Financial statement issues that are unique to manufacturers, Cost Accounting

Assignment Help:

Financial Statement Issues that are Unique to Manufacturers

Different from the retailers, manufacturers have three exclusive inventory category:
1) Raw Materials,
2)Work in Process,
 3)Finished Goods.
 Below is the inventory section from balance sheet of the actual company:

 

INVENTORIES

 

RAW  MATERIAL

11,736,735

WORK-IN-PROCESS

7,196,938

FINISHED  GOODS

2,161,627

 

For the given company, observe that the finished goods are small piece of the whole inventory. Finished goods represent the cost of the completed products awaiting sale to the customer. But, this company has much significant amount of raw materials (the components which will be used in manufacturing the units which are not yet started) and work in process. Work in process is an account most in requirement of clarification. This account is for goods which are in production but not yet complete; it comprises an accumulation of monies spent on the direct material which is the raw materials which have been put into production such as direct labour, and applied manufacturing overhead.

Your previous studies should have ingrained these formulations:

Beginning Inventory + Purchases = Cost of Goods Available for the Sale
and the Cost of Goods Available for Sale - Ending Inventory = Cost of Goods Sold.
If you require a refresher, look at the Current Assets book. Certainly, these relations were essential to calculate the cost of goods sold for the company with only one category of the inventory.

For the producer with the three inventory categories, these "logical" formulations should take on the recurring nature for each and every category of the inventory. Typically, this entails to elaborated set of calculations/ schedules for each of the respective inventory categories. Don't be intimidated by the number of the schedules, as they are all based on the similar concept.


Related Discussions:- Financial statement issues that are unique to manufacturers

What would be the cost transferred to the blending dept., Walter manufactur...

Walter manufactures a silicone paste wax that goes through three processing departments: cracking, blending, and packing. All raw materials are introduced at the start of work in t

Assessment item 2, rocess costing Prepare a spreadsheet to solve the follow...

rocess costing Prepare a spreadsheet to solve the following process costing problem. Review the four process costing videos provided in Interact Resources. Note that in the situati

What is bad debt expense, What is bad debt expense, using the aging method ...

What is bad debt expense, using the aging method (also called the "percentage of receivables" method), given the following set of facts?   A firm has $80 of gross accounts recei

Discount model of stock valuation-ddm, Value one stock using the dividend d...

Value one stock using the dividend discount model of stock valuation with two periods of constant growth (not the simple one period growth model).  See chapter 18 of the textbook

Cash Budgeting, Stopover industries ltd, a recently incorporated company pl...

Stopover industries ltd, a recently incorporated company plans to go into production next year. the following standard cost matrix has been assembled for one of the products it pro

Break-even analysis, Break-Even Analysis Break-even point is the volum...

Break-Even Analysis Break-even point is the volume of sales at that there is no loss or. Break-even charts graphically show the relationship of cost to profits and volume and

What is the gain or loss on the sale, a machine is purchased on july 1 2009...

a machine is purchased on july 1 2009 for $181,500. It has an expected useful life of 11 years and no salvage value. After five years, the machine is sold for $98,000 cash. What is

Break Even Analysis, A company manufactures a single product. Estimated cos...

A company manufactures a single product. Estimated cost data regarding this product and other information for the product and the company are as follows: Sales price per unit Rs.2

Prepare a cash flow forecast, 1.  Prepare a cash flow forecast for the prop...

1.  Prepare a cash flow forecast for the proposal to launch SafeCus in 2010 for a three-year period from 1 January 2010 using the data in the body of the Case Study and discount at

Operating costing, meaning and definition of operating costing

meaning and definition of operating costing

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd