The Complete CFO Handbook

Chapter 20. Costing and Control of Materials, Labor, and Factory Overhead

Agenda

Item 1	Distinguish between and account for direct and indirect materials and labor as they are used in the production process.
Item 2	Differentiate among the forms used in the purchase and issuance of materials such as a purchase requisition, a purchase order, a receiving report, and a materials requisition.
Item 3	Compare and contrast the periodic and perpetual cost accumulation systems used to account for materials issued to production and for ending materials inventory.
Item 4	List and describe briefy the five common control procedures used to assist management in keeping inventory costs to a minimum and plant production flowing.
Item 5	Identify the three activities involved in accounting for labor.
Item 6	Describe the accounting for employee and employer taxes and fringe beneft costs.
Item 7	Identify the guaranteed wage and incentive plans that may be used.
Item 8	Apply the concept of factory overhead as an accumulation of all indirect manufacturing costs.
Item 9	Compute a factory overhead application rate using the appropriate denominator activity.
Item 10	Explain the four estimated levels of production and discuss their importance in calculating an appropriate factory overhead application rate.
Item 11	Apply the concepts of applied factory overhead, actual factory overhead, and under‐ and overapplied factory overhead and illustrate how these accounts are utilized in the journalization of factory overhead.

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