I am recently studying manufacturing account. In my exercise I have raw materials account with 8000 debit balance. 5000 worth of raw materials left raw materials account on credit side and 3000 went to work in process acount on debit side and 2000 went to manufacturing overhead account also on debit side.
When calculating costs of goods manufactured the authors excluded 2000 with minus sign from raw materials used in production. Raw materials used in production are 5000 less 2000. Do you think guys that the reason for this exclusion is that 2000 that went to manufacturing overhead account is actual overhead and actual overheads are not taken into account when cost of goods manufactured is calculated ? Since only applied overheads are taken into account for cost of goods manufactured calculation I think I have reasons to think that they excluded actual overhead for a reason.
thanks for reply Lorraine. to be honest I changed numbers in order to make things simpler. Anyway, I will take picture and put it here so that people can have a look at what I mean
-- Edited by rafapak on Tuesday 7th of April 2020 10:03:56 AM
Could you show us how the question, and the figures relevant to the question, are laid out?
in journal entry number 2 page 170 direct materials were added to work in process 50000 and indirect materials were added to manufacturing overhead account 2000. On page 172 indirect materials were deducted from manufacturing account (below raw materials used in production).
