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    Cost Flow Model

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    Mae Astoveza
    This document contains examples of cost flow models, just-in-time inventory methods, and job costing for service organizations. It shows calculations for beginning and ending inventory, cost of goods sold, work in process, overhead applied, revenues and expenses. For a service company, the income statement shows a net operating loss due to overapplied overhead and high marketing costs outweighing revenues.

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    Cost Flow Model

    Uploaded by

    Mae Astoveza
    24 views3 pages
    This document contains examples of cost flow models, just-in-time inventory methods, and job costing for service organizations. It shows calculations for beginning and ending inventory, cost of goods sold, work in process, overhead applied, revenues and expenses. For a service company, the income statement shows a net operating loss due to overapplied overhead and high marketing costs outweighing revenues.

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    This document contains examples of cost flow models, just-in-time inventory methods, and job costing for service organizations. It shows calculations for beginning and ending inventory, cost of goods sold, work in process, overhead applied, revenues and expenses. For a service company, the income statement shows a net operating loss due to overapplied overhead and high marketing costs outweighing revenues.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    24 views3 pages

    Cost Flow Model

    Uploaded by

    Mae Astoveza
    This document contains examples of cost flow models, just-in-time inventory methods, and job costing for service organizations. It shows calculations for beginning and ending inventory, cost of goods sold, work in process, overhead applied, revenues and expenses. For a service company, the income statement shows a net operating loss due to overapplied overhead and high marketing costs outweighing revenues.

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    of 3

    CHAPTER 3

    23. Cost flow model

    Computer Chips Potato Chips Poker chips


    Beginning Inventory 600,000 160,000 60,000
    Transfers In 1,600,000 600,000 200,000
    The discrepancy
    Transfers Out is that physical(1,800,000)
    count of inventory doesn’t match up with the
    (500,000) accounting
    (180,000)
    Ending Inventory 400,000 260,000 80,000

    Physical Count 600,000 240,000 50,000


    Differences 200,000 20,000 30,000
    records.

    24. Just-in-time method

    Cost of Goods Sold $50,000.00


    Accounts
    Accounts Payable
    Payable Cost of Goods $50,000.00
    Sold
    Cost of Goods Sold $50,000.00 $50,000.00
    $30,000.00 $16,000.00
    Accounts and Wages Payable $30,000.00 $30,000.00
    Finished Goods Inventory $16,000.00
    Accounts and Wages
    Cost of Goods Sold Payable Finished Goods Inventory
    $16,000.00
    $30,000.00
    ([COGS 80,000.00/2,000]x400) $16,000.00

    25. Just-in-time method.

    Cost of Goods Sold $26,000.00


    AccountsPayable
    Accounts Payable Cost of Goods Sold$26,000.00
    Cost of Goods Sold
    $26,000.00 $22,000.00
    $26,000.00 $4,000.00
    Accounts and Wages Payable $22,000.00 $22,000.00
    Finished Goods Inventory $4,000.00
    Costand
    Accounts of Goods
    WagesSold
    Payable $4,000.00
    Finished Goods Inventory
    ([COGS $48,000.00/1,200]x100)
    $22,000.00 $4,000.00
    26. Job costs in service organization.
    A.

    WIP: Springsteen Production $240,000.00


    WIP: RCI Records $120,000.00
    Direct Labor – Unbillable $24,000.00
    Accounts and Wages Payable $384,000.00
    WIP: Springsteen Production $80,000.00
    WIP: RCI Records $40,000.00
    OH (applied) $120,000.00
    Overhead $140,000.00
    Accounts and Wages Payable $140,000.00
    Marketing and Administrative Costs $20,000.00
    Accounts and Wages Payable $20,000.00
    Accounts Receivable $600,000.00
    Revenue: Springsteen Production $400,000.00
    Revenue: RCI Records $200,000.00
    Cost of Services Billed $480,000.00
    WIP: Springsteen Production $320,000.00
    WIP: RCI Records $160,000.00
    B.

    Loomis and Associates


    Income Statement for the Month Ending January 31
    27.
    Revenue from Services $600,000.00
    Less: Cost of Services Billed 480,000.00
    Gross Margin 120,000.00
    Less:
    Direct Labor – Unbillable 24,000.00
    Overhead (underapplied) 20,000.00
    Marketing and Administrative Costs 20,000.00
    Operating Profit $56,000.00
    Job costs in a service organization.

    A.
    WIP: Mountain View Company $120,000.00
    WIP: Palatine Productions $72,000.00
    Direct Labor – Unbillable $8,000.00
    Accounts and Wages Payable $200,000.00
    WIP: Mountain View Company $90,000.00
    WIP: Palatine Productions $54,000.00
    OH (applied) $144,000.00
    Overhead $140,000.00
    Accounts and Wages Payable $140,000.00
    Marketing and Administrative Costs $60,000.00
    Accounts and Wages Payable $60,000.00
    Accounts Receivable $300,000.00
    Revenue: Mountain View Company $200,000.00
    Revenue: Palatine Productions $100,000.00
    Cost of Services Billed $336,000.00
    WIP: Mountain View Company $210,000.00
    WIP: Palatine Productions $126,000.00
    B.

    Internet Designs
    Income Statement for the Month Ending January 31

    Revenue from Services $300,000.00


    Less: Cost of Services Billed 336,000.00
    Gross Margin 36,000.00

    Overhead (overapplied) 4,000.00


    Less:
    Direct Labor – Unbillable 8,000.00
    Marketing and Administrative Costs 60,000.00
    Operating Loss $100,000.00

    C. No. The two jobs aren’t profitable for Internet Design.

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