Slides calculate cost of goods manufactured

Calculate Cost of Goods Manufactured © Dale R Geiger 2011 Terminal Learning Objective • Task: Calculate Cost of Goods Manufactured • Condition: You are a cost advisor technician with access to all regulations/course handouts, and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors • Standard: with at least 80% accuracy • • • • Explain terminology Differentiate between product and period costs Identify key elements in Inventory chain template Solve for missing variables in Inventory chain template © Dale R Geiger 2011 Input  What is the Cost of the Output? Output  © Dale R Geiger 2011 Cost Accounting Terminology • Direct Costs • MATERIALS and LABOR that can be identified with a particular product or process • Example: Lumber and hardware for furniture • Indirect Costs • PRODUCTION-RELATED costs that cannot be identified with a particular product or process • Example: Maintenance on power tools © Dale R Geiger 2011 Cost Accounting Terminology • Direct Costs • MATERIALS and LABOR that can be identified with a particular product or process • Example: Lumber and hardware for furniture • Indirect Costs • PRODUCTION-RELATED costs that cannot be identified with a particular product or process Example: Maintenance on power tools â Dale R Geiger 2011 Cost Accounting Terminology • Direct Costs • MATERIALS and LABOR that can be identified with a particular product or process • Example: Lumber and hardware for furniture • Indirect Costs • PRODUCTION-RELATED costs that cannot be identified with a particular product or process • Example: Maintenance on power tools © Dale R Geiger 2011 Cost Accounting Terminology • Direct Costs • MATERIALS and LABOR that can be identified with a particular product or process • Example: Lumber and hardware for furniture • Indirect Costs • PRODUCTION-RELATED costs that cannot be identified with a particular product or process Example: Maintenance on power tools â Dale R Geiger 2011 Cost Accounting Terminology • Direct Costs • MATERIALS and LABOR that can be identified with a particular product or process • Example: Lumber and hardware for furniture • Indirect Costs • PRODUCTION-RELATED costs that cannot be identified with a particular product or process • Example: Maintenance on power tools © Dale R Geiger 2011 Cost Accounting Terminology • Manufacturing Overhead • An AGGREGATION of indirect productionrelated costs • Will be ASSIGNED to products or processes and become part of the cost of the product • Conversion Costs • Costs incurred to CONVERT raw materials into finished goods Examples: cost of machinery, labor, utilities â Dale R Geiger 2011 Cost Accounting Terminology • Manufacturing Overhead • An AGGREGATION of indirect productionrelated costs • Will be ASSIGNED to products or processes and become part of the cost of the product • Conversion Costs • Costs incurred to CONVERT raw materials into finished goods • Examples: cost of machinery, labor, utilities © Dale R Geiger 2011 10 The Inventory Chain Overhead © Dale R Geiger 2011 42 The Inventory Chain Overhead © Dale R Geiger 2011 43 Input-Output Equation Beginning + Input – Output = End If you take more water out of the bucket than you put in, what happens to the level in the bucket? © Dale R Geiger 2011 44 Check on Learning • What are the key variables to the Work in Process account? • What is the input to the raw materials account? © Dale R Geiger 2011 45 Using the Inventory Chain © Dale R Geiger 2011 46 Using the Inventory Chain © Dale R Geiger 2011 47 Using the Inventory Chain © Dale R Geiger 2011 48 Using the Inventory Chain © Dale R Geiger 2011 49 Using the Inventory Chain © Dale R Geiger 2011 50 Using the Inventory Chain © Dale R Geiger 2011 51 Using the Inventory Chain © Dale R Geiger 2011 52 Practical Exercise © Dale R Geiger 2011 53 Accounting for Manufacturing Spreadsheet Enter the information given in the exercise above into the white blanks in the Taccounts © Dale R Geiger 2011 54 Accounting for Manufacturing Spreadsheet The “Results” tab displays the calculations using the given data © Dale R Geiger 2011 55 Accounting for Manufacturing Spreadsheet “Solve” indicates that the value displayed has been calculated using the information given in the Data Input tab © Dale R Geiger 2011 56 ... part of the cost of the product • Conversion Costs • Costs incurred to CONVERT raw materials into finished goods • Examples: cost of machinery, labor, utilities © Dale R Geiger 2011 10 Cost Accounting... part of the cost of the product • Conversion Costs • Costs incurred to CONVERT raw materials into finished goods • Examples: cost of machinery, labor, utilities © Dale R Geiger 2011 12 Cost Accounting... Learning Objective • Task: Calculate Cost of Goods Manufactured • Condition: You are a cost advisor technician with access to all regulations/course handouts, and awareness of Operational Environment