COST ACCOUNTING AND

CONTROL
COST ACCOUNTING CYCLE

Alexsander C. Ong, CPA

Instructor
Polytechnic University of the Philippines – Santa Rosa Campus
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

LEARNING OBJECTIVES
After studying this chapter, you should be able to:
• Understand the flow of cost accounting cycle
• Journalize the entries of the flow of manufacturing costs from
purchase of raw materials to the completion into a finished product
• Prepare the Statement of Cost of Goods Manufactured and Sold

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

RAW MATERIALS INVENTORY – the account shows the raw materials (both direct and
indirect materials) available for use

The company may maintain separate accounts for direct and indirect materials or supplies.
Direct Materials Inventory is used to include only direct materials. Factory Supplies
Inventory is used to include only indirect materials
Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

WORK IN PROCESS INVENTORY – the account represents the cost of
partially completed goods on which production activities have been
started but not yet completed as of a certain period.

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

FINISHED GOODS INVENTORY – the account summarizes the costs of
completed jobs stored in the warehouse ready for sale and delivery to
customers

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

MANUFACTURING / FACTORY OVERHEAD – the account is used to record
the actual overhead incurred and the amount of overhead applied to the job

The difference between the Actual FOH and Applied FOH is called the
over/underapplication. The variance is closed to COGS if immaterial. But if the
variance is material, it is closed to all accounts with OH elements (WIP, FG, COGS)
Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

VALUATION METHODS FOR PRODUCT COSTS

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

COST ACCOUNTING CYCLE

Ong, A.
COST ACCOUNTING AND CONTROL
COST ACCOUNTING CYCLE

REFERENCES
• De Leon Jr., Guillermo M. & De Leon, Norma D. Cost Accounting (2012
Edition). GIC Enterprises & Co., Inc.
• Rante, Gloria A. Cost Accounting (2013 Edition). Millenium Books, Inc.

Ong, A.