit Credit
Work in Process xxxx

Materials xxxx
Direct Labor

Debit Credit
Work in Process xxxx

Payroll xxxx
Factory Overhead

Debit Credit
Work in Process xxxx

Factory Overhead - applied xxxx

Cost Pricing

Total Units Produced Unit Cost

Direct Materials xxxx ÷ xxxx = xxxx

Direct Labor xxxx ÷ xxxx = xxxx
Factory Overhead xxxx ÷ xxxx = xxxx
xxxx xxxx xxxx
Work in Process

Debit Credit
Finished Goods xxxx

Work in Process xxxx

Finished Goods

Debit Credit
황해도
Cost of Goods Sold xxxx

Finished Goods xxxx

Cost of Goods Sold

Debit Credit
Income Summary xxxx

Cost of Goods Sold xxxx

Cost of Goods Sold
Statement
Direct materials used
Materials Inventory, Beg. xxxx
Add: Purchases xxxx
Total available for use xxxx
Less: Materials Inventory, End xxxx xxxx
Direct Labor xxxx
Factory Overhead xxxx
Total Manufacturing Costs xxxx
Add: Work in process, Beg. xxxx
Cost of goods put into process xxxx
Less: Work in process, End xxxx
Cost of goods manufactured xxxx
Add: Finished goods, Beg. xxxx
Total goods available for sale xxxx
Less: Finished goods, End xxxx
Cost of goods sold xxxx