5.
Non-manufacturing overhead costs.
These are not product costs and as such should not be charged
to the work in progress account. When incurred by the company in the process of
manufacturing the products, they should be recorded as follows:
Dr non-factory overhead
account...................******
Cr account
payable............................*******
At the end of the period, these costs will be transferred to
the profit and loss account, as they are period costs.
Dr profit and loss
account.......................*****
Cr non-factory overhead account...*******
6. Jobs
completed.
When a job is complete, the output is transferred from the
factory to the finished goods stores. The cost of this job is transferred from
the work in progress account to the finished goods account.
Dr finished goods
account.............*****
Cr work in progress account...****
This transaction ends the first part of the work, as the cost
of the goods manufactured is known. What is required is then to compute the
cost of goods sold and the various profits to be derived from each job; this
will require the use of particular costing techniques depending on the purpose
of the computation of the profits and this will constitute the core of the next
chapter.
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