Cost mgmt haroon

Cost Management
Haroon BakariHaroon Bakari

LayoutLayout
Concepts
Balance Sheet (Jan 1,2009)
Transactions
Posting
COGS
Income Statement
Balance Sheet (Jan 31,2009)
Conclusion

Flow Of Cost
Direct Material + Direct Labor =
=Indirect Material + Indirect Labor
Other
Indirect Costs+
Includes:
Factory
Supplies
Lubricants…..
Includes:
Inspection
Clerical Staff
salaries etc
Supervisors..
Includes:
Rent
tax
Depreciation
Misc…..
Product Cost
Period Cost
+
=
Manufacturing Cost
Marketing Expenses + Admn Expenses = Commercial Expenses
+
=
Total Operating Cost

Balance SheetBalance Sheet
Current assets
Cash 200000
Account recievable 270,000
Inventories:
Finished Goods 70000
Work in process 250,000
Materials 210,000 530000
Total Current Expense 1000000
Property Plant and equipment
Land 100000
Building 400000
Machinery and equipment 600000
1000000
Less accumulated depreciation 100000 900000
Total Property plant and equip 1000000
Total Assests 2000000
Current liabilities
A/C Payable 500000
Income tax Payable 400000
Total Current liabilities 900000
Owners' Equity 600000
Retained Earnings 500000
Total Stockholders' equity 1100000
Total Liabilities andStockholders' equity 2000000
Stockholders' Equity
Balance Sheeet
January 1 2009
Assets
Liabilities

Transactions And Journal Entries
Jan 2 2009 - Material purchased and
received on account ……200,000
Journal Entry
Materials…………..200,000
– A/C Payable………………..…200, 000

Jan 4 2009 Material requisitioned during the
month:
for production ………………….180,000
for indirect factory use…………20,000
Journal Entry
Work in Process………………180,000
Factory overhead Control……..20,000
Material………………………….………….200, 000

Jan 31 2009 Total Gross Salaries…….200,000
Distribution is as under
Direct Labor……………….60%
Indirect labor………………15%
Marketing Salaries………..15%
Admn Salaries…………….10%
Journal Entry
Work In Process…………………….120,000
Indirect Labor………………………..30,000
Marketing Salaries…………………...30,000
Admn Salaries………………………..10,000
Cash………………….……………..200,000

Jan 31 2009 Depreciation Plant and equipment …..100,000
Journal Entry
Depreciation Expense…………..100,000
– Accumulated Depreciation….......….100,000

Jan 31 2009 Work Completed and transferred to
Finished Goods Inventory ……………….550,000
Journal Entry
Finished Goods………………550,000
– Work In Process………..….......……..550,000

Jan 31 2009
Sales…….1,000,000
– 60% Cash received
– 40% On Accounts
Journal Entry
Cash……………….…..600,000
Account Receivable…..400,000
– Sales………………..….......….1,000,000

Jan 31 2009 General/Misc factory Overhead…….50,000
Journal Entry
Misc Expense…………..50,000
– Cash………………………..….......….50,000

Transactions And Jo0urnal Entries
Jan 31 2009
Paid A/C Payable………………...300,000
Journal Entry
A/C Payable….…………..300,000
– Cash…………………………….......….300,000

Jan 31 2009 Factory Overhead control account accumulated to WIP
account:
– Indirect material………………20,000
– Depreciation…………………100,000
– Indirect Labor…………….……30,000
– Misc…………………………….50,000
Journal Entry
Work In Process….…………..200,000
– Factory overhead……………………....….200,000

PostingPosting
750,000
31/1 200,000
31/1 120,000
3/2 550,0004/1 180,000
1/1 250,000
Work In Process
200,000
31/1 200,002/1 200,000
1/1 210,000
Material
210,000
550,000800,000
31/1 300,000
31/1 50,000
31/1 200,00031/1 600,000
1/1 200,000
Cash
250,000
670,000
31/1 400,000
1/1 270,000
A/C Receivable
670,000

PostingPosting
31/1 450,0031/1 550,000
1/1 170,000
Finished Goods
170,000
400,000
2/1 200,00031/1 300,000
1/1 500,000
A/C Payable
400,000 100,000
31/1 500,000
1/1 500,000
Retained Earnings
100,000
31/1 200,000
31/1 50,000
31/1 100,000
31/1 20,000
31/1 30,000
Factory Overhead
0

Cost Of Goods Sold
Beginning Inventory Raw Material…………………..…..….210,000
– Add Purchase of raw material …..…………….....….200,000
Raw material available for use……………………….……………..……….410,000
– Less ending inventory raw material .......................(210,000)
– Less Indirect material used………………………......(20,000)
Raw Material Consumed……………………………………………..…….180,000
Direct Labor…………………………………………..……………………..….120,000
Add Indirect Manufacturing Cost:.
– Indirect Labor……. …..………………..................…..30,000
– Depreciation………………………….....................…100,000
– Indirect Material………………......….……………...….20,000
– Misc………………………………………………….......50,000
Total Indirect Manufacturing cost………………………………………...200,000
Total Manufacturing Cost in current A/C Period..……………….……….500,000
– Add beginning WIP Inventory………………………………………...… 250,000
Total Manufacturing cost……………………………………..…..…..…....750,000
– Less Ending WIP Inventory…………………………………….…….… 200,000
Cost of Goods Manufactured……………………………………...……….550,000
– Add Beginning Finished Goods Inventory………………….……..….… 70,000
Cost of Goods available for sale………………………...……...…..……..620,000
– Less Ending Finished goods inventory……………………………...… 170,000
Cost OF Goods Sold………………………………………………….……..450,000

Income Statement
Sales……………………………..1,000,000
– Less Cost of Goods Sold.................(450,000)
Gross Profit………………..……………550,000
– Less Operating Expenses
• Marketing Expense……..30,000
• Admn Expense………….20,000 (50,000)
Income from Operations…….....500,000

Current assets
Cash 250000
Account recievable 670,000
Inventories:
Finished Goods 170000
Work in process 200,000
Materials 230,000 600000
1520000
Property Plant and equipment
Land 100000
Building 400000
Machinery and equipment 600000
1000000
Less accumulated depreciation 200000 800000
Total Property plant and equip 900000
Total Assests 2420000
Current liabilities
A/C Payable 400000
Long Term Debt 400000
Total Current liabilities 800000
Owners' Equity 600000
Retained Earnings 1020000
Total Stockholders' equity 1620000
Total Liabilities andStockholders' equity 2420000
Stockholders' Equity
Liabilities
Total Current Assets
Balance SheetBalance Sheet ---31 Jan 2009
Assets

Sincere and continuous,
goal directed efforts at
last will bring fruitful
results…..........
HOPE……
……..THANKS

Cost mgmt haroon

Cost mgmt haroon

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