. It purchased 30 units in January at a cost of $40 each, 30 units in June at $43 each, and 30 units in November at $46 each. Thus, for the year the retailer purchased 90 units with a total actual cost of $3,870 [30@$40...
. It purchased 30 units in January at a cost of $40 each, 30 units in June at $43 each, and 30 units in November at $46 each. Thus, for the year the retailer purchased 90 units with a total actual cost of $3,870 [30@$40...
statements. If a company has small inventory amounts and significant sales, a simple cost system that spreads manufacturing overhead costs solely on the basis of machine hours can result in a reasonably accurate balance...
will be allocated $20. Indirect manufacturing costs are also referred to as manufacturing overhead, factory overhead, or burden. Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance...
. A manufacturer’s inventory consists of the cost to produce the items (the costs of direct materials, direct labor, and manufacturing overhead). Sometimes a company’s inventory cost has to be reduced to a lower...
.) and the other costs of the manufacturing facility (depreciation, property tax, maintenance, heat, and insurance) are indirect product costs since these costs must be allocated to the product. These indirect product...
the actual sales for the year are $2 million, $4 million or $8 million. [In contrast, a flexible budget for sales commissions expense might be expressed as 5% of sales. This means that the budget for sales commissions...
. There is no accrual for the principal portion of the loan payment. The principal balance of the loan is not reduced until the actual principal payment occurs. Join PRO to Track Progress Mark the Question as Read...
A current asset whose ending balance should report the cost of a merchandiser’s products awaiting to be sold. The inventory of a manufacturer should report the cost of its raw materials, work-in-process, and...
What is practical capacity? Definition of Practical Capacity Practical capacity is a manufacturer’s level of output (often expressed in machine hours, barrels, pounds, etc.). Practical capacity is less than its...
, that is a temporary situation until the actual bills are processed. Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance Your Accounting and Bookkeeping Career Perform better at...
avoid the use of the payback reciprocal. Instead, you should compute the internal rate of return or the net present value because they will discount each of the actual cash amounts to reflect the time value of money....
with significant amounts of inventory and plant assets. For example, when inventory is measured by using the first-in, first-out cost flow assumption under US GAAP, the actual historical cost of inventory that is...
Is a favorable variance always an indicator of efficiency in operation? In a standard costing system, some favorable variances are not indicators of efficiency in operations. For example, the materials price variance,...
for its selling and general administration will be an expense for the period indicated by the meter reading dates. However, the utility bill for the direct and indirect manufacturing operations is part of its...
to the product, such as the aluminum in beverage cans Direct labor , which are the wages and fringe benefits earned by the individuals who are physically involved in converting raw materials into a finished product...
to the manufacturing departments and then the departments’ direct and indirect costs (including the depreciation) are allocated to the products that utilize those departments. Manufacturing overhead in general is...
ledger account that reports the cost of the goods that are on the factory floor. In this current asset account are the cost of the direct materials, direct labor and the allocation of manufacturing overhead for the...
Depreciation (Flashcards) Download Single-Sided PDF Download Double-Sided PDF All Cards (35) Marked Wrong (0) Marked Right (0) depreciation This is the systematic allocation of the cost of a building, equipment,...
Our Explanation of Inventory and Cost of Goods Sold will take your understanding to a new level. You will see how the income statement and balance sheet amounts are affected by the various inventory systems and cost flow...
are: It greatly reduces the chance of double-counting revenues and/or expenses, and It allows for more efficient processing of the actual invoices that will be processed in the new accounting period Example of...
was pleased to arrange for this procedure. In less than 15 minutes, the owner eliminated the need for me to calculate/estimate the amounts for two adjusting entries every month. Soon, each month’s actual amounts...
What are the effects of overstating inventory? Definition of Overstating Inventory Overstating inventory means that the reported amount for the cost of a company’s inventory is greater than the actual true cost based...
to record daily differences (if any) between a teller’s actual cash at the end of the day versus the expected amount of cash based on checks cashed, deposits received, etc. A company to record unexplained differences...
month of its accounting year, the manufacturer must debit Warranty Expense for $5,000,000 (5,000 cars X $1,000)and will credit Warranty Liability for $5,000,000. When warranty work is done, the manufacturer debits...
Should a manufacturer's selling prices be based on costs? A manufacturer’s selling prices should not be based on costs alone. One reason is that the actual cost of each product is not known with precision. At...
to the health insurance company. Then in account 4211 they can see the portion of the cost that was paid by the employees. The company’s income statement will report the combination of the amounts in accounts 4210 and...
of vendor invoices, receiving reports, etc. Accounting for goods in transit, goods on consignment, etc. The cost of each item in inventory is based on the actual costs of the items purchased or produced by the company...
, the balance in the account Prepaid Expenses must be adjusted so that the balance sheet reports the amount that is actually prepaid (not yet expired) at the end of the month. If the company issues only quarterly...
of $5 ($50,000 divided by 10,000 units) is that some costs did not increase when the additional unit was produced. For example, fixed costs such as the actual salaries, depreciation, and property taxes are unlikely to...
What is capex? Definition of Capex Capex is a shortened form of the term capital expenditure or capital expenditures. Capex is often used when referring one or both of the following: Actual amounts that were spent during...
How can I determine the inventory methods used by other companies in my industry? Definition of Inventory Methods Inventory methods refers to the order or manner in which a company moves its actual costs out of the...
method, the interest expense will be included in the company’s net income or net earnings. The interest expense is adjusted to a cash amount through the changes to the working capital amounts, which are also reported...
principle by later increasing the inventory to an amount that is greater than those earlier actual costs. One place that you might find part of the difference between the LIFO cost reported on the balance sheet and its...
income statement. This is achieved with techniques such as the allocation of manufacturing overhead costs and through the use of process costing, operations costing, and job-order costing systems. Cost accounting...
, and manufacturing overhead used to manufacture a product. Definition of Period Costs Period costs are expenses that will be reported on the income statement without ever attaching to products. Since they are not...
. An unrelated customer asks the company to inform them of the price for constructing a specific residence. The company prepares a detailed calculation of the final price that the customer will pay. The price will...
, a manufacturer using equipment that is fully depreciated will have lower manufacturing overhead and lower cost of goods sold because the current year’s depreciation for the equipment is $0. Generally, the cost...
from the company’s present cash balance. Also assume that the company’s building materials, labor and overhead will amount to $400,000 during the three months of construction. The capitalized interest is based on...
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