This project requires you to identify, analyse and classify cost transactions, record the transactions in the accounts
Question:
This project requires you to identify, analyse and classify cost transactions, record the transactions in the accounts and prepare cost reports in accordance with the organisational policies and procedures and the Australian Accounting Standards.
Business Background: Jimmy Brewing is a GST registered manufacturer of cider which sells at wholesale and retail outlets. The entity has the following policies and procedures in relation to its manufacturing operations:
Materials Policy and Procedures:
All direct and indirect production materials are to be maintained and controlled in the Materials store and issued to production at the request of the Factory Manager.
Direct materials are to be accounted for using the First-in-first-out method of recording in accordance with the AASB Inventory standard with all per unit amounts on the Inventory card calculated to two decimal places.
Delivery costs on materials purchased to be included with cost of purchases as per the Australian Accounting Standard.
Labour Policy and Procedures:
All factory labour is controlled by the Human Resources department and allocated to the factory at the request of the Factory Manager.
PAYG taxation to be applied to fortnightly payroll at 20%.
The Superannuation Guarantee Contribution is to be applied to all factory wages in accordance with legislation and treated as a factory overhead cost.
Factory labour allocations: 70% of total labour costs are to be allocated directly to factory production and 30% to be treated as factory overheads.
Overheads Policy and Procedures:
Depreciation on factory equipment is to be applied at the end of each month using the Reducing Balance Method of depreciation at 30% p.a.
At month end factory overheads are to be applied to the factory at $1.00 per direct labour dollar used in production and any under or over applied overhead is to be transferred to Cost of Goods Sold.
Accounting Policy and Procedures :
Journal entries to be recorded in a General Journal on a daily basis and General Ledger maintained.
Control accounts required for Materials, Labour, Factory Overheads, Work in Progress and Finished Goods.
End of month reports required: Trial Balance, Manufacturing Statement, Income Statement and Balance Sheet.
Manufacturing Statement to be reconciled to Materials Control, Labour Control, Factory Overhead Control and Work in Progress Control.
Horngrens Financial And Managerial Accounting The Financial Chapters
ISBN: 9780134486840
6th Edition
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura