Course Code: ACC 102
Teacher’s Guide: Module #21
Name: _____________________________________ Class number: _________________
Section: _________ Schedule: _________________ Date: ________________________
Lesson title: Manufacturing Operations – Part 2 Materials:
Objectives: Module #21
1. Prepare the pro-forma entries of the common
transactions for a manufacturing entity; References:
Fundamentals of Financial
2. Prepare a statement of cost of goods sold; and Accounting and Reporting by
Win Ballada
A. LESSON PREVIEW/REVIEW
1) Introduction (2 mins)
Cost of goods sold (COGS) pertains to the costs for a business to sell inventory over a given period of
time. This could be monthly, quarterly, or yearly. You could calculate COGS every month, and also do a
quarterly review to make sure everything lines up. Other businesses may only do this quarterly. COGS
is a method of giving a real-world valuation of inventory and provides analysis of how much the
company spend to turn the raw materials into sold products.
B. MAIN LESSON
1) Activity 1: Pre-Printed Content Notes (13 mins)
ACCOUNTING FOR MANUFACTURING ACTIVITIES
Two accounting systems may be used in accounting for manufacturing activities are:
1. Cost System
✔ Keeps perpetual records of the records of the cost of raw material, work in process and
punished goods inventories.
✔ Provides more timely information about those inventories and charges in their level well
as the manufacturing cost per unit of product which managers use in their efforts to
control cost.
This document is the property of PHINMA EDUCATION
Course Code: ACC 102
Teacher’s Guide: Module #21
Name: _____________________________________ Class number: _________________
Section: _________ Schedule: _________________ Date: ________________________
2. Non-cost System
✔ Produces a manufacturing accounting system based on the periodic inventory system.
✔ The cost of raw materials, work in process and finished goods inventories are based on
physical counts of the quantities on hand at end of each period. This information is the
used to compute the amounts consumed, finished and sold during period.
✔ The following are the pro-forma journal entries of the more common transactions of a
manufacturing entity under this system:
1. To record purchase of raw materials and indirect materials on account:
Purchases – Raw Materials xx
Indirect Materials xx
Vouchers Payable xx
2. To record of defective raw materials returned to vendor:
Voucher Payable xx
Purchase Returns and allowances xx
3. To record payment of account with in the discount period:
Voucher Payable xx
Purchase discounts xx
Cash in Bank xx
4. To record freight and handling raw materials:
Transportation In xx
Vouchers Payable xx
5. To record payroll for factory employees:
Direct Labor xx
Indirect Labor xx
SSS Contributions Payable xx
Medicare Contributions Payable xx
Pag-IBIG Contributions Payable xx
Withholding Taxes Payable xx
Vouchers Payable xx
6. To record employer’s payroll expenses:
Employer’s Payroll Contributions – Factory xx
SSS Contributions Payable xx
Medicare Contributions Payable xx’
EC- Contribution Payable xx
Pag-IBIG Contribution Payable xx
This document is the property of PHINMA EDUCATION
Course Code: ACC 102
Teacher’s Guide: Module #21
Name: _____________________________________ Class number: _________________
Section: _________ Schedule: _________________ Date: ________________________
7. To record distribution of payroll:
Voucher Payable xx
Cash in Bank xx
8. To record accrual of factory payroll:
Direct Labor xx
Indirect Labor xx
Accrued Payroll xx
9. To record depreciation of factory building:
Depreciation Expense – Factory Bldg. xx
Accumulated Depreciation – Factory Bldg. xx
10. To record repairs on factory building:
Repairs and Maintenance – Factory Building xx
Vouchers Payable xx
11. To record real amortization patents:
Amortization of Patents xx
Patent xx
12. To record real property taxes on factory site:
Real Property Taxes xx
Voucher Payable xx
13. To record factory utilities incurred
Factory Utilities xx
Vouchers Payable xx
14. To record of tools used:
Tools Used xx
Tools xx
15. To record sales of finished good:
Accounts Receivable xx
Sales xx
16. To record sales return of customers:
Sales Returns and Allowance xx
Accounts Receivable xx
This document is the property of PHINMA EDUCATION
Course Code: ACC 102
Teacher’s Guide: Module #21
Name: _____________________________________ Class number: _________________
Section: _________ Schedule: _________________ Date: ________________________
17. Closing entries peculiar to manufacturing concerns:
a. To close manufacturing accounts with credit balance, and to record ending inventory for
materials and work in process:
Raw Materials Inventory, end xx
Work in Process Inventory, end xx
Purchases Returns and Allowances xx
Purchases Discounts xx
Manufacturing Summary xx
b. To close manufacturing accounts with debit balance:
Manufacturing Summary xx
Raw Materials Inventory, beginning xx
Work in Process Inventory, beginning xx
Purchases – Raw Materials xx
Transportation In xx
Direct Labor xx
Indirect Labor xx
Indirect Materials xx
Depreciation Expense – Factory Bldg. xx
Repairs and Maintenance – Factory Bldg. xx
Amortization of Patent xx
Real Property Taxes xx
Factory Utilities xx
Tools Used xx
Employer’s Payroll Contribution – Factory xx
Factory Supplies Expense xx
Miscellaneous Factory Expense xx
c. To close manufacturing summary and beginning finished goods inventory to income
summary:
Income Summary xx
Manufacturing Summary xx
Finished Goods Inventory xx
d. To establish the ending finished goods inventory:
Finished Goods Inventory, beginning xx
Income Summary xx
This document is the property of PHINMA EDUCATION
Course Code: ACC 102
Teacher’s Guide: Module #21
Name: _____________________________________ Class number: _________________
Section: _________ Schedule: _________________ Date: ________________________
STATEMENT OF COST OF GOODS SOLD
Renante Balocating Manufacturers
Statement of Cost of Goods Sold
For the Year Ended Dec. 31, 2019
Direct Material Used:
Raw Materials Inventory, beginning Pxx
Add: Net Cost of Purchases:
Purchases – Raw Materials Pxx
Less: Purchases Return and Allowance Pxx
Purchases Discounts xx xx
Net Purchases Pxx
Add: Transportation In xx xxx
Raw Materials Available for Use Pxxx
Less: Raw Materials Inventory, end xxx Pxxx
Direct Labor xxx
Manufacturing Overhead
Indirect Labor Pxxx
Indirect Materials xxx
Depreciation Expense – Factory Bldg. xxx
Repairs and Maintenance – Factory Bldg. xxx
Amortization of Patents xxx
Real Property Taxes xxx
Factory Utilities xxx
Tools Used xxx
Employer’s Payroll Contributions – Factory xxx
Miscellaneous Factory Expenses xxx xxx
Total Manufacturing Costs Pxxx
Add: Work in Process, beginning xxx_
Total Cost of Goods Placed in Process Pxxx
Less Work in Process, end xxx_
Cost of Goods Manufactured Pxxx
Add: Finished Goods, beginning xxx_
Total Goods Available for Sale Pxxx
Less: Finished Goods, end xxx_
Cost of Goods Sold Pxxx
This document is the property of PHINMA EDUCATION
Course Code: ACC 102
Teacher’s Guide: Module #21
Name: _____________________________________ Class number: _________________
Section: _________ Schedule: _________________ Date: ________________________
2) Activity 2: Skill-building Activities (with answer key)
In addition to the year-end statement of financial position and income statement, the management of
Esterlina Geneva Company required the controller to prepare the statement of cost of goods
manufactured. During 2022, P361,920 of raw materials were purchased. Operating cost date and
inventory account balances for 2022 follow:
Direct Labor (10,430 hours at P9.50 per hour) P 99,085
Plant Supervision 42,500
Indirect Labor (20,280 hours at P6.25 per hour) 126,750
Factory Insurance 8,100
Factory Utilities 29,220
Depreciation – Factory Building 46,200
Depreciation – Factory Equipment 62,800
Manufacturing Supplies 9,460
Repairs and Maintenance 14,980
Selling and Administrative Expense 76,480
Raw Materials Inventory, Jan. 1, 2022 26,490
Work in Process Inventory, Jan. 1, 2022 101,640
Finished Goods Inventory, Jan. 1, 2022 148,290
Raw Materials Inventory, Dec. 31, 2022 24,910
Work in Process Inventory, Dec. 31, 2022 100,400
Finished Goods Inventory, Dec. 31, 2022 141,100
Required:
1. Compute the cost of direct materials used during the year.
2. Compute the total manufacturing costs for the year.
3. Compute the cost of goods manufactured during the year.
3) Activity 3: Check for Understanding (5 mins)
Direction: Try this exercise and see how well you understand the concepts about the topic. In the
spaces provided, write the term that the given sentences describe.
_______________ 1) Manufacturing cost required to convert raw materials into a finished product,
including direct labor and overhead cost.
_______________ 2) Labor that can economically be traced to units of finished product
_______________ 3) Material can economically be traced to units of finished product
_______________ 4) All manufacturing costs other than direct material and direct labor
_______________ 5) Costs not associated with the manufacturing process that are expensed in the
period incurred.
This document is the property of PHINMA EDUCATION
Course Code: ACC 102
Teacher’s Guide: Module #21
Name: _____________________________________ Class number: _________________
Section: _________ Schedule: _________________ Date: ________________________
A. LESSON WRAP-UP
1) Activity 6: Thinking about Learning (5 mins)
Congratulations for finishing this module! Shade the number of this module that you have finished.
b) Think about your learning by filling up your “My Learning Tracker” below. Write your learning targets,
your scores, and learning experience for this session and deliberately plan for our next learning
session.
Date Learning Target/Topic Scores Action Plan
What module# did you do? What What contributed to the quality of your performance today?
What’s the date What were your scores
were the learning targets? What What will you do next session to maintain your performance or
today? in the activities?
activities did you do? improve it?
This document is the property of PHINMA EDUCATION
Course Code: ACC 102
Teacher’s Guide: Module #21
Name: _____________________________________ Class number: _________________
Section: _________ Schedule: _________________ Date: ________________________
KEY TO CORRECTION
Activity 2
Activity 3
1. Conversion Cost 4. Overhead
2. Direct Labor 5. Period Cost
3. Direct Material
This document is the property of PHINMA EDUCATION
Course Code: ACC 102
Teacher’s Guide: Module #21
Name: _____________________________________ Class number: _________________
Section: _________ Schedule: _________________ Date: ________________________
TEACHER-LED ACTIVITIES
A. If this session happens to be a face-to-face, in-classroom learning session:
1. Collect completed work in the SAS.
2. Allocate your contact time with students to individual or small group mentoring, monitoring, and
student consultations.
3. You may administer summative assessments (quizzes, demonstrations, graded recitation,
presentations, performance tasks) during face-to-face sessions.
4. You may also explore supplementary activities that foster collaboration, provided that social
distancing is observed.
5. You may provide supplementary content via videos, etc.
It is important to remember that students who cannot make it to face-to-face, in-classroom sessions for
health and safety reasons, should not be given lower grades for missing in-class activities and should
be given alternative summative tests.
B. If this session happens to be an at-home learning session for the students:
1. Check and grade collected SAS and other input from students.
2. Schedule phone calls/virtual calls/virtual chats to individual students or small groups of students
to monitor work, provide guidance, answer questions, and check understanding.
This document is the property of PHINMA EDUCATION