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Cost Accounting

Assume that you manage the manufacturing operations for the custom order division of a company that makes fine jewelry. The company’s raw materials consist mainly of gold (10 karat and 14 karat), precious stones, and semiprecious stones. Describe what manufacturing information would be important to track. The manager of manufacturing operations would require the following information and documents to track the progress: 1. What is amount of materials on hand?

This will be evident by the materials ledger which would highlight the recorded amount of each type of material on hand. 2. What is the quantity or amount of materials used for each order placed by the customers? The materials requisition allows materials to be released from inventory storage for it to be employed in manufacturing the customers’ orders. Hence, materials requisition will show the exact amount of materials employed in manufacturing a particular customer’s order. 3. What is the cost of labor employed to work on each customer’s order?

The time tickets or the card swapping machine will exactly indentify the time spent by each employee in working on each order and thus the cost of labor can be calculated. 4. What is the total cost of manufacturing an order and

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the overhead expenses that have been incurred for each customer order? The manager can calculate the total cost and overhead expenses by employing job-cost order sheet which takes information recorded in materials requisition and time tickets or labor cost records.

5. What is cost of in-process jobs or cost of work-in-process? The cost ledger which records the job-cost order sheet of each order in process can help identify the cost of in-process jobs. 6. What is the total cost of the completed jobs? The manager can employ finished goods ledger which has job-cost order sheet for all the finished jobs. Bibliography Matz, A & Usry, M. (2003). Cost Accounting. 7th ed. Cincinnati: South-Western, ch. 5

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