Question

In a normal costing system for a furniture manufacturer, costs are accumulated in one of five categories: raw material (RM), work in process (WIP), finished goods (FG), fixed overhead (FOH), or variable overhead (VOH). During production, costs flow from one category to another.
Required:
Identify each of the following costs as direct material (DM), direct labor (DL), indirect material (IM), or indirect labor (IL) and indicate which category (RM, WIP, FG, FOH, or VOH) that cost would flow from and to. (Hint: When costs originate, they only flow into a category.)
(a) Purchased machine oil
(b) Purchased unfinished wood, nails, and stain
(c) Used stain to varnish a desk
(d) Oiled the woodworking machinery
(e) Paid insurance on the factory and equipment
(f) Paid a machine operator who oils and maintains the machinery
(g) Used machinery to cut wood to specifications for a desk
(h) Used cut wood and nails to assemble a desk
(i) Paid a woodworker to build a desk
(j) Applied overhead based on direct labor hours
(k) Completed a desk, which is ready to be sold
(l) Sold a desk


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  • CreatedMarch 27, 2015
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