Chapter 19 - Standard Costs, Variable Costing Systems, Quality Costs, and Joint Costs

Accounts Payable
Act. Qty. @
Act. Price

danielle_dalo 3/11/10 2:20 PM

Formatted

Exhibit A
Flowchart for Black Meter Company
Materials Inventory
Act. Qty. Std.
Std. Qty. @
Price
Std. Price
Material Price Variance
Inventory
Adjustment
Balance to Cost of Sales

Every 6 mos. a physical inventory is taken and

costed at standard. Any difference between this
amount and the book balance is an inventory
adjustment which is closed to Cost of Sales
Work in Process Inventory*
Material
Sales
(@ Std.)
@ Std.

Wages Payable
Act. Hrs. @
Act. Rate

Actual

Overhead
Std. Hrs. x
Overhead Rate

Labor
(Std. Hrs. @
Std. Rate)

Direct Labor Variance

Balance to Cost of Sales

Overhead (@
Std.)

Overhead Variance
Any month-end balance in this
account closed to Overhead
Variance

Balance to Cost of Sales

*For meter parts, costs flow at standard from Work in Process to Finished Goods, and then to Cost of Sales. The diagram
here is descriptive of complete meters, which are made to order and hence are not inventoried prior to shipment to the
customer.

19-7

Sales
@ Std.

Cost of Sales
To Revenue
and Expense
Summary

Variances:
-Material price
-Materials inventory
adjustments (usage)
-Direct Labor
-Overhead