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C O S T A C C O U N T I N G
S Y I, I, A B U. S.
For Use in Connection with Cost Accounting -
Theory and Practice (Student's Edition),
by J. Lee Nicholson, C. P. A.
Prepared By
J. LEE NICHOLSON, C. P. A.,
Instructor in Cost Accounting, columbia University
and member of firm, J. Lee Nicholson & Company,
Accountants and Industrial Engineers.
233 Broadway (Woolworth Building)
New York.
1916.


SYLLABUS.
Cost Accounting - Theory and Practice.
COST ACCOUNTING AND ITS PLACE IN MODERN ORGANIZATION:-
The instructor in cost accounting is confronted with certain
peculiar difficulties partly inherent in the subject and partly due to
the attitude of mind towards it on the part of the uninformed. Much of
the confusion arises from not distinguishing between what cost account-
ing is and what it is used for.
Cost Accounting in itself is the finding of costs and the
analysis of them into their component parts; the use that is made of
the results is a part of business management. But since costs are
analyzed almost entirely for the use that can be made of the information,
it is very important for the teacher to spend much time and attention
to the compilation of cost reports, at which point he comes into direct
touch with "efficiency management". That is, while the subject itself
is independent as a science, it is dependent at every turn on the in-
dustrial conditions in which it is applied. . This distinction should be
kept clearly in mind by both teacher and student.
It is naturelly out of the question to cover the field of in-
dustrial engineering in a cost accounting class. At the same time it
is necessary to refer constantly to certain phases of efficiency work
in order to drive home the Why and wherefore of cost finding methods.
Such references come naturally from the teacher and for the most part
are in the nature of illustrations. This implies a femiliarity on his
part with a variety of manufacturing lines, both as to the processes
themselves and their relations to cost accounts.
THEORETICAL AND PRACTICAL METHODS:-
The fact that theoretical accuracy sometimes leads to wholly
impracticable methods is another thorn in the side of the instructor-
cost accounting exists only for the use that is made of it and that use
is essentially practical.
The instructor must exercise considerable discretion in bel-
ancing theory with practice, especially as some of his class with aca-
demic minds are morally sure to emphasize the theoretical aspect, while
others are just as sure to neglect necessary detail in order to get a
system which works easily, but which may be quite useless, if not actu-
ally misleading. The proper method is first to establish the theoretic-
ally correct method and then to show, how its sharp edges and corners can
be smoothed over so as to make it workable.


Another phase of the same difficulty v. ill show itself in the
attitude of some students who regard the study of principles and meth-
od as a necessary evil and do their work in that spirit. Their aim is
to hurry the thing up and "get down to practical work". As a matter of
fact the theoretical part is the more important of the two, and the
teacher will be doing an injustice to these misapprehending students
if he does not make that point clear and emphatic. The cost finding .
problems possible in class work will not fit any student to do original
cost Work without a thorough understanding of the principles that
underlie them.
STUDY OF FORTS:-

The study of forms and their uses will also prove a teaching
problem if it is not undertaken in the right manner. The uses and de-
signs of forms may be made to vary so widely in various conditions
that it is necessary for the text-book to describe each kind of form,
not only as to its essential purpose, but also with reference to many
other functions for which it may be used. This gives the appearance of
overlapping in function which may be confusing to some. The best way
is to treat each form according to some understood plan.
The following is suggested as a regular course to be followed
in the study of a form:
1. What is its essential purpose?
2. What ruling or design is necessary?
3. What secondary functions may it perform?
4- What changes or additions are necessary in the
original design to make it suitable for these?
5. Who fills out the form?
6. Where is the information obtained that goes on
the form?
7. Where does the information on the form go?
8. What is the final disposition of this information?
9. Can the form be used as a summary or permanent
record?
TEXT-Böök:-
The synopsis of the contents of "cost accounting - Theory
and Practice", by J. Lee Nicholson, classifies the subject matter a de-
quately for reference, but it may be well to add suggestions as to the
treatment of certain chapters.
THEORY OF COSTS:-
Chapters I to V contain the theory of costs and should be
thoroughly mastered. For advanced work the instructor can supplement
the text by, reference to standard works on particular points. For in-
stance, depreciation is treated exhapstively by Earl A. Saliers in
"Principles of Depreciation"; by Eſſing Matheson in "Depreciation of
Factories"; and by P. D. Leake in "Depreciation and Wasting Assets".
Mr. Church's books, "Production Factors" and "Proper Distribution of
Expense Burden" are good books on machine rates.

TAGE SYSTEMS:-

The chapter on "Wage Systems" should be studied in connection
with Gantt's "ork, "ages and Profits", Taylor's "Shop Management" and
some good work on the premium system, as "The Methods of the Santa Fe'"
edited by Mr. Going. The files of the Thgineering Magazine contain
much material on the subject. A comparative wage chart, showing the
effect of the different systems on the workman and employer in the case
of a definite increase of output, is a valuable help and can be pre-
pared without too much, trouble. The chapter is inserted at this point
because the wage system is sure to effect the form of the time tickets
and quite often the production report,
METHOD OF PRESENTING THE SUBJECT: —
The method of teaching the subject of cost accounting Will
depend to some extent upon the policy of the school. The method advo-
cated herewith is one which combines the lecture and quiz with actual
practical class work.
The students should be encouraged to take notes. The subject
of the evening should be presented by the instructor, and after his
lecture he should allow the students time to ask questions which per-
tain only to the subject under discussion. The instructor should then
make the home-reading assignments from the text-book. At the next class
session the instructor should conduct a quiz which should pertain to
the subject discussed at the previous session. The instructor may then
judge if the subject matter, which had been presented, is thoroughly
understood by the students. He should necessarily clear up all points
before proceeding with the new subject.
The following pages show:
l. The subject matter including the class work for
thirty weeks of two hours each.
2. The detailed classification of each subject with
the proper assignments in "Cost Accounting -
Theory and Practice", by J. Lee Nicholson.
Four lectures are provided with this course as "Type Lectures"
and are therefore intended more for suggestions as to lectures than to
use the lectures exactly as presented. They are as follows: -
Lecture No. 1 - Cost Accounting.
" .. " 2 - Principles and Geners l Methods of
Cost Finding.
Elements of Costs.
Distribution of Indirect Expenses.
.
.
:
-
LIST OF SUBJECTS TO BE PRESENTED AND DISCUSSED AT EACH CLASS SESSION:
2.
3.
4.
5.
6.
7.
8.
9.
10.
ll.
l?.
l3.
lA.
l6.
l6.
- l?.
18.
lº.
20.
2l.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
Cost Accounting - What is it?
Principles and General Methods of Cost Finding.
Elements of Costs - material, labor and overhead.
Distribution of Overhead - manufacturing, selling and adminis-
trative.
Wage systems and their relation to costs and production.
Reports - What should they contain? To whom should they be
presented?
Detailed factory reports for recording material costs.
Detailed factory reports for recording the labor costs.
Compiling the costs and the cost sheet.
Compiling the costs and the cost sheet.
Relation and control of the factory ledger accounts with the
financial accounts and records.
Investigating manufacturing conditions of a plant.
Devising the cost system.
Written quiz and review.
General mid-year review.
Written mid-year examination.
Classification of cost accounting systems.
Practical work upon a system.
Prectical work upon a system (continued )
Practical work upon a system (continued)
Practical work upon a system (continued )
Practical work upon a system (continued )
Practical work upon a system (continued )
Practical work upon a system (continued)
Practical work upon a system (continued )
Practical work upon a system (continued )
Practical work upon a system (continued )
Practical work upon a system (continued)
Practical work upon a system (continued )
Practical work upon a system (continued )
Final Review.
Final examination.


I, E G T U R E.
COST ACCOUNTING.
Science is standardized knowledge and business science is
standardized methods.
Methods can only be standardized by measurement and all
methods must be measured by their costs.
Determining costs accurately is measuring efficiency, and a
reliable cost system is the foundation of all efficient management.
Cost Accounting, as a science, is a branch of General Ac-
counting. Its purpose is to analyze and record in detail the various
:*. of expense that enter into the production of any particular piece
of work.
Among the accounts of the modern factory, none occupy a more
important position than do the cost accounts. They are the microscope
of manufacture. They reveal the otherwise imperceptible germs of failure
that feed and fatten upon the profits, destroying the vitality of the
business. Properly adjusted to the general system of factory operations
and records, they enable the menagement to ascertain, with at least fair
accuracy, the cost of the goods produced.
Cost Accounting is not concerned with purely fiscal transac-
tions but employs itself in determining certain expenses incurred in
actual productive operations. Its work is to separate these into their
elements and so compile the results that the total production cost can
be obtained from the units. Once this is accomplished, the best modern
usage is to incorporate the results in the regular books. In this
way the modern cost system builds up an interlocking system of acºunts
which not only corrects certain errors of valuation that would otherwise
exist, but furnishes a source where the operations of the company may
be studied in detail.
CENTRAT AND SELLING COSTs:-
A sharp distinction should also be drawn between the field of
cºst accounting and general or selling cost, ºhe latter includes all
administrative and selling expenses such as salaries, commiss" ons, ad-
vertising, etc., which are essential in deterin: ning what an articº. 3 may
sell for, but which he we no bearing cn the cost of production itself,
s
In it: technical sense, cost accounting begins and ends with the cost
of actual production.
EFFICIENCY:-
The subject of "Efficiency" has recently become one of the
foremost topics in the world of business management.
Efficiency means the getting of maximum results with a mini-
mum expenditure of time, labor and expense. Much planning and many exper-
iments are on record looking to the elimination of wasted efforts and
uneconomical arrangements. The direct object in view has been to de-
termine what could be done in a given time under given conditions. The
ultimate purpose is to realize such a standard in actual practice. This
defines sufficiently the relative position of cost accounting to effi-
ciency as a whole. The cost system is one of the means employed to
reach a standard that has been established as possible. Efficiency is
at once the goal and purpose and justification of cost accounting.
PRINCIPAL ADVANTAGES:-
There are many ways by which cost keeping approaches toward
the end in view. The following list indicates some of the most im-
portant advantages derived:
(a) A perpetual inventory is kept automatically in the
records of a cost system.
This enables one to prepare a profit and loss statement at
any time directly from the books and without the trouble of a physical
inventory.
(b) It determines at what prices different articles
may be sold and what commissions may be paid-
In this way it prevents the mistake often made of forcing
the sales of unprofitable goods and holding back goods on which there
is a substantial profit.
(c) It classifies expenses and this leads to economies
through pointing out extravagant payments.
Very often an expense listed under one item belongs elsewhere
and the result is positive misinformation which may be a serious matter
in its influence on a company's policy.
(d) Since a cost system keeps its records for different
departments separately, it locates difference of
profits and efficiencies in the several divisi or S.
The management can know which departments are paying profits
and which are being run at a loss and make changes accordingly.
º
(e) The records allow of a comparison of costs at dif-
ferent periods and in varying conditions.
This information cannot help being of value.
(f) It allows a comparison of estimated costs and ac-
tual costs.
This paves the way for more accurate estimates in the future.
(g) It locates the leaks and weak spots.
No manufacturer will question the fact that there are leaks
in every establishment and, since the entire cost must be paid before
any profits accrue, these ieaks are taken directly out of what would be
profits.
(h) It tends to hold everybody up to about a certain
standard.
This means a general output more even both in quality and
quantity.
(i) It is the revealer of inefficiency.

If the inefficiency is on the part of foremen or managers,
a comparison of department date will indicate it. It may be that it
lies in the methods employed or even in the machines in use. The system
will indicate where changes are desirable and lines along which innova-
tions should be made.
MONTHLY STATEMENTS:-
(j) It provides for a monthly financial statement.

Perhaps the most important factor in connection with system
and organization is that one which enables a business man to have laid
before him a monthly Profit & Loss Statement outlined to show how the
result is reached by a proper classification of his product. Compare
for a moment the difference between such a statement and the one given
...:* end of the year without any more information than the base re-
ul-lº -

With the statement at the end of the year, nothing can be done
to change the result of the preceding period and only an investigation
can be made which may or may not result in anything of a definite
character bearing on the operations of the new year. With an analyzed

statement showing the result of the month, instead of waiting, as in
the old plan, for twelve months to elapse before ascertaining what.
the result may be, the executive may have the information at hand in
this instance to enable him to weed out the faults, and thereby gain
eleven months of profit resulting from these changes, which otherwise
would be lost.
THE TEREE FUNCTIONS:-
From a management standpoint, the three principal functions
of a cost system are - -
(a) The ascertaining of actual costs.
(b) From the data thus obtained, the
reduction of subsequent costs.
(c) The relation between the individual
costs and the selling department.
Unless these three elements above mentioned are utilized.
in connection with a cost system, its full value can never be obtained.
NO READY-MADE SYSTEM:-

- The student must recognize at the beginning that he will
find no ready-made method of cost keeping.
There could be none. The conditions that exist in different
branches of industry are so entirely different in their nature that
methods applicable in one case might easily become ridiculous when
tried in another. More than that, the conditions in two plants manu-
facturing the same products are rarely similar enough for the same
system to apply equally well in both. The location of the plant, the
source of power, the lab or situation, and most of all the human element,
as shown in the management and its relation to the men, are all con-
trolling factors that seldom repeat themselves.

HUMAN ELEMENT :-
- What we have called the human element is probably the most
important single factor in the shaping of any successful system.

º
No plan can prove its worth without the co-operation of the
entire superintending force and no practical cost expert would ever
introduce a system without giving that part of it most careful con-
sideration.
CHANGES IN CONDITIONS:-



There is another element that should be considered and that
is the changes in conditions of manufacturing, and the product manu-
factured.

In many instances systems in use are impractical and entirely
inadequate owing to new conditions of manufacture. It frequently hap-
pens that one particular article or line of product will be manufac-
tured where the processes are all the same, and then later the business
will be changed to the extent that new articles will be added, neces-
sitating different methods of operating and in certain cases different
equipment, all of which alters the entire conditions of manufacturing.

Consequently, under these circumstances, a system that was
apparently suitable to the former conditions is entirely impractical
under the changed conditions.
REAL FORCES:-


Ingenuity and good judgment are the real forces of systematiz-
erS ` The system introduced by the manufacturer which is the most suc-
cessful is made so not by adopting the rules, routine and records of
some plan of others, but by using them to obtain ideas in applying the
principles to his own business.
WHAT THE STUDENT SHOULD MASTER AND UNDERSTAND:-
What them is the object in view on the part of the student?

(a) To master absolutely the theory and principles
underlying the science.
This in itself is not difficult for the principles and ele-
ments of cost have been analyzed for all time. The difficulty lies in
the application to any particular situation, in collecting and arranging
the mass of data in accord with the theory and so get correct informa-
tion, and in making correct inferences from it. To be efficient, the
cost man must see the principle behind the fact.


(b) To understand and familiarize himself with the
general type methods of expense distribution.
These type methods are so worked out that any business will
fall naturally under some one of them in its general outline. The cost
man must understand the possibilities of each type and what modifications
can be made without interfering with the results. Quite often it is
necessary to employ one method in one part of a plant and another one
elsewhere. Without this clear understanding it is hardly possible to
get through without making serious errors.
(c) To know how to choose and design good forms.



This cuts deeper than is apparent on first sight. A form is
determined first of all by the question "What do I want to know?" And .
the next question is "How can it best be obtained and arranged so as
to get the most out of it with least trouble and expense?" The choice
of a good form and its proper handling when made out have a great deal
to do with the success or failure in the installation of a cost system.

The student must therefore prepare himself to answer these
questions and embody what he wants in the best form that he can.
He must be prepared to study the type forms given in this
course. They will suggest ideas that have been used successfully and,
if he has the right understanding, it will not be hard to make the
modifications necessary to fit any particular case of his own.
Besides the three main objects as stated, any cost man must
know about the different possible wage systems and the conditions in
which each is especially applicable.
WAGE SYSTEMS:-

The more he knows about them and of their successes or failures
in specific instances, and why they succeeded or failed, the more use
he will be and the more likely he is to save his own system from need-
less trouble. The success of any business depends very much on the
spirit in which the men do their work and the labor situation has never
been quite so keen and important in the United States as it is today.
The cost man needs the co-operation of the workmen about as much as
anything else; he can hardly get along without it.
COST LITERATURE:-


It also follows that any live cost man will keep abreast with
the literature on factory and business management. Much of it may not
- 7 -


present information of direct application to the subject, but again
there are always valuable ideas that can be adapted in more or less
changed form. The successful man is the one who can grasp good ideas
(and get the heart of them) and then use them in his own way. This is
especially true in a business, like cost accounting, where the field is
so wide and varying in its conditions. But one must remember that the
man who can do this is the man who is the master of his subject and who
understands its possibilities.
The following books may be mentioned as fairly covering the
subject:
Theory, Principle and Practice - -

"Cost Accounts" - Hawkins.
"Principles of Factory Cost Keeping" - Moxey.
"Cost Accounting, Theory & Practice" - Nicholson.
Overhead - -
"Expense Burden" - Church.
General Reading - -
"Factory Costs" - Webner.
"Factory Organization & Administration" - Diemer.
Engineering Costs - -
"Cost Keeping" - Gillette & Dana.
CARRY TO EXTREME:-

A warning should be given to those who are tempted to carry
a good idea too far. A cost system has its natural limite which may not
be passed without disaster. It must not be too simple or else it will
fail to locate the spots that need attention, because it will include
the data that would otherwise locate them in larger units. If, on the
other hand, it is too complex and goes to foolish extremes, it will break
down of its own weight and will be thrown out by a disgusted management.
Somewhere between these limits is its true field; just where must be de-
cided by the man on the spot. There arise instances where the expense
of finding direct costs turns out to be more than the costs themselves.
In handling such cases in a practical manner, the expert on costs may
seem to violate every fundamental principle of the whole science but, as
a matter of fact, he is only saving it from going to seed.
CRITICISMS OF SYSTEM:-

Much of the opposition and criticism that cost systems have
incurred are due to a lack of practical common sense in adapting a sys-
tem to meet existing conditions. The enthusiast is apt to hold his
system more sacred than the factory's interests. A cost system exists
for the sake of business, not the business for the sake of a cost system.
Many manufacturers fear the changes from old methods to now
ones and they have grounds for this fear, for unless common sense and
care are used by the Industrial Engineer in introducing new plans, dis-
organization instead of organization will result at least for a time in
the beginning.
I believe that in the installation of cost systems or scien-
tific management it is good policy to first work along the lines of the
least resistance before attempting to reach the maximum at once.
In other words, do not tear out or destroy the whole structure
of methods in use at oncé, even if they are bad, and attempt to put a
complete new plan in operation.
Installation of new methods should be gradual and one year's
::::: for an installation is short, if the best results are to be ob-
airled.

It is sometimes good policy to repair a machine instead of
throwing it out; and, in installing modern machinery, it is best to
have the new machine running well before dispensing with the old one.
THE cost accountant and THE Manufacturer:-

Although it is not possible for the cost specialist to design
and install a practical cost system with only knowledge of cost account-
ing, principles and with no knowledge of manufacturing conditions, it is
on the other hand equally impossibie for the manufacturer or his cost
clerk to devise a system suitable to the conditions of the plant, with-
out having the technical knowledge of a cost specialist as to the under-
lying principles of cost accounting and general factory conditions.
- The cost specialist is best fitted for the work because of
his practical training in studying manufacturing conditions and problems.
Benj. A. Franklin in his recent work, "Cost Reports for Ex-
ecutives", makes this statement :-
"The day of cost rule is dawning. Everywhere cost
systems are being installed and there are few executives today


who do not possess at least a desire for a complete cost system,
but the lack of ability though, on the part of most of them, to
recognize when a cost system is right, complete and serviceable
and the fear of red tape and the expense of maintaining it, deter
too many from obtaining the goal of their desire.
Yet a thoroughly effective and proven cost system may
be maintained when properly introduced at a vory low clerical
cost and the values obtainod from it are always greater than this
cost."

It would not be possible in one evening to attempt to cover
the various elements in cost finding, so I shall only mention briefly
what is generally considered the most complex and difficult feature in
finding costs, namely, the distribution of overhead expenses.
OWERHEAD:-
There are now several methods recognized as standard, each
one of which is suitable under certain conditions.

No one method can be recommended for general use, be it ever
so efficient in its own field.
The conditions of manufacture and the nature of the indirect
expenses incurred in the different lines are entirely too diverse to
encourage the hope that such a general method will ever be discovered.

Even a singlo plant may call for tho application of one method
in one department and other methods elsewhere.
The theorist finds a good share of his trouble in practice
right at this point. In his zeal for minute accuracy he is likely to
load his system down with details that make it unwelcomo and imprac-
tical.
The manufacturer refuses to be burdened with a complex system
of cost finding, both for reasons of expense and inconvenience.
What he wants is a method as simple as possible which will
give as accurate results as could be expected.
Unfortunately, where the conditions are complex, the method
of dealing with them must also be more or less complex.
- 10 -
There is always this conflict between the desire for simplicity
on the one hand and accuracy on the other, which, in practice, must gen-
erally be settled by a compromise. -
The best method of distributing the indirect expenses is that
which minimizes the amount of indirect expense to be prorated on a more
or less arbitrary basis.


* this is meant a method that will localize the expenses,
ordinarily termed "Indirect", in such a way as to make it possible to
charge these expenses to the product directly instead of indirectly,
and thus reduce the amount which must be prorated pyer the whole.
The new machine rate was devised with this in view. Where it
can be applied, the results may be said to be as near the true costs as
it is possible to obtain.
However, it is limited to those factories or plants where the
majority of operations are machine processes and fails when applied to
conditions where there is a considerable amount of bench work, or where
machines are only incidental to the real process. -
OUT LINE OF COURSE: -
LIST OF SUBJECTS TO BE PRESENTED AND DISCUSSED
AT. EACH GLASS SESSION.
1. Cost Accounting - What is it?
2. Principles and gº; methods of cost finding.
3. Elements of costs - material, labor and overhead.
4. Distribution of overhead - manufacturing, selling and
administrative.
5. Wage systems and their relation to costs and production.
6. Reports - What should they contain? To whom should they
be presented?
7. Detailed factory reports for recording material costs.
8. Detailed factory reports for recording the labor costs.
9. Compiling the costs and the cost sheet.
10. Compiling the costs and the cost sheet.
ll. Relation and control of the factory ledger accounts with
the financial accounts and records.
12. Investigating manufacturing conditions of a plant. tº:
13. Devising a cost system. tº:
14. Written quiz and review.
15. General mid-year review.
16. Written mid-year examination.


17,
18.
19.
20,
21.
22.
23.
24.
25.
26.
27.
28,
29.
30.
31s
32.
Classification
Practical
Practical
Practical
Practical
Practical
Practical
Practical
Practical
Practical
Practical
Practical
Practical
Practical
Work
Work
Work
work
Work
Work
Work
Work
work
Work
Work
Work
Work
Final Review.
Final Examination.
- ll -
of cost accounting systems.
upon a system.
upon a system (continued).
upon a system (continued).
upon a system (continued).
upon a system (continued).
upon a system (continued).
upon a system (continued).
upon a system (continued).
upon a system (continued).
upon a system (continued).
upon a system (continued).
upon a system (continued).
upon a system (continued).


- 8 -
THIRD SESSION.
NOTE: The pages" referred to hereafter refer to the Text Book.
l.
2.
3.
4.
5.
6.
7.
10.
ll.
12.
13.
14
1.5.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE:
QUIZ.
In what two ways are costs calculated?
Ans. Page 46.
What is the first system called?
#hat is the second system celled?
In applying the items of cost, what two methods are generally used?
How are charges made under the first methodº
How are charges made under the second method?
Ans. Page 46.
In what way does the Machine Cost Method differ from the Process
Cost Method?
Name the four types of systems founded on the two methods of cal-
culating costs and the two methods of applying costs.
Ans. Page 47.
Should more then one standard method be used in one plant º If so,
why?
For Whet purpose is a pertiel or incomplete cost system used?
Define e Production Depertment.
Ans. Page 48.
That are production depertments in any line of business?
What departments are classified as Indirect or Non-Production De-
partments?
Under what conditions is the invoice price of meterial not used ºs
a cost 2 -
!ns. Page 50.
Why should the cost of the by-product be calculated?
Ans. Page 50.
16. Define Direct or Productive Labor Cost.
17. Name the three different types of estimating cost systems.
Ans. Page 51.
18. Neme the three forms used in the first plan.
19. TXplain the purpose of the three forms used in the first plen.
Ans. Pege 167.
---oCo---
IECTURE III, "Elements of Costs".
SUGGESTIONS FOR LECTURE III.
(a) Flements of Costs - Meteris l, Tabor find Overhead.
(b) Mater is 1 - Purchesing, Receiving, storing, Delivering to
Manufacturer.
(c) Labor – Productive and Non-Productive.
(6) overhead - Menufacturing, selling, Administrative.
--- oſ)o---
ASSIGNMENT FOR HOME STUDY:
Study Chapters II and III.
Reed Chapter W.
- 10 -
10.
ll.
12.
l3.
14.
15.
l6.
17.
18.
FOURTH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS IECTURE:
QUIZ.
What are the three principal elements of costs?
How may they be sub-divided?
Define Direct Charges.
Define Direct Material Charge.
Define Direct Labor end Expense.
Ans. Page 24.
Tescribe whet constitutes Indirect Material.
Describe What constitutes Indirect Labor.
Describe what constitutes Indirect FXpense.
Into what two divisions may indirect expenses be classified?
What is the common term used to express Indirect Expense?
Name the items or accounts which could be termed an Indirect
Expense.
How should taxes be distributed?
How should rent be distributed?
How should insurance be proportioned over the product?
Aas. Page 26.
How would Depreciation, Maintenance and Repairs be distributed?
What general factors should be considered in arriving at the
amount of depreciation?
What are the two general plans used in arriving at the amount of
depreciation?
Ans. Page 27.
What is the objection to using a single rate of depreciation over
the whole plait?
– 11 -
19. In What way should Power Cost be distributed?
Ans. Page 28.
20. Should Tool Cost include overhead?
21. Under what condition is the cost of tools charged to an order or
an asset account 2
22. When tools are charged to an order and not used again, what distri-
bution should be made of them and how should they be handled when
they are charged to an order and may be used in the manufacture of
other orders?
23. How would you charge the cost of experimental work?
24. Would you include overhead in the cost? If so, why?
Ans. Page 29.
25. What elements of cost should be charged to the account termed "Over,
Short and Damage Account"?
26. How, or upon whet base, is interest usually figured as a cost 7
27. How would you define Production Costs?
28. What are Selling Costs?
29. Define Commercial ºxpense.
Ans. Page 30.
30. What is Prime Cost?
31. When the indirect is added to Prime Cost, what would you then call
the total?
Ans. Page 32.
--- ooo---
LECTURE IV:
"Distribution of Indirect or Overhead Expense"
SUGGESTIONS FOR LECTURE IV:
(a) Manufacturing Overhead:
Direct - Indirect.
Productive Labor.
Productive Hours.
Prime Cost.

New Pay Rate.
Machine Method - Old, New and Scientific.
---ooo---
- 12 -
CLASS PROBLEM-
Traw diagram of Costs to Selling Price.
---ooo---
ASSIGNMENT FOR HOME STUDY:
Problem 2.
Study Chapter W.
Read Chapter VI.
10.
ll.
- 15 -
SIXTH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE,
and
PROBLERM 3.
QUIZ.
Why is the day rate method not productive of the best results?
Ans. Page 71.
What class of labor, from its very nature, must be treeted as time
Work only?
Explain the basic plan of piece work.
Ans. Page 72.
Why does this plan at times cause dissatisfaction on the part of
employer and workmen?
Ans. Page 73.
Explain the Differential Rete Plan.
Ans. Page 74.
Explain the Premium Plan.
Ans. Page 75.
Explaim the Differential Bonus Plan and the advent age this plan
would have over other methods of paying wages.
Ans. Page 76.
In what manner does the Gantt system affect the foremen?
Ans. Page 77.
What particular objection would there be to the Stint system?
Ans. Page 77.
Explain the Contract System and List Percentage System and state in
What manner this system differs from the Stint system.
Ans. Page 78.
Why should there be any objection to workmen receiving a percentage
of the profits of the business as an element of extra wages?
Ans. As the workman has no control over the administrative and
selling departments of the business it would be unfº ir to
him should a loss occur by the selling price not being
high enough to overcome the expenses of these two depart-
ments.
- 16 -
12. Where it can be used, what form of profit sharing would be re-
garded as the most satisfactory?
Ans. Page 78.
---ooo---
LECTURE WI. "Reports"
SUGGESTIONS FOR LECTURE WI:
General reason for reports.
)
) Style of reports.
| What they should contain.
)
:
Periods of reports.
Comparison-With estimates
With standards
with previous periods
with previous period percentages
with previous ºverages.
(f) Reports to-Executives
Sales Department
Purchasing Department
Factory Superintendent
Factory Foreman
Master Mechanic, etc.

---ooo---
ASSIGNMENT FOR HOME STUDY;
Read Chapter VII.
Study forms in Chapters XVIII, XIX, XX, XXI and XXII.
Study "Reports for Executives", Page 158.
4.
8.
9.
10.
ll.
– 17 -
SEVENTH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS IECTURE.
What general reason could be given for preparing reports?
The purpose would be to bring before the executive end depert-
ment heads such statistical data that would assist them in
planning for production, cutting out inefficiency, cutting
down costs, arriving at true costs, fixing selling prices,
etc.
What should be the style of the reports?
Ans. Page 237.
What should they contain?
Ans. Only live data boiled down with figures and percentages
which carry their own story.
At What times should reports be presented?
Ans. Usually weekly and monthly, although consiferable data.
is necessary to present daily, especially as to production,
Sales and financial conditions.
Why should reports be comparative and whº t shoulê the comperison be?
Ans. See Suggestions for Lectures.
To whom should reports be made?
Ans. See Suggestions for Lectures.
What kind of a report should go to the Master Mechanic * -
Ans. Data showing conditions of Mechinery, Loss of Production
by Machines, Cost of Repairs and Maintenance, etc.
What kind of a report should go to the Factory Foremen?
Ans. Dete concerning Production of their Department, such as
quality of production, Porcentages of Cost to Production
in Labor end overhead, Waste of Material and Time and
condition of department generally.
What kind of report should go to the Superintendent?
Ans. Same as to Foremen except data to all departments should
be included.
What kind of a report should go to the Purchasing Department?
Ans. Deta as to stock on hand; quality of rew meterial - defec-
tive, bad and good; prompt deliveries, etc.
What kind of a report should go to the Sales Department 7
Ans. Cost percentages of selling expenses, sales, stock, etc.

- 18 -
12. What kind of a report should go to Executives?
Ans. Data boiled down of reports to all department heads,
also financial data.
---ooo---
Lecture 6 - Recording the Meterial Costs.
Suggestions for Lecture contained in Chapter VII, Pages 80 to 92.
ASSIGNMENT FOR HOME STUDY;
Chapter VII, Pages 80 to 92.
2.
3.
4.
5.
6.
9.
16).
ll.
12.
- 19 -
FIGHTH SESSION.
- -
QUIZ AND DISCUSSIO’ſ CT PREVIOUS LECTURE.
QUI2.
Neme the elements the t comprise the final cost of an order or
article.
"That three important considerations are involved in arriving £ t
final costs?
Ans. Page 80.
Name the forms upon which information about material is ordinarily
recorded.
Ans. Page 81.
What is the purpose of f Purchase Requisition?
By whom is the order mºde out?
What part does this record play in regard to costs?
Ans. Page 82.
order
In whet way would the purchase/be used as a meterial received
record? -
What perticular value is there in using a meterial received
record?
By whom should this fort, be made out 3
What use is made of the information contº inef on this record?
Ans. Page 83.
For what purpose is the caption "Charged To" intended to fulfill
on Form 2 Bº
Ans. Sometimes the materiº 1 is charged directly to the order
and put into process without the meteria1 heing entered
on the raw stock recon 6's. -
Describe, in connection with Form 33, what would be entered under
the captions of "Gross", "Tero", "Net".
Ans. Sometimes charges are mº de &ccording to weight of case
and packing meterial and case as well, as Haw, Materia i
is included in "eight.
13.
14.
15.
16.
17.
18.
19.
20.
2l.
22.
23.
24.
25.
26.
Where is the data taken from that is recorded on the Raw stock
Records 2
Ans. Either the material received record or a copy of a
purchase order.
From what record would the information be obtained which would be
entered on the raw stock orders under the caption "Delivered"
as shown on Forms 11 and 12?
Ans. Material Requisition or Bill of Material.
Generally speaking, how should the stock be located and identified?
Ans. Page 85.
For what purpose is the caption headed "Reserve and Available" in-
tended as shown on Form 1:32
By what means should the stock records be verified?
Ans. Page 86.
Name the three kinds of factory orders.
Why should the copy of a Production or Factory order go to the
stock clerk?
Ans. Page 87.
State the purpose of a Sub-Production Order.
Ans. Page 88.
Can the Production Order be used as a stock record?
In entering the cost date on Form 15B, from what records would the
data be taken to be entered under the caption, "Material, Labor
and Indirect Expense?" -
Ans. Material would be taken from Bill of Meterie 1, Material
Requisition or purchase Order and from the Sulmary of
the Time Records for Tabor and from the Factory Report
for Indirect Tºxpense. -
State the purpose of a Material Requisition.
Ans. Page 89.
Under Whet eondition is a Bill of Meterial used?
Should a Material Requisition be used in connection with a Bill of
Material; if so, why?
What record is made of Material Returned to the Stock?
Ans. Page 90.
– 21 -
27. Explain the method of using Form 60 - Inventory Test.
Ans. Page 91.
28. Suppose the inventory test shows a discrepancy between the stock
records and a physical inventory, how may the difference be ad-
justed and accounted for?
Ans. Page 92.
---ooo---
LECTURE VIII. "Recording the Labor Cost"
Suggestions for Labor contained in Chapter VII, Pages 92 to 100.
---oCo---
ASSIGNITENT FOR HOME STUDY:
Study Chapter VII, Pages 92 to 100.
Study forms, numbers 26 to 34 in Che pter XX.
3.
4.
5.
6.
7.
10.
- 22 —
NINTH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE.
QUIZ.
State what principal facts are to be ascertained in connection with
the designing of time reports. The text book shows eight questions
that are to be considered.
Ans. Pages 93 - 94.
What is meant by the caption "Department and Classification Number"
in Form 26?
Ans. "Department" - where the workman is stationed. "Classi-
fication" of product.
What is meant by "Section Number" in Form 27?
Ans. Sometimes the cost of a job is classified by sections.
What is meant by the caption "Machine Number" in Form 27?
Ans. The number of the machine which the workman has in charge
What essential features are connected with Form 29?
Ans. The material cost is calculated on the time report.
Under what class would Form 30 be called?
Ans. Time Stamp Form.
F; what other purpose is this form intended outside of reporting
ime?
Ans. It may also be used where the workmen are paid according
to a premium system of wages.
On Form 30 what are the fifteen captions, beginning with "Boring",
intended for and in what manner would the time be shown in connec-
tion with this form?
Ans. The captions are for operations and it is sometimes common
for a number of operations to be printed on one form and ,
where workmen are working all day on one particular ope”
tion, a check-mark is inserted after the particular cºerº-
tion, denoting the fact that the workman has been on that
particular operation during the day.
Explain the purpose of Form 31.
Ans. Page 97.
Explain Fórm 32.
Ans. Page 97.
— 23 -
ll. Explain Form 33.
Ans. Page 97.
--- oOo.---
Sketch in rough the following time reports:
1 - Showing -
Quantity
Time
but not cost.
2 - Showing -
Production-Made
Defective
Good
Time-Begun
Finished
Hours
Cost
3 - Showing -
Time
Labor Gost
Material Cost
---000---
The students will be allowed ten minutes in which to study the
types of forms that are to be turned in, after which the text book must
be closed and the form sketched. The form need not be the same as il-
lustrated but should contain the requirements as requested.
--- ooo---
LECTURE IX:
Chapter VIII - Pages 101-114.
SUGGESTIONS FOR LECTURE IX:
Charging the Factory Ledger.
Summarizing the cost data.
Production reports.
"Compiling the Cost Data"

- 24 -
ASSIGNMENT FOR HOME STUDY:
Problem 4.
Study Chapter VIII, Pages 101-il4.
Study Form numbers 5-9, 24-25, 35-40, 41-44, 47-51 in Chapters
XVIII, IX and XX; and 45-46 in Chapters XXI and XV.
l.
2.
3.
5.
6.
7.
8.
10.
ll.
12.
- 25 -
TENTH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE,
and
PROBLEM 4.
QUIZ.
In what two groups are the forms divided in compiling the cost data?
Ans. Page 101.
What is the purpose of a Purchase Journal?
Ans. Page 102.
Describe the purpose of an Accounts Payable Voucher.
Ans. Page 103.
Explain the use of a Register of Accounts Payable.
Ans. Page 104.
For what purpose is a form used termed "Report of Material De-
livered"?
Ans. Page 105.
In what way is the pay-roll used in connection with an Accounts
Payable Voucher?
Ans. Page 107.
In what way are the forms used, called "Analysis of Pay-Roll"?
Ans. Page 108.
For what purpose is a Statement of Factory Expenditures used?
Ans. Page 109.
In Form 7B what relation has "Account Number" under "Factory Labor"
to the list of operating accounts?
Ans. Page 103.
In Form 9B what are the columns under the caption "Miscellaneous
Accounts" intended for?
Ans. Page 103.
What is the purpose of the Process Card Record?
Ans. Page 205.
Explain how the Labor Cost is entered on this form.


- 26 -
13. Describe how the item "floor space charged" is taken care of .
lA. How is the cost of maintenance recorded?
15. From where should the data be obtained in connection with Depre-
ciation?
16. How is the department — Indirect Expense — charged?
Ans. Page 206.
l'7. How are the Indirect Expenses other than Departments calculated?
18. What data is entered on the Power Cost & Distribution Form?
Ans. Page 207.
19. What relation does this form — "Daily Cost of Distribution" - bear
to the Process Card Record form?
Ans. Page 208.
20. State the purpose of a form for recording defective work.
Ans. Page 113.
--- ooo---
LECTURE X: "Compiling the Cost Data"
Chapter VIII, Pages lla - 126.
SUGGESTIONS FOR LECTURE X:
Cost records
Finished Stock
Billing and Shipping Records
Final Factory Charges and Charts.
---ooo---
ASSIGNMENT FOR HOME STUDY:
Study Chapter VIII, Pages 114 - 126.
Study Forms 52 - 59, 62 – 65 in Chapters XXI and XXII.
--- ooo---
l.
2.
3.
4.
5.
6.
8.
9.
10.
ll.
l2.
13.
l4.
lă.
l6.
- 27 -
ELEVENTH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE.
QUIZ.
For what particular function is Form 52 intended?
In using Form 53 what kind of system calls for a form of this
character?
In Form 53 what is meant by Process Cost and Process Rate per Hour?
Ans. Page lla.
Explain the purpose and use of Form 54.
Explain the use of Form 55.
For what purpose are the columns relating to Machines intended?
Ans. Page llā.
What is meant by Minimum and Maximum?
What is meant by the caption "Used" on Form 56?
Where would the data be obtained for entry under the captions
"Production", "Used or Sold"?
For what particular purpose may a form like 58 be used?
Ans. Page lló.
Explain Form 59 and the purpose of the column under the caption
"Orders and Unfilled Orders". -
Explain the purpose of Form 62.
Ans. Page ll 7.
Explain the purpose of Form 63.

Explain how entries are made on Form 64.
Ans. Page 118.
What are the two general plans in use in keeping a register of scles
and costs?

Explain the plan as shown on Form 64.
Ans. Page lig.
l'7.
18.
19.
20.
– 28 -
Under what system is Form 65 intended to be used?
Name the accounts usually found in a factory ledger.
Ans.
Page 120.
What do the following accounts show :
Ans.
Students
lowing:
(a
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Raw Material & Supplies Account
Labor Account
Indirect Expense Account
Work in Process Account
Part Finished Stock Account
Finished Stock Account -
General or Private Ledger Account.
Pages 121-124.
are requested to make blank journal entries for the fol—
For the total amount of materials and supplies purchased
and received during the period.
For the total amount of charges during the period.
For the total amount of indirect expenses incurred during
the period.
For the total amount of materials and supplies requi-
sitioned out and chargeable to the product.
To distribute the pay-roll for the period, charging the
direct labor directly to the product or operation and the
indirect labor to the indirect expense account.
For the total amount of indirect expense distribution and
charged to the product.
For the total amount of product transferred to the stock
either part finished or finished.
For the total amount of part finished stock transferred
to operating departments to be completed.
For the total amount of the cost of the goods sold during
the period.
--- ooo---
s - 29 -
LECTURE XI: "Relation and Control of the
Factory Ledger to the finan-
cial books.
Chapter IX.
SUGGESTIONS FOR LECTURE X: ;
Method of Controlling the Factory Ledger:
Records for charging Factory Ledger Accounts:
1. Purchase Record or Voucher Register.
2. Distribution or Analysis Record.
Records for crediting Factory Ledger Accounts:
l. Cost Sheet and Cost Records.
2. Cost of Sales Records.
3. Miscellaneous Factory Orders.
---ooo---
ASSIGNMENT FOR HOME STUDY:

º Problem 5.
tudy Chapter IX.
Study Form numbers 7, 8 and 9 in Chapter XVIII and 66 and 70 in
Chapter XXII.

– 30 -
TWELETH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE
and
PROBIEM 5.
QUIZ.
l. What elements in the Factory Ledger should be controlled by the
General Ledger?
2. How is the Factory Ledger Account or other General Ledger Control-
- ling Accounts in the Factory charged and credited?
Ans. Page 127.
3. How should Sales Accounts be handled in the General Ledger and how
are the entries to be made?
4. How should Selling Expenses be classified?
Ans. Page 128-
5. Name some items of Administrative Expenses.
Ans. Page 129.
6. In preparing statement, shown on Form 68, where would the data be
obtained to enter under the caption "Sales"?
Ans. Page 130.
7. What is the advantage of having a monthly Profit & Loss Statement?
8. In what way could the items of Cost contained in any one Sales
classification be investigated?
Ans. Page 131.
9. What particular advantages are there in keeping a plant and tool
record?
Ans. Page lºº.
--- 000---
LECTURE XII: *Examination of a Plant."
Chapter X.

- 31 -
SUGGESTIONS FOR LECTURE XII:
Organization - Manufacturing, Selling and Administrative.
Operating Conditions of the Plant.
Product Manufactured.
Records in use:
1. Financial
2. Statistical
3. Factory
4. Cost.
Methods of Presenting Reports.
Method of Recording Examination Information,
---ooo---
ASSIGNMENT FOR HOME Sºul)Y:
Study Chapter X.
- 32 -
7.
8.
9.
THIRTEENTH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE.
QUIZ.
What are the basic reasons for examining the plant before intro-
ducing a new system or improving the one in use?
At what point should the examination begin?
How should the examination proceed from this point?
In what manner will the general type of the system suggest itself?
Ans. Page 134.
Under what four general classifications should the information
representing the examination be gathered?
Ans. Page 135.

What data should be secured in reference to Raw Material?
Ans. How it is received.
How it is checked.
Followed to finished stock.
Maximum quantity.
Minimum quantity.
Waste and scrap.
Storing.
Finished Stock.
Finished Part Stock.
Also Page 135.
|
:
}
i
Where should the storeroom be located?
Where should Material be located; how would you store Pig Iron, for
instance? -
What data should be secured for Power, Machinery and Processes?
Ans. {º} Gost
b) Floor Space
(c) Indirect Expenses
(d) Location
(e) Efficiency of Mochines
(f) Automatic or Hand Mochines for either machine or
productive labor basis.
10.
ll.
12.
13.
14.
15.
16.
What data should be secured in reference to labor?
Ans. Page 136.
How should the question of Indirect Expenses be studied?
Ans. Classified.
| Department Expenses.
} Peculiarity of certain operations.
} Depreciation.
) Insurance.
| Power, Heat and Light.
} Supplies.
Also Page 137.
.
What is the underlying purpose of an organization?
What should be studied relative to departments?
What general subjects should be covered in the report?
Ans. Store facilities.
Stock system.
Tool department dies and operations.
Defective Work.
Method of requisitioning material or supplies •
Time Reports.
Inspection.
Packing and Shipping.
How production orders are issued.
How production reports are mºde.
How work is planned in advance.
How responsibility is defined.
Also Page 138.

In connection with mechanical aids, what data should be obtained?
Ans. (a) Time clocks.
Time Stamps.
Automatic Counters.
Yard Service.
Factory Telephone.
Jigs and Dies.
Tools.
Mechanical Devices in office such as Adding ºnd
Calculating Machines,
Also Page 139.

Why should ventilation or light be studied?
Ans. Page 139.
17. Where should leaks be looked for?
Ans. A waste in Material.
Lost time.
Checking Material.
Defective Material.
Defective Work.
Unbalanced Departments.
In handling material.
Poor aisle space.
i
18. What should be the subconscious thought while examining all
details?
Ans. Page 140.
LECTURE XIII: "Devising a Cost System".
Chapter XI.
SUGGESTIONS FOR LECTURE XIII:
Study of conditions in a plant.
Needs of a particular industry.
Capacity of organization to operate a cost system.
Results to be obtained. -
Cost Department organization and its methods of procedure.
Forms and records which cre necessary to record the cost infor-
mation.
Summary Records.
System Report:
What it should contain.
How presented to management.
---ooo---
ASSIGNMENT FOR HOME STUDY;
Study Chapter XI.
l,
2.
3.
4.
5.
6.
7.
8.
9.
10.
– 35 -
FOURTEENTH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE.
QUIZ.
What particular thoughts should the c.ccountant have in mind in con-
nection with the devising of a cost system so far as it relates to
the kind of system that should be used?
Ansa Page 156.
What particular thing should be avoided in the devising of a cost
system, in order not to make it top-heavy?
Ans. Page 157.
What is meant by a Cost Period?
Ans. Page 158.
What particular advantage may be gained by introducing an Estimating
Cost System?
Ans. Page 159.
*:::::::: **** criticism could be offered against a Departmental
System?
Ans. Page 160.
What are the three main divisions of the Charts?
Ans. Page l62. -
What are the six general divisions for which entries are made in a
cost system?
Ans. Page 162.
By means of these six classifications what two features may be shown?
Ans. Page 163.
What two features are shown on the subsidiary records on the Charts?
Ans. Page 163.
What is the most important thing to consider in connection with the
devising of the system?
Ans. Page 164.
---006---
- 36 -
LECTURE XIV : Subject Matter "Review".
ASSIGNMENT FOR HOME STUDY :
Review.
---oCo---
- 37 -
3.
4.
5.
FIFTEENTE SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE.
REVIEW CHAPTERS I - VIII.
QUIZ.
What relation does Cost Accounting bear to Efficiency?
Ans. A Cost System is one of the means employed to record the
data necessary in establishing efficiency records.
Ans. (a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
What are the principal advantages of a cost system?
A perpetual inventory is kept automatically in the
records of a cost system.
It determines at what prices different articles may
be sold and what commissions may be paid.
It classifies expenses and this leads to economies
through pointing out extravagant payments.
Since a cost system keeps its records for different
departments separate, it locates difference of profits
and efficiencies in the several divisions.
The records allow of a comparison of costs at dif-
ferent periods and in varying conditions.
It allows a comparison of estimated costs and actual
costs.
It locates the leaks and weak spots.
It tends to hold everybody up to about a certain
standard.
It is the revealer of inefficiency.
What are the three principal elements of costs?
How may they be sub-divided?
What are direct charges?
Ans. Page 24.
- 38 -
6.
7.
8.
9.
10.
ll.
12,
13.
14.
15.
16.
17.
18.
19.
20.
21.
What are indirect charges?
What two divisions should be made in indirect charges in connection
with their distribution?
Ans. Page 25.
Name ten items composing Indirect Expenses.
Ans. Page 26.
What is Prime Cost?
What is Factory Cost?
Ans. Page 31.
How are costs supplied according to a Special Order System?
How are costs applied according to a Product System?
Ans. Page 46.
What is meant by the Machine Cost Method?
Ans. Page 47.
What important part do the operating departments play in making
up and arranging cost accounts?
Name five direct operating departments.
Ans. Page 49.
Name two indirect operating departments.
How is material cost of by-product handled?
Ans. Page 51.
Upon what principle is the direct labor cost based in the distribu-
tion of indirect expenses?
Anse Page 54.
What principle is involved in the method of distributing the in-
direct on direct labor hours?
Ans. Page 56.
On what principle are all machine rates based?
Ans • Page 59.
What are the three fundamental principles or ideas in the new
machine rate?
Ans • Page 60.
22.
23.
25.
26.
- 27.
ge.
29.
º, Ans. Page 88.
31.
32. In what two groups are the forms divided in compiling the cost
data?
33.
34-
35.
- 39 -
What are the various charges from which the machine rate is made
up?
Ans. Page 63.
Upon what principle is the differential wage rate plan based?
Upon what principle is the premium plan based?
Why is the Premium Method more favored by workmen?
Ans. Page 75.
Name the three important considerations involved in arriving at
final costs.
Ans. Page 80.
Name the forms upon which information about material is ordinarily
recorded.
Ans. Page 81.
Name the three general kinds of Production Orders.
Ans. Page 87.
What is the purpose of a sub-Production order?
State the purpose of a Bill of Material and under what conditions
it is used. - - - - -
Ans. Page 90.
State what the principal facts are to be ascertained in connec-
tion with the designing of Time Reports. The text book shows
eight questions that are to be considered. - -
Ans. Page 93.
Ans. Pages 101 and 102.
- What is the purpose of an Accounts Payable Voucher?
Ans. Page lC3.
what is the purpose of an Analysis of Pay-Roll form?
Ans. Page 108.

What entries are made on the Process Card Record and how is the
machine rate found? -
Ans. Page 205.
- 40 -
36. What are the entries on the Power Cost & Distribution form?
Ans. Page 207.
37. Describe the purpose of a form for recording defective work.
Ans - Page ll3.
38. Should overhead be added to part-finished or finished parts stock?
HOME STUDY;
Prepare for final examination for First Semester.
SIXTEENTH SESSION.
FINAL EXAMINATION FOR THE FIRST SEMESTER.
NOTE: Answer each question in the order given. Do not re-write the
l.
2.
3.
4.
6.
7.
8.
9.
question on your papers. Refer to your answers by using the
numbers of the questions.
(a) Name the three principal divisions of cost known as the ele-
ments of cost and show how they may be sub-divided. (b) Define
direct charges. (c) Define and give an illustration of direct
expense.
(a) Define indirect material charges. (b) What does indirect or
non-productive labor consist of? f; What is meant by indirect
expense? (d) Name five items of indirect expenses.
Should interest be charged as a part of the cost?
Draw a diagram showing the relation of the cost elements to selling
prices.
Name the four types of systems. These will embrace the two standard
conditions in manufacturing and the two standard methods of distri-
buting costs. -
(a) Name three direct or productive departments of any manufactur-
ing plant. (b) Name three indirect or non-productive departments
of any manufacturing plant.
(a) How are costs compiled and charged where a special order Sys-
tem is in use? (b) How are costs charged where a Product system
is in use?
Name five of the standard methods of distributing indirect expenses
and describe each briefly.
Supposing that a certain batch of tobacco leaf costing $5.00 a
pound is used in the manufacture of cigars and from this same batch
the tobacco is used on both high-priced and low-priced cigars, how
would the material cost be ascertained which is charged against high-
priced and low-priced cigars?
- 42 -
10.
ll.
12.
13.
14.
15.
(a) Name five of the standard wage systems in use. (b) Define
the premium plan of paying wages.
(a) Name five forms upon which information about material is
ordinarily recorded. (b) Nome the three kinds of production or
factory orders.
(a) What is a sub-production order? (b) Under what conditions
in manufacturing may a bill of material be used?
Name three accounts usually found in the factory or operating
ledger and describe each.
In making an examination of a plant for the purpose of devising
a cost system, name the four general classifications upon which
information should be sought in obtaining the proper data.
Define the term "Cost Period”.
BOOKKEEPING PROBLEM.
Problem 1:
The following represents the trial balance of the firm of
Lane & Morris at December 31, 1913:-
J. H. Lane-Gapital - - - - - - - - - - - - - - - -
S. Morris-Capital . . . . . . . . . . . . . . . . .
J. H. Lane-Drawing . . . . . . . . . . . . . . . .
S. Morris-Drawing . . . . . . . . . . . - - - - - -
Cash . . . . . . . - - - - - - - - - - - - - - - - - - - - - -
Accounts Receivable . . . . . . . . . . . . . . .
Bills Receivable . . . . . . . . . . . . - - - - -
Accounts Payable . . . . . . . . . . . . . . . . . .
Bills Payable . . . . . . . . . . - - - - - - - - - - -
Deposit Account-R. A. Lane - - - - - - - -
Inventory, January l, 1912 . . . . . . . .
Purchases-Net - - - - - - - - - - - - - - - - - - -
Sales-Net - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Salary - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Traveling Expense . . . . . . . . . . . . . . . . .
Commission - - - - - - - - - - - - - - - - -
Printing & Stationery . .
Advertising . . . . .
- - - - -
- - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - -
- - - - - - - - -
- - - - - - - - -
- - - - - -
- - - - - - - - - - -
- - - -
Express, Freight & Cartage - - - - - - - - - - - - - - - - -
Rent - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Insurance - - - - - - - - - - - - - - - - -
Expense - - - - - - - - - - - - -
Furniture & Fixtures . . . . . . . . . . . . . .
- - - - - - - -
Inventory December 31, 1913 . . . .
Partners' Salaries (each) . . . . . . . . .
- - - - - - - - - - - - - - - -
- - - - - - - - -
- - - - - - -
- - - - - - -
- - - - - -
Partners to be credited with 5% interest on
capital.
R. A. Lane Deposit Account allowed 5%
interest.
Insurance Unexpired . . . . . . . . . . . . . . .
Profits are divided equally.
Depreciate the Furniture &
Fixtures 10%.
2,750.00
2,200.00
6,780.30
38,635.71
l,000.00
20,783.40
35,340.06
15,780.00
2,700.00
3,640.00
309.00
l,615.00
691.00
6,000.00
700.00
2,018.13
l,000.00
$141,942.60
$ 25,000.00
20,000.00
3,829.34
5,000.00
10,000.00
78,113.26
$141,942.60
. . ; 23,909.18
3,000.00
llā.00
From the above information prepare - -
2.
1. Trading & Profit & Loss Statement for the year
ended December 31, 1913.
Balance Sheet as at December 31, 1913.
Solution of Problem 1.
LANE & MORRIS .
B. A. L. A N C E S H E E T.
DECEMBER 31, 1913.
ASSETS:-
Cash - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ 6,780.30
Accounts Receivable . . . . . . . . . - - - - - - - - - - - 38,635.71
Bills Receivable . . . . . . . . . . . . . . . . . . . . . - - l,000.00
Merchandise Inventory . . . . . . . . . . . . - - - - - - 23,909.18
Furniture & Fixtures . . . . . . . . . . . . . . . . . . - 900.00
Unexpired Insurance Premiums . . . . . . . . . . . 115.00
Total Assets - - - - - - - - - - - - - - - - - - - - - - $71,340.19
LIABILITIES:-
Bills Payable . . . . . . . . - - - - - - - - - - - - - - - - - - $ 5,000.00
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . 3,829.34
Deposit Account-R. A. Lane . . . . . . . . . . - - - 10,500.00
Total Liabilities . . . . . . - - - - - - - - - - - 19,329.34
NET WORTH . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - $52,010.85
REPRESENTED AS FOLLOWs:-
J. H. Lane - - - - - - • - - - - - - - - - - - - - - - - - - - - - - $28,355.43
S. Morris . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - 23,655.42 $52,010.85
Solution of
LANE & MORRIS.
TRADING & PROFIT & 1,05S STATEMENT,
For the year ended December 31, 1913.
Problem l.
SALES (Net ) - - - - - - - - - - - - - - -
COST OF SALES:-
Inventory, January 1, 1913 . . . . . . . . . . . .
Purchases (Net)
Total - - - - - - - - - - - - - - - - - - - - - - - - -
Inventory, December 31, 1913 . . . . . . . .
Gost of Sales . . . . .
GROSS PROFIT . . . .
. . $20,783.40
35. 340.06
- - - - - - - - - - - - - - - - - - - - - - - - -
33.35.3.1:
---
- - - - - - - - - - - -
- - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
EXPENSES:-
- • Lane-Salary - - - - - - - - - - - - - - - - - - - -
8. Morris-Salary - - - - - - - - -
Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Traveling Expense . . . . . . . . . . .
Commission . . . . . . . . . . . . . . . . . . . . . . . . - - - - - -
Printing & Stationery . . . . . . . . . . . . . . . . . . .
Advertising . . . . . . . . . . . . . . . . . . . - - - - - - - - - - -
Express, Freight & Cartage . . . . . . . . . . . . . .
Rent - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Insurance - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Depreciation-Furniture & Fixtures . . . . . . .
Expenses - - - - - - - - - -
Interest - - - - - - - - - - - - - - - - - - - - - - -
- Total Expenses . . . . . . . . . . . .
NET PROFIT . . . . . . . . . . . . . . . . . . . . . . .
. . . $ 3,000.00
3,000.00
15,780.00
2,700.00
3,640.00
309.00
l,615.00
691.00
6,000.00
585.00
100. OO
2,018.13
2.750, 00
-*-
- - - - - - - - - - - - - - -
- - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - -
Distributed as follows: -
J. H. Lane - - - - - - - - - - - - - - - - - - - - - - - - - $ 1,855.43
S. Morris . . . . . . . .
- - - - - - - - - - - - - - - - - -
$7
3
8, llā.26
------
$4
4.
2.214.28
5,898.98
2,188:13
-º-º-
$
3,710.85
l,855.42 & 3,710-85
Problem 2-
DISTRIBUTION OF INDIRECT EXPENSES.
Figure out cost in schedule form showing percentage of over-
head and Overhead Cost applying to each article according to the de-
partment through which the article passed, and show total cost with
Overhead added on the number of articles produced and the unit cost per
article.
The following articles were manufactured in a given month,
the particulars of which are shown on schedule:
Article #1 passed through all departments.
Article #2 passed through Departments A, C and
G only.
Article #3 passed through Departments D, F and
G only.

Article #4 passed through Departments A, E and
G only.
Article #5 passed through Departments B, C, E
and F only.
Expenditures for Direct Labor and Overhead are based on
figures contained on page 290, Form 43 A and B.

Problem 2.
S U M M A R Y O F C O S T S.
Total
Unit Total IHFGöt Total Unit
Ar- Material Material Labor Fimé Overhead Total Gost Töf
ticle. Quantity. Gost. Costſ. CoSt. CoSt. Gost. Göst. Articiſe.
l 2 $2.00
2 4 2.50
3 8 1.00
4. 10 1.50
5 6 3.00
D E P A R T M E N T A L D I R. E. C. Tº I, A B O R O W E R H E A D C Q S T S.
Total Total
Ar- TJTF8&t OVEF-
tigle. A B 9. D E. E g IEEEFE head-
l l. 35 • 25 • 35 .40 • 75 . 50 .20 3.80
2 3.00 --- 2.50 - - - --- --- 1,50 7.00
3 --- --- --- l. 60 --- 1. 75 .65 4.00
4. 8.00 --- --- --- 7.00 --- 5.00 20.00
5 --- 6.50 1.50 --- 4.00 3.00 --- 15.00
B as I s y o R o v B R H E A D D, 1 s T R I B u + 1 on.
A. B & D E F. G
Department Over- -
head . . . . . . . . $7,599.49 $485.21 $2,097.02 #3,110.25 # 956.74 $863.97 $959.50
Department Di- - - -
rect Labor . . 4,018.38 292.94 1,370.80 2,867.98 1,093.66 412.70 879.94




Department Ove
r-
head Percent-
age
The departmental labor stated represents the total cost of labor for the total quantity
produced of each article.

Solution of Problem 2.
S U M M A R Y O F C Q S T S.
- TT5EEI
Unit Total Direct Total Total Unit
Material Material Labor Prime Overhead Total Cost of
Article. Quantity. CoSt. Cost . Cost. Cost. Cost. Cost. Article.
l 2 $2.00 $ 4.00 $ 3.80 $ 7.80 $ 5.86 $13.66 $6.83
2 4. 2.50 10.00 7.00 17, OO ll. 13 28.13 7.03
3 8 1.00 8.00 4.00 12.00 6.ll 18, ll 2.86
# 10 #:33 15.00 20. OO 35.00 26, 71 61, 71 6.17
6 3. 18.00 15.00 33.00 22.84 55,84 9.31
- TETFTATRTM ETNTATDTIRTETTITBTOTRTÉ OTWTETRT H E A DTCTOTSTS.
T- Total TSEEI
Article A B G D E F G Direct Labor. Overhead,
l l. 35 • 25 • 35 - 40 • 75 • 50 • 20 3, 80 ---
2.55 •4l - 54 •43 •66 1.05 • 22 --- 5-86
2 3.00 --- 2.50 --- --- --- 1.50 º,00 - ---
( 5.67 --- 3.82 --- --- --- i.64 --- ll. 13
3 { --- -- - - - - 1.60 --- 1.75 .65 4.00 ---
--- --- --- 1, 73 --- 3.67 • 71 --- 6.ll
4. ( 8.00 --- --- --- 7, 00 --- 5.00 20.00 ---
(15.13 --- --- --- 6.13 --- 5.45 --- 26 - 71
5 t --- 6.50 l,50 --- 4.00. 3,00 --- 15.00 ---
_ ( --- 10.76 2.30 --- 3.50 6-28 --- --- 22.84
- BTATSTSTFTOTRTÜVTETRTHETATDTDTSTRTBTUTIOTN.
- A B C D E. F G

Department Over- - -
head . . . . . . . . 37,599.49 $485.21 32,097.02 $3,110.25 $ 956.74 $863.97 $959.50
Department Di- - - -
rect Labor . . 4,018.38 292,94 1,370.80 2,867.98 - 1,093.66 412.70 879.94
Department Over-
head Percent- -
age • - - - - - - - - 189.1% 165.6% 153% 108.4% 87.5% 209.3% 109%

Solution of Fºr clblem 3.
W. A. G E S C H E D U L E.
Reduc-
Men's Reduc- tion in
No. of Gain Cost Over- Cost tion in Cost per
Arti- Rate of Labor per of Ma- head Total per Cost per 100
System, cles. Payment. Cost. Day. terial. Cost. Cost, Article. Article. Articles.
Day Rate 8 • 30 per hour $3.00 $1.00 $1.50 $5.50 $.6875
Piece Work ( 8 • 32 per piece 2, 56 –$.44 1.00 1,50 5.06 .6325 $.0550 $5.50
(10 • 32 per piece 3, 20 • 20 l, 25 1.60 6.05 • 605 • O325 8, 25
Differential ( 8 • 32 per piece 2.56 - , 44 1. OO 1, 50 5, O6 , 6325 • 0550 5.50
Rate (10 • 34 per piece 3. 40 .40 1, 25 1.60 6.25 • 625 . O625 6.25
( 8 • 28 per hour 2.80 -. 20 1, 00 1. 50 5.30 • 6625 . O250 2.50
| Average 1-1/4 pieces per hour on a ten-hour base.
Premium ( ( . 14 additional )
(10 (for each hour ! 3.15 .15 1. 25 1.60 6.00 - 60 , O375 8, 75
( (saved
( Two pieces extra - 2-1/2 hours.
Bonus ( 8 • 28 per hour 2.80 - .20 1.00 l. 50 5.30 - 6625 • O250 2.50
rºl (10 .32 per hour 3. 20 - 20 1. 25 1.60 6.05 - 605 .0825 8.25
( 8 • 28 per hour 2.80 - .20 1, 00 l. 50 6.30 - 6625 • O250 2.50
Gantt (10 • 28 per hour 3. 50 , 50 1.25 1.60 6.35 ,635 , 0525 5.25
( plus 25%
( 8 • 28 per hour 2.90 - . 10 1.00 l. 50 5.40 • 675 • 0125 1.25
( plus 3-1/2% for
Santa ( 80% efficiency.
Fe? (10 • 28 per hour 3.36 • 36 1.25 1.60 6.21 • 62.l , 0665 6.65
( plus 20% for
( 100% effi-
( ciency
Based on a working day of ten hours.

Problem 4.
P. O. W. E. R. C O S T S & D I S T R T B U T. I O N.
Month ended -
Horse No. of Horse
Power Hours Power
Items. Amount. Dept. Used. Run. Hours. Rate. Amount.
10 216 2,160
15 200 3,000
18O 3,600
25 170 4,250.
30 160 4,800
Rent . . . . . . . . . . . . . . . . . . . . . $ 100.00
Fuel - - - - - - - - - - - - - - - - - - - - - 450, 00
Engineer . . . . . . . . . . . . . . . . . 150,00
Fireman - - - - - - - - - - - - - - - - - - 100,00
Repairs . . . . . . . . . . . . . . . . . . 25.00
Supplies . . . . . . . . . . . . . . . . . 191, 70
Water . . . . . . . . . . . . . . . . . . . . 25. OO
Inspection . . . . . . . . . . . . . . . 100, 00
Taxes . . . . . . . . . . . . . . . . . . . . 25.00
Insurance . . . . . . . . . . . . . . . . 50, CO
Depreciation . . . . . . . . . . . . . 30, CO
Total - - - - - - - - - - - - - - - $1,246.70 10C 926 17,810
- T-
i
2
O
Horse Power Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - -
Horse Power Lost in Transmission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Horse Power Distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Horse Power Developed . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - 108
Cost per Horse Power Hour - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Problem 4.
P R o c e s s o R M A c H 1 N E R E c o R D.
Month ended -
D I S. Tº R H B U Tº I O N.
Dept. - Dept - Dept. - Dept - Dept -
Itents. Total. l. 2. 3. 4. 5.
Department Run Hours . . . . . . . . . - - - -
Nußber of Machines or Horse Power
Used • - - - - - - - - - - - - - - - - - - - - - - - - - -
Total Machine Hours . . . . . . . . . . . . . .
Day Work . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,739.50 $ 966.50 $1,269.00 $1,684.00 $1, C20.00 $ 800.00
Piece Work - - - - - - - - - - - - - - - - - - - - - - - 6,340.75 1,340.00 1,860.00 1,443.25 922, 50 775. OO
Supplies - - - - - - - - - - - - - - - - - - - - - - - - - 617.00 l60. OO 135. OC 115.00 llz.00 95. OO
Power Cost - - - - - - - - - - - - - - - - - - - - - - -
Floor Space or Rent . . . . . . . . . . . . . . 434.00 100. CO 75.00 6C.OO 87. OO 112.00
Depreciation - - - - - - - - - - - - - - - - - - - - - 150.00 10.00 20, OO 30.00 40.00 50.00
Insurance . . . . . . . . . . . . . . . . . . . . . . . . 100. OO 15.00 18.00 20.00 22, 00 25.00
Department Indirect Expenses . . . . . 1,725.75 3.29.50. 447.00 446.75 277.50 225.00
Total . . . . . . . . . . . . . . . . . . . . . . . -
General Operating . . . . . . . . . . . . . . . . 690.30 131, 80 178.80 178.70 lll.00 90.00
Total . . . . . . . . . - - - - - - - - - - - - - - - - -
Cost per Hour . . . . . . . . . . . . . . . . . . . .

P. O. W. E. R. C O S T S
Month ended
D I S T R I B U Tº I O N.
Solution of Problem 4.

Horse No. Horse
Power Hours Power
Items. Amount. Used. Run. Hourse Rate. Cost.
Rent . . . . . . . . . . . . . . . . . . . . $ 100.00 l 3.0 216 2, 160 , O7 15l. 20
Fuel . . . . . . . . . . . . . . . . . . . . 4:50.00 2 15 200 3,000 , O7 210. OO
Engineer . . . . . . . . . . . . . . . . 150. OO 3 20 18C 3,600 • O7 252.00
Fireman . . . . . . . . . . . . . . . . . 100.00 4. 25 170 4, 250 . Of 297.50
Repairs . . . . . . . . . . . . . . . . . 25.00 5 30 160 4,800 • Oº 336. O0
Supplies - - - - - - - - - - - - - - - - 191.70
Water . . . . . . . . . . . . . . . . . . . 25, CO
Inspection . . . . . . . . . . . . . . 100.00
Taxes . . . . . . . . . . . . . . . . . . . 25, 00
Insurance . . . . . . . . . . . . . . . 50.00
Depreciation . . . . . . . . . . . . 30.00
Total . . . . . . . . . . . . . . $1,246.70 100 926 17,810 $1,246.70
Horse Power Hours . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - ... 17,810
Horse Power Distributed . . . . . . . . . . . . . . . . • * * * * * * * * * * * * * * * * * * * * - - - - - - - - - 100
Horse Power Developed . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - 108
Horse Power Lost in Transmission . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 8

Cost per Horse Power Hour . . . . . . . . . . . . .
- - - -
- - - - - - - - - - - -
- - - - - -
. . . 7 cents.

P R O C E S S O R
Month ended
M A C H I N E
Solution of Problem 4.
R. E. C. O. R. D.
D I S T R I B U T. I O N.
Dept. Dept. Dept. Dept. Dept.
Items, Total. l. 2. 3. 4. 5.
Department Run Hours . . . . . . . . . . . . . 926 216 200 180 170 160
Number of Machines or Horse Power
Used - - - - - - - - - - - - - - - - - - - - - - - - - - - 100 - 10 - 15 20 25 30
Total Machine Hours . . . . . . . . . . . . . . 17,810 2,160 3,000 3,600 4,250 4,800
Day Work * * * * * * * * * * * * * * * * * * * * * * * * * $ 5,739.50 $ 966.50 $1,269.00 $1,684.00 $1,020.00 $ 800.00
Piece Work - - - - - - - - - - - - - - - - - - - - - - - 6,340.75 1,340.00 1,860.00 l,443.25 922.50 775. OO
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . 617.00 160, 00 135, 00 life 00 112. OO 95.00
Power Cost - - - - - - - - - - - - - - - - - - - - - - - 1,246.70 151. 20 210.00 252, CO 297.50 336.00
Floor Space or Rent . . . . . . . . . . . . . . 434.00 100.00 75. OO 60. OO 87, OO 112.00
Depreciation - - - - - - - - - - - - - - - - - - - - - 150.00 10.00 20.00 30.00 40, 00 50.00
Insurance . . . . . . . . . . . . . . . . . . . . . . . . 100.00 15.00 18, CO 20, 00 22.00 25.00
Department Indirect Expenses . . . . . 1,725.75 3.29.50 447.00 446.75 277, 50 225,00
Total . . . . . . . . . . . . . . . . . . . . . . . $16,353.70 $3,072.20 $4,034.00 $4,051.00 $2,778.50 $2,418.00
General Operating . . . . . . . . . . . . . . . . 690.30 131, 80 178. 80 178. 70 111.00 90.00
Total . . . . . . . . . . . . . . . . . . . . . . . $17,044.00 $3,204.00 $4,212.80 $4,229.70 $2,889.50 $2,508.00
Cost per Hour - - - - - - - - - - - - - - - - - - - - $ O. 95.7 $1,4833 $1.4042 $1.1749 $ • 6798 $ • 5255
Problem 5-
The cost records of the Novelty Mfg. Company are kept at the
factory office, the general and financial records being kept at the
main office.
On September 1, 1915 the factory ledger showed the follow-
ing facts :-
Cash balance $500.00; Raw Material & Supplies $18,545-60;
Unpaid Wages of Productive Workers $2,450.25; Work in
Process - Material $40,375.50; Work in Process - Productive
Labor $12,420.75; Work in Process – Manufacturing Over-
head $5,375.80; Finished Stock $35,643.70.
An analysis of the various summary records for the month of
September, 1915 showed the following:
The invoices for purchases of raw materials and supplies
amounted to $6,840.65.
- The wages paid during the month were $10,423.50 of which
$3,470.25 was for non-productive labor.
The general office reported the additional factory indirect
expenses for the month to be $1,840.60.
The Summary of Material Requisitions showing the materials
and supplies used amounted to $5,870.95.
The productive labor which was distributed and charged upon
detailed cost cards to Work in Process amounted to $6,540. 75. All
the indirect expenses which were incurred during the month were dis-
tributed and charged to the Work in Process account.
The summary of the production reports showed that the total
cost of all finished orders amounted to $10,560.50 for material,
$8,840.90 for productive labor and $6,475.60 for indirect manufacturing
expenses. -
The sales for the month of September were properly costed
and the Register of Sales & Costs showed that the total cost of all
shipments was $33,440.80.
You are requested to prepare all the necessary journal en-
tries which would enable you to record the above information properly
upon the Factory Ledger. In addition, you are requested to open all
the factory ledger accounts showing the detailed transactions in each
account and submit a copy of the final trial balance at September 30,
1915.
Solution of Problem 5-
NQWERTY MANUEFACTURING COMPANY.
T. R. I. A. L. B. A. L. A. M. C. E.
FACTORY LºgBF-
SEPTEMBER 1, 1915.
Dr. Cr-
l Cash - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ 500.00
2 Raw Material & Supplies . . . . . . . - - - - - - - . . . . 18,545.60
3 Unpaid Wages . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - $ 2,450.25
4 Work in Process - Material . . . . . . . . . . . . . . . . 40,375.60
5 Work in Process - Productive Labor . . . . . . . . 12,420.75
6 Work in Process - Manufacturing overhead . . 5,375.80
7 Finished Stock - - - - - - - - - - - - - - - - - - - - - - - - - - - - 35,643.70
8 General Ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,4ll. 20
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $112,861.45 %ll2,861.45
-
J O U R N A I, E N T R L E S.
SEPTEMBER 30, 1915.
Raw Meterial & Supplies . . . . . . . . . . . . . . . . . . . . . . $ 6,840.65
Wages • * * * * * * * * * - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10,423.50
Factory Indirect Expenses . . . . . . . . . . . - - - - - - - - - l,840. 60
To General Ledger . . . . . . . . . . . . . . . . . . . - - - - $ 19,104.75
(To record factory expenditures for
Material, Labor & Indirect Expenses
for the month).
--- ooo---
Work in Process - Material . . . . . . . . - - - - - - - - - - - $ 5,870.95
To Raw Material & supplies ......... - - - - - $ 5,870.95

imaterial & Supplies delivered to
operating departments during the
mºnth, 5* Summary of Material Requi-
sitions).
--- ooo---
Solution of Problem 5.
J o U R N A L E N T R I E S (CONT"D).
Work in Process - Productive Labor . . . . . . . . . . . $ 6,540.75
Factory Indirect Expenses (Non-Productive
Labor) . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - 3,470.25
To Wages . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - $ 10,011.00

[Distribution of Labor charging
Productive Labor to the operating
Departments of the plant and charg—
ing the Non-Productive Labor to the
Factory Indirect Expenses).
---000---
Work in Process - Manufacturing overhead . . . . . $ 5,310.85
To Factory Indirect Expenses . . . . . . . . . . . . # 5,310.85
(To record distribution of the fac-
tory indirect expenses charging
same to the operating departments.
---ooo---
Finished Stock . . . . . . . . - - - - - - - - - - - - - - - - - - - - - . . $ 25,877.00
To Work in Process - Material . . . . . . . . . . . $ 10,560.50
Work in Process - Productive Labor . . . 8,840.90
Work in Process - Manufacturing Over- -
head . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,475.60
(To record the production for the
month, per the Summary of Production
Reports).
---ooo---
General Ledger . . . . . . - - - - - - . . . . . . . . . . . . . . . . . . . $ 33,440.80
To Finished Stock . . . . . . . . . . . . . . . . . . . . . . . $ 33,440.80
(To record cost of shipments for the
month, per Register of Sales & Costs).
--- ooo---
Solution of Problem 5.
NOVELTY MANUFACTURING COMPANY.
1915.
Sept. 1
1915.
Sept. 1
30
1915.
Sept. 30
1915.
Sept. 30
30
1915.
Sept. 1
30
1915.
Sept. 1
3O
1915.
Sept. 1
30
F A C T O R Y I, E D G E R A C C O U N T S,
Dr. Cr-
CASH ACCOUNT.
Balance . . . . . . . . . . . . . . . . . . $ 500.00
RAW MATERIALS & #Es:
915.
Balance . . . . . . . . . . . . . . . . . . $ 18,545-60 Sept. 30 Delivered to Work in Process $
Purchases . . . . . . . . . . . - - - - - 6,840.65
WAGES.
1915.
Payments . . . . . . . . . . . . . . . . . $ 10,423.50 Sept. 1 Balance . . . . . . . . . . . . . . . . . . . . $
30 Work in Process - Labor . . . .
30 Factory Expense Labor . . . . . .
FACTORY INDIRECT EXPENSES.
1915,
Purchases, etc. . . . . . . . . . . $ 1,840.60 Sept. 30 Work in Process - Manufac-

Non-Productive Labor . . . . . 3,470.25 turing overhead . . . . . . . . . . . 3
WORK IN PROCESS - MATERIAI.
1915.
Balance . . . . . . . . . . . . . . . . ... $ 40,375.60 Sept. 30 Production . . . . . . . . . . .
Raw Material & Supplies . . 5,870.95
WORK IN PROCESS - PRODUCTIVE LABOR.
TIg|IBT
5,870.95
2,450.25
6,540.75
3,470.25

5,310.85

- - - - - - $ 10,560.50

Balance . . . . . . . . . . . . . . . . . . $ 12,420.75 Sept. 30 Production . . . . . . . . . . . . . . ... § 8,840.90
Productive Labor . . . . . . . . . 6,540.75
WORK IN PROCESS - MANUFACTURING OVERHEAD.
1915. -
Balance - - - - - - - - - - - - - - - - - - 5,375.80 Sept. 30 Production - - - - - - - - - - - - - - - - - $ 6,475.60
Factory Indirect Expenses. 5,310.85

Solution of Problem 5.
F A G T o R Y L E D G E R A C C O U N T S (CONT'D).
Dr. Cr-
FINISHED STOCK.
1915. I9 I5.
Sept. 1 Balance . . . . . . . . . . . . . . . . . . $ 35,643.70 Sept. 30 Cost of Shipments . . . . . . . . . . $ 33,440.80
30 Producti On - - - - - - - - - - - - - - - 25 ,877.00
GENERAL LEDGER ACCOUNT. -
1915, 1915.
Sept. 30 Finished Stock Sept. 1 Balance . . . . . . . . . . . $110,411.20
Sales .
- - - - - - -
-
T. R. I. A. I.
- $ 33,440.80
39 Rey Material & supplies
30 Wages . . . .
Cash
- - - - - -
Raw Matériai & supplies - -
Wagos . .
Work in Process
Work in Procoss
Labor . .
Work in Process
Overhead . . . . . .
Finished Stock .
General Ledger .
- - - - - - - -
- - - - - - -
Total . . . .
B. A. L. A. N. C. E.
- - - - - - - - - - 500, 00
- - - - 19,515.30
- - - - - - - - - - - - - - - $ 2,037.75
- Material - - - - 35,686.05
- Productive
. . . . . . . . . . . . . . . 10, 120-60
- Manufacturing
- - - - - - - - - - - - - - - 4, 211-05
- - - - - - - - - - - - - - - 28,079.90
96,075.15
- - - - - - - - - - - - - - -
. . . . . $98,112.90 $98,112.90
6,840.65
10,423.50
1,840.60
30 Factory indirect ºpenses ..

- 5 -
LECTURE I: FIRST SESSION. "Cost Accounting"
--- of Q---
succesſions FOR LECTURE I:
{º} Definition of Subject
b) Relation to Ffficiency
(c) Adventages
(d) Relation to General Financial Records
(e) Simple and Complex Methods of Cost Systems
(f) Outline the Course
(g) Bibliography of the Subject.
--- ooo---
PROBLEM I: "Bookkeeping"
To test student's knowledge of bookkeeping.
---OOo---
ASSIGNMENT FOR HONTE STUDY;
Study Chapter I.
Read Chaptero IV, XII and XIII.
- 5 -
SECOND SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE:
5.
Chapter I. Lecture No. 1.
Problem I.
QUIZ.
That is the purpose of Cost Accounting es a science?
What is the purpose of interlocking the cost records with the
financial books?
Ans. Lecture No. 1 - Pages 1 and 2.
What distinction should be made between General and Selling CX-
penses?
Ans. Lecture No. 1 - Pºge 2.
That relation exists between Cost Accounting and Efficiency?
Ans. Lecture No. 1 - Pºges 2 and 3.
NOTE - In Lecture No. 1 - Ten principal advantages are stated in
connection with a cost system. The advantages should be
stated and the students called upon to a nswer the benefit
to be derived.
(a) A perpetual inventory is kept automatically in the records of
a cost system.
(b) It determines at what price different articles may be sold
and what commissions may be paid.
(c) It classifies expenses.
(d) It locates differences of profits and inefficiency in the dif-
ferent departments.
(e) It provides for a comparison of costs.
(f) It shows a comparison of estimated costs with actual costs,
- 7 -
11. (g) It locates the leaks and weak spots.
12. (h) It tends to hold everybody up to a certain stenderd.
13. (i.) It is the revealer of inefficiency.
14. (j) It provides for monthly financial stetements.
Ans. Lecture No. 1 - Pages 3, 4 and 5.
15. What are the three principal functions of a cost system from a
managerial standpoint?
Ans. Page 6 - Lecture No. 1.
16. Why cannot a system be devised to apply to every line of manu-
facturing business?
Ans. Page 6 - Lecture No. 1.
17. In what way do changed conditions in menufacturing affect a
cost system?
Ans. Page 7 - Tecture No. l.
18. That should be the object in view on the part of the student in
studying this course?
Ans. Lecture No. 1 - Pages 8 and 9.
19. Why should the student of cost accounting study wage systems?
Ans. Lecture No. 1 — Pege 9.
20. What is liable to happen if a cost system is carried to extremes
in detail?
Ans. Lecture No. 1 - Page 11.
---ooo---
LECTURE II.
"Principles and General Methods of Cost Finding".
SUGGESTIONS FOR LECTURE II.
(a) General development of cost accounting from the simple ac-
counting system to the complete cost system.
(b) Dividing the factory into departments.
(c) Generel treetment of meterial, labor end overheed as costs.
---ooo---
ASSIGNMENT FOR HOME STUDY:
Study Chapters IV, xII and XIII.
LECTURE #2.
CHAPTER IV.
PRINCIPLES & GENERAL METHODs of coST FINDING.
There are four general types of complete cost systems common-
ly used, which depend upon the principles of cost finding as applied to
the conditions of manufacture for their classification.
CONDITIONS:-
The conditions of manufacture refer to the basis on which
costs are calculated and are - -
1. Special Order System.
2. Product System.
The costs will be found on the order, job or ‘article in a
Special Order System.
In a Product System the costs will be found on the product
or process without relation to a particular order or article.

The principles of cost finding refer to the methods of col-
lecting the items of cost as they apply to either of the above men-
tioned systems. These methods are known as - -
l. Productive Labor Method of Gost
Finding (Hours or Wages).
2. Process Method of Cost Finding.
PRODUCTIVE LABOR METHOD:-
In the Productive Labor Method of Cost Finding the labor
and material are charged directly to the order, article or product,
and to these charges is added the prorata share of the indirect ex-
penses, based upon the amount or the time of the productive labor, which
gives the total cost.
PROCESS METHOD OF COST FINDING:-
The Process Method is to make the charges of costs against the
process or operation and, after the cost is ascertained, it is distrib-
uted over the product according to its classification.
A special type of the process method, and particularly valu-
able when it can be used, is the "Machine Cost Method".
MACHINE COST METHOD:-
It employs the same principle but applies it to machines or
group8 of machines.
Its effectiveness is due to its power to absorb many of the
indirect expenses as direct charges, thus lessening the amount that
must be distributed over the product as a whole.

The importance of this must not be underestimated. The com-
pilation and distribution of the direct material and labor charges are
not matters of difficulty as a rule and can be accurately determined
but almost all the trouble and mistakes in finding costs arise through
the distribution of the indirect expenses.
Any method that provides for transforming a large part of
these indirect expenses into direct charges attacks the difficulty at
its source.
TYPES OF SYSTEMS.
The four types of systems, according to these two classifica-
tions, may be designated as follows:-
1 - Special Order System using the productive
labor method.
2. Special Order System using the process or
machine cost method.
3. Product System using the productive labor
method.
4. Product System using the process or machine
cost method. -
g
COMBINING FEATURES OF Tºo OR MORE TYPES OF SYSTEMS:-
Most phases of manufacturing may be covered by these four
types but often, in actual practice, it is necessary to combine the
feature of two or more types in finding the costs in different parts
of a plant.
Each type is susceptible to more or less modification to fit
special conditions, while still retaining its general character.
The success or failure of a cost system sometimes depends on
the recognition of the conditions governed by this fundamental classi-
fication.
PARTIAL OR INCOMPLETE COST SYSTEMS:-
Partial or incomplete cost systems may be devised for any
particular purpose.

As a rule the object is to find the cost of certain lines of

goods as a class without going into details for each production, order
or article.
ESTIMATING COST SYSTEMS:-
There are also regular methods of estimating costs and veri-
fying the estimates to a certain degree of accuracy.
These are not cost systems in the true sense of the word, as
they do not provide for finding actual costs; nevertheless, they may be
of considerable practical value in small shops, and, in larger factories,
:::::A; ºn serve to indicate where accurate cost methods should be in-
8", a.... eCi-
ANALYSIS OF OPERATIONS,
Since one of the principal functions of a cost system is to
analyze the costs into their component parts, it follows that there must
be corresponding analysis of the manufacturing operations.

DIVISION OF FACTORY INTO OPERATING DEPARTMENTS:-

This is accomplished by dividing the factory into a number of
operating departments, the aim being to limit as much as possible each

department to simple and uniform operations.
The operating department plays a very important part in making
up and arranging the cost accounts.
It furnishes a center about which various expenses may be
grouped and from which the indirect expenses may be distributed over
a limited field with a greater degree of accuracy.
OPERATING DEPARTMENTS:-
would be - -
Sorting Carding
Scouring Spinning
Carbonizing Knitting
Drying Rib Knitting
Picking Seaming
In certain kinds of textile mills, the operating departments
Dyeing
Boarding
Finishing
Boxing
Packing
In an axle works the departments would be as follows:-

Al Forge Department
A2. Upsetter Department
A3 Drop Forge Department
A4 Blacksmith Department
A5 Welding Department
A6 Turning Department
A7 Heaving Axle Department
A8 Axle Box Department
A9 Axle Nut Department
AlO Threading Department
All Light Axie Finishing Department
Blæ Commercial Assembly Department
Blà Pleasure Auto Department
Blá Pleasure Auto Assembly
Blå Auto Parts Department
Bl? Chassis Assembly Department
Cl8 Foundry.


INDIRECT PRODUCTION DEPARTMENTS:-
Plant
Power
Supervision and Inspection
Engineering and Draughting
Purohasing and Stores
Time and Cost
Pattern
Axle Tool
Die Sinking
Auto Parts Tool
Yard and Local Transport
Accounts are kept for each department and these should show
the cost for material and labor and the indirect expense involved in
its operations.
DIVISION OF COST :-
It is evident that the cost of any article in any one depart-
ment can be obtained by the addition of four distinct elements of cost
in that department - ºiz.:-
l. Direct Material.
2. Direct Labor.
º 3. Department Indirect Expense; i.e., the expenses
that may be charged to that particular department;
and - -
4. General Indirect Expense; i.e., its share of the
general indirect expenses of the plant that cannot
be charged against a department but must be distrib-
uted prorate over the several departments.

The costs in each operating department should therefore be
recorded under these four headings.
MATERIAL COST.S.
The cost of direct material is a matter of market price at
the time of purchase, plus the freight and yard charges when same are
included in the cost.
REWALUING: -
Sometimes the raw material is purchased in bulk and has to be
sorted and revalued according to grade, as in buying feathers, tobacco
Quor wool in the grease. The material cost must then be adjusted accord-
ing to the various grades so as to equal the original price.
BY-PRODUCTS : –
Complications sometimes arise in the treatment of scrap ma-
terial when it is used in making by-products.
The custom is to determine the percent of the original ma-
terial so used and deduct this percent of the cost from the primary
product, and consider it as the material cost of the by-product.
ESTIMATE:-
If, however, there is no way of determining the percent,
except at considerable expense or when the waste varies greatly in
quantity and quality, its scrap value is estimated and usually entered
under the head of sundry income when same is sold.
THEORY: -
Theoretically the waste or scrap value should be deducted
from the material cost of the product but, when this is attempted in
practice, it is often impossible to locate the product affected.
LABOR COST.S.
The direct labor is sometimes easier to determine than the
direct material. In piece-work it is given directly on the product
without further calculation, unless the cost of several parts are to
pe added to find the cost of the whole. In time-method of payment,
it is only necessary to find how much time each workman has put on the
product and the dollar and cent value of that time is determined.
There are, however, in a few lines of manufacturing, condi-
tions where a workman may spend only from three to five minutes on a
single order or article.
- - - In such cases it is not practical to charge this direct labor
specifically to the individual order or article.
PROCESS PLAN :-
A plan must be arranged for a distribution of this class of
labor over the number of articies worked on during a given time or, in

0
other words, the principle of the prooees plan must be used for this
particular class of labor.
ESTIMATE :-
An estimate is quite often made, based on previous experienge,
and then used to apply to labor costs. If the conditions remain exactly
the same, the practical results may be fairly accurate.
PLANS OF DISTRIBUTION OF INDIRECT EXPENSE: –
Indirect expense, far from being a minor item, is quite on a
par with material or labor cost if not actually more important.
It is unquestionably the most difficult to analyze and re-
duce to figures and, ever, with this accomplished, the problem is only
half completed.
APPLICATION TO MANUFACTURING PRODUCT : –

The question is how to apply this expense to the manufactured
product in such a way as to reveal the true cost of production of the
separate articles or classes of articles.
Unless this is determined approximately correct, the specific
end or purpose of all the preliminary steps is still unrealized. Thus,
the correct distribution of the indirect expenses becomes one of the
essential links in the chain of process used in cost finding, without
which no results can be depended on as accurate.
WARIOUS METHODS:-

From time to time various methods of effecting this distribu-
tion have been proposed, varying widely in theory and involving distinct-
ly different processes in execution.

They have been devised for the most part by men who were
themselves interested in certain lines of manufacture, and who have
arrived at them by a study of conditions in their own plant or in fac-
tories of the same character.
NO ONE STANDARD METHOD OF DISTRIBUTION
SUITABLE TO ALL CONDITIONS:-
It is a perfectly natural result that there are now several
methods recognized as standard, each one of which is suitable to cer-
tain conditions while being altogether out of place when adopted apart
from these conditions.
It is obvious that no one method can be recommended for
general use, be it ever so efficient in its own field.
The conditions of manufacture and the nature of the indirect
expenses incurred in the different manufacturing lines are entirely too
diverse to encourage the hope that such a general method will ever be
discovered.
When it comes to the point of actually choosing a method of
distribution as a concrete instance, the manufacturer is generally con-
fronted by such a variety of conditions and circumstances, apparently
peculiar to his own plant, that he is prone to abandon the case and
confess himself unable to cope with the situation.
The complexity of the indirect expenses as a whole, and the
difference in their character in different parts of the factory, are the
two leading factors which induce this feeling of helplessness.
It is to meet the latter difficulty that the plan was devised
of dividing the factory into departments.
Each department should be so formed that the expenses con-
nected with it may be grouped and treated departmentally.
This suggests the idea that different methods of distribution
may be used in the same factory in different departments, which is
actually done in some cases. More will be said on this feature of dis-
tribution after the different plans have been described.
The difficulty arising from the complexity of indirect ex-.
penses as a whole, in connection with different classes of product, is
not so easily disposed of .
The manufacturer refuses to be burdened with a complex system
of cost finding, both by reason of expense and inconvenience. What he
wants is a method, as simple as possible, which will give results as
accurate as could be expected.
HOW MOST PRACTICAL METHODS CAN BE DETERMINED:-
The most practical method can be deterrºined only by having a
knowledge of all the methods in general use and the underlying principles
of the same, together with an understanding of the conditions in a
factory to which one method or another is particularly applicable.
LECTURE #3.
ELEMENTS OF COST.S.
Production Costs are classified into three principal divisions
known as the elements of costs: -
l. Material
2. Labor
3. Expense.
Sub-divided, these may be classified:-
Direct
l. Material {#####st
(Direct or Productive
2. Labor (Indirect or Non-Productive
(Direct -
3. Expense trºot.
DIRECT CHARGES.
Direct Charges is that element of cost that enters into and
can be charged directly to the product.
DIRECT MATERIAL CHARGE:-
The cost of the substance, out of which the product is made,
is the direct material charge,
DIRECT LABOR CHARGE:-
The cost of the labor, applied directly to the productive
process, is the direct labor charge.
DIRECT EXPENSE CHARGE: -


Any expense that can be charged directly to an order, job or
process, may be included as a direct charge under the caption "Direct
Expense". The expense of workmen in traveling to and from a job, as
well as the hotel expenses of the workmen while engaged out of town on
a particular job, are illustrations of Direct Expenses.
ALL OTHER CHARGES:-
All other expense comes under the general head of "Indirect
Expense" and is there classified under one of the sub-heads. It is
sometimes called "Burden" or "Overhead." Cost.
INDIRECT CHARGES,
INDIRECT MATERIAI, ; -
Indirect material consists of such material as factory sup-
plies, used in the processes, but which either do not enter into the
product itself or, if they do, in such a way as not to be charged proper-
ly to any particular article. Examples of this are oil, fuel, glue, etc.
INDIRECT LABOR:-
Indirect labor is that labor spent in repairing, handling,
supervision, etc.; that is, any lab or not engaged directly on the article
itself.
INDIRECT EXPENSE:-
The term "Indirect Expense" refers only to those expenses that
are incurred in the manufacturing end of the business and which are
properly a part of the cost of production. Supervision, repairs, light,
experimental work, interest, depreciation, etc., are scattering examples.
SELLING & ADMINISTRATIVE EXPENSES.
The expenses that arise from advertising, commissions, sal-
aries of officers, etc., are known as commercial or selling and admiri-
istrative expenses.
These expenses are necessary and most important in planning
sales and determining profits, etc.
DO NOT ADD TO COST : –
The Selling and Administrative Expenses neither add to nor
subtract anything from the actual cost of producing the goods to sell.
Therefore they find their places in the general accounting department of A
the factory, but not in the cost accounting books.
ADMINISTRATIVE EXPENSES: -
The separation of administrative expenses as a distinct class
is largely a matter of convenience.
Practically the administration divides its time between govern-
ing the selling organization and considering the problems of production;
that is, administrative expense is partly a production cost and partly a

selling cost; but it is generally uncertain what part of it may be proper-
ly assigned to each.
The purposes of cost finding are best served by classifying
them from the experises arising from production proper and direct super-
vision.
DIVISION OF INDIRECT EXPENSES.
Indirect expenses, as a class, are divided into two divisions
depending upon how they are to be apportioned or distributed in the costs.
This classification will vary in almost every factory but on the whole
it will consist of the general items:
Indirect Material Taxes
Indirect Labor Insurance
Light -- Repairs
Heat Maintenance
Power Experimental Work
Rent Supervision
Interest Inspection
Depreciation Over, Short & Damage
etc., etc.
PROCESS OR PRODUCT EXPENSE:-
The one division consists of those that can be apportioned to
individual products or certain processes because they are incurred in
particular departments of the factory. In this class are salaries of
foremen, repairs to machinery, etc.

GENERAL EXPENSE:-
The other division is rade up of interest, depreciation of
plant, taxes, and the like, which extend over the plant as a whole
and must be distributed over the product as a whole. They are therefore
designated as general operating oxpenses.
FIXED CHARGES:-
The line between those two divisions is more or less varying
as quite often the rent, light, etc., are assigned departmentally on
the basis of floor space and such an item as depreciation may be split up
into depreciation of machines and depreciation of building.
The diagrara shows a more extended classification of costs.
Direct Expense (Material
(Labor
(Indirect Material
(Assigned (Indirect Labor
( or (Indirect Department Ex-
(Departmental ( pense.
(Indirect Material
(Indirect Labor
General (Indirect General Ex-
( pense.
Selling & Admin-
istrative
(
(
(
(
(
|
TOTAL COST : Fºrest Expense:
(
(
(
(
| Not a part of the cost system.
|
Over, Short and Damage is made up of tho waste and damage
minus any value that the damaged goods may have to the company; e.g.,
use in packing or scrap.
POWER:-
To obtain accurate costs, it is almost always necessary to
segrogate and charge the power as a direct expense to each department
or machine.
It is also nocessary in order to show leakagos and waste and
to effect economies.
Where power is purchased this can be done *:::: Where it
is produced the power plant must be considered as a department by itself
and bear its own assignment of direct and certain indirect expenses.
The student will see how it is arranged in item No. 2 in the
list of indirect expenses given before.
If the power plant furnishes heat, or heat and light, to the
factory, the cost of these items must be subtracted from the total power
cost to get the net power cost.
CALCULATION OF POWER:-
The actual calculation of the power used by a machine or de-
partment is a mechanical problem. If electric power is used, depart-
ment meters will show directly the power consumed.
In the case of machines with electric motor, ammeters may be
used to determine the average amperes used per hour.
Multiplying the amperage by the voltage gives the watts
used.
There are also curve drawing instruments that give the power
directly, as power factor indicators for alternative current and watt
meters for direct current circuits.
For steam driven machinery there are several types of dynamo-
meters in use that may be arranged to register directly the power con-
sumed by any single machine or group of machines.
Where compressed air is used as in drilling machines, etc.,
the most accurate results are obtained by an air meter placed not too
close to the machine.
A comparison between different machines will give the ratio
of power to assign to each.
There are several formulae meant to give the power directly,
but authorities are not agreed as to their reliability.
TAXES & INSURANCE & INTEREST : —
Taxes are a part of the general operating expenses, as they
are independent of department value.
2
Insurance, on the other hand, is partly distributed over the
plant as a whole and over each department according to its value.
Interest, as an expense, is generally treated in three ways:-
1. Interest on mortgages which may be considered
as a part of the rent charge.
2. Interest on buildings and land value which is
one of the general operating expenses.
3. Interest on the value of different machines
or equipment of different manufacturing de-
partments, which is assigned to the product
operated by these machines or departments.
As there is a difference of opinion among accountants as to
treating "Interest" as a cost of production, the student is referred
to "Gost Accounting, Theory & Practice", where the views of two
other writers are set forth and reference is also made to a number of
articles on this subject.
As the question is of great importance, it is advisable to
read carefully not only the views as set forth in this book but also
the views of the writers contained in the reference, before making a
final decision in this matter.
As it may not be possible for the class to look up all the
reference made to this question in the Lecture Book, I will endeavor
to quote the opinion of the writers in as few words as possible.
- In Garcke & Fells book it is stated that Interest on Fixed
Capital and the provision against Depreciation are factors in the cost
of production. This book is regarded to some extent as an English
authority on Gost Accounting.
Spencer in the "Commercial Organization & Factories" states
"Other equally important subsidiary items of profit and loss are the
amounts of interest on the value of plant, buildings, etc., provision
for which will be conceded when it is remembered that if these assets
were disposed of and reacquired at a rental, such a payment would assured-
ly figure in the account for rents, rates and taxes. In other words,
the original investors in the real property of a company are entitled
to a return on their investment before profits may be earned." This is
also an English view on the subject.
In that fine Engineering Cost Book by Gillette & Dana, there
is this view: - "Contractors doing work on the cost, plus a fixed sum,
or the cost plus a percentage basis, are anxious aná justly so to in-
clude among the items of cost the interest on the money invested in the
plant used on the work. Interest on Capital necessary to the business
will have to be charged as overhead expense and distributed among the
various jobs."
Hugo Diemer, in his work, "Factory Organization & Adminis wra-
tion", quotes that a Committee on the National Machine Tool Builders'
Association made the following recommendation in connection with interest
charges: "Under the heading of Interest, the committee considers it in-
cumbent that an amount should be charged into the burden element of the
cost of each month equal to a fair interest of the value of ground ,
buildings and plant equipment, viz.: 1/12 of say 5%. We cannot commence
to figure profit until this interest charge is first added to the cost.
The manufacturer who does not own his buildings and ground will charge
rent instead of interest on these values into his costs. As to the
plant equipment, the mere fact that a manufacturer has paid for this
does not relieve him of charging an intezest on it into his costs any
more than if he had out interest-bearing notas given in payment for it, or
an issue of interest-bearing stock to cover this plant equipment. If he
never earns more than a fair interest on his total investment, then he
is practically earning no profit by his business transactions, since he
could get this interest on his money without going into business. There-
fore this interest should be added into the cost before we put on the
profit which should establish the selling price." Mr. Diemer is the
instructor in Cost Accounting in the Pennsylvania State College and con-

º: a practical machine shop in the college with a complete cost system
In 118 e -
* In "cost Accounts", by Hawkins, the author states "No charge
should be made in cost accounts for the services of a principal, nor
for interest on his own capital. Whatever return is produced by these
is profit, and not an expense of manufacture." No matter what the opin-
ion may be as to Mr. Hawkins's view on Interest, there are very few men
in this country who would agree with him that no charge should be made
for a principal in the conduct of a business. -
In "Cost Keeping & Scientific Management" written by H. As
Evans, Naval Constructor, U. S. Navy, the author states "The elements
of Indirect Costs are, among other items, interest on money invested
and rent", and on another page of his book is this quotation: "If the
entire plant is rented no one questions that the rent paid should be
charged to the cost of production, but when the plant is owned by the
company operating it, many consider that interest and rent should not
be charged." If it is correct to charge rent in the first case, there
should be no question that it is a proper charge in the second. The
interest on the investment must be met and this is chargeable whether
the concern owns the property or not, for, whether return is made to
landlords, lenders of capital or to the stockholders."
In that admirable book "Depreciation & Wasting Assets" by
P. D. Leake, who has written a number of very excellent books, the
author states "In all questions concerning the determination of costs
for competitive or for comparative purposes, interest on the money of
capital must always be included as part of the cost." Mr. Leake takes
the position that interest, as well as depreciation, should be con-
sidered. I mention this because some writers have stated that depre-
ciation alone should answer the purpose.
The following quotations are all taken from articles in the
Journal of Accountancy:
A. Hamilton Church, the author of "Expense Burden" and "Pro-
duction Factors" in the April number of the Journal states: "Wherever
capital is made use of, whether in the power plant, in the erection of
buildings, or in the purchase of costly special machinery, the use of
such capital has to be paid for somehow and somewhere. It is only
rational that it should be paid for by just those processes (and there-
fore those jobs) which involve its use. To exclude interest charge
from cost of these jobs is to ignore one of the most important matters
that we should know, namely - how far this use of capital is economical-
ly justified."


Mr. J. E. Sterrett, in the same number of the Journal, states
as follows: "From an accounting viewpoint, interest or return upon
capital invested is a part of the profit to be derived from trade. In
its proper place it is no more to be overlooked than the cost of pro-


duction or the selling and management expenses, but to merge it with
cost of production or with the expense of distribution tends only to
confusion and error. Furthermore, there is a broad distinction between
profits anticipated and profits realized, and to begin to take profits
weeks or months before the goods can be offered for sale is not only
unsound in accounting but censurable in finance."
Mr. E. L. Suffern, in the May number, has this to say: "It is
beside the mark to say that the interest he would have to pay should be
considered as a part of the profits payable to the lender. So far as he
is concerned, there can be no profits to him until his interest has been
earned, and it certainly is part of his cost of doing business.

That interest rates are variable does not affect the fact -
other elements are variable likewise - material and labor are variables
when one location is compared with another, yet they must be treated as
costs quite as surely as if they were everywhere the same-
If a contract were taken for the construction of some special
machine tools, on the basis of cost and a percentage, and this contract
required one-third of the plant capacity and one-third of the working
capital for a given period, it seems clear that no accurate record of
costs could be made that did not include interest as one of the ele-
ments of production. No true comparison could be made as to the rela-
tive advantage of special as against regular classes of output wit’ out
including in the cost of each the interest item."
The following view in the May number is from J. Porter Joplin,
C. P. A. "Neither does it seem logical to charge interest on an amount
invested in certain machinery when the machinery is only one factor in
the invested capital needed to produce the product on which the cost is
to be determined, and in some cases a factor of the least magnitude. As
a general principle it would seem not to serve the end for which it was
intended, and is a most undesirable practice."
H. G. Miller, connected with the New York Edison Company, in
the June number of the Journal, writes as follows: "It is regrettable
that the decimal measuring stick is confused with the interest rate.
While both are percentages, one measures merely a return previously
earned, the other determines the return in advance; one depends on mis-
cellaneous investment and fluctuating markets, the other on a guaranteed
agreement to make a definite return. (The interest rate is, of course,
determined by supply and demand, time and the nature of the investment
and security offered, but in any specific case the rate for the term of
the liability is fixed in the bond.)
I conclude, therefore, that interest on manufacturing invest-
ment is not a factor of the cost of production. Within the bounds of
89 onomic conditions, efficient management is measured by approximation
to those bounds. "
The following quotation is from Herman L. Temple, also in the
June number: "There can be but one conclusion in regard to capitalizing
interest, depreciation, obsolescence, etc., in the partly or completely
ready-for-market product, and in this connection it is generally accepted
that interest is not a factor to be inventoried as an eiement of the
cost of production, but is a factor to be considered in establishing the
sales or selling price of the units or elements produced."
There are three other articles mentioned in the chapter on
Interest, but the quotations given will be sufficient to give you a
fairly comprehensive idea of how this question is viewed by different
writers and accountants. Any of you who may be interested in the argu-
ments of the various quotations will, no doubt, find it interesting to
read in full the articles of which only a quotation is taken. -
– 10 -
It is worth while noticing that most of the writers who fa-
vored the inclusion of interest in costs are men who make a specialty
of cost accounting.
Interest may be used as a cost without carrying it as an
asset in the inventory thus meeting the objection of some writers on
this point. The method of handling the matter should be - -
l. To charge up interest against the cost
and credit the account which might be
styled "Manufacturing Interest Reserve
Account."

2. To charge to this account the amount of
interest which has been figured in the
cost of all goods which have been shipped
and credit the Interest Income Account.
The balance of the Interest Reserve Ac-
count may then be deducted from the inven-
tory at such times as financial statements
are prepared, the balance representing in-
terest charged on goods that are in process
of manufacture or in finished stock.

. . . Repairs, Maintenance, Experimental Work, Supervision, etc.,
are divided between the plant and its departments depending on where
the expenses are incurred.
DEPRECIATION:-
This brings us to depreciation, the most complex and difficult
element of expense to reduce to accurate figures.
Depreciation, as a term, may be defined as loss in value. This
loss may be due to age, use, or a 6 ombination of these two with several
contributory causes.
Thus, in a factory, the amount of depreciation is the measure
of loss in invested capital.

The manufacturer who calculates his profits without taking
into consideration this important feature is obtaining figures that mis-
represent the conditions.
- 11 -
The plant has lost in value during the process of production
and this loss of value is just as much a part of the cost of production
as Wages or any other similar element.
In applying depreciation to the plant, the same general prin-
ciples hold good as in other forms of indirect expenses. As far as
possible the depreciation that occurs in one department should be charged
to the articles passing through that department, the remaining deprecia-
tion to be prorated over the whole plant in the same ratio as the other
general operating expenses.
It is obvious that no machine can depreciate in value more
than the original cost plus the amount spent in repairs and renewal of
parts.
We may say that the purpose of setting aside a depreciation
item of expense is to distribute the cost of a machine over the product
it turns out, through a period of time estimated as the average life of
the machine.
The same is true of depreciation as written off on the build-
ings and property of the plant as a whole.
It is not within the scope of a text book to present an analy-
sis of the factors of depreciation or to dwell on the technique of their
actual evaluation. Whole volumes are devoted to depreciation alone. It
is enough to indicate a few of the important factors.
(a) Nature and construction of buildings and equipment,
together with their conditions.
(b) Deterioration of plant in general end of machinery
in particular due to wear and tear.
(c) Amount spent for maintenance in the way of repairs
and renewals.
(d) The invention of new methods or new machines which
may or may not entirely replace the old ones-
(e) Permanency of business and likelihood of increase
or decrease in the same.
(The student is referred to "Depreciation of Factories" by
Ewing Matheson, a standard work on the subject.) -
Besides these, such items as amortization, interest, peculiar
use of machines, property leased or owned, rate of production, idleness
of plant, etc., etc., must be considered.
- 12 -
Increase or decrease of value of land, however, has no effect
on depreciation as applied to manufacturing costs.
The relation of maintenance to depreciation needs to be noted
more particularly.
It is clear that whatever is spent for maintenance tends to
lessen depreciation.
If a factory could be kept up to its original condition by
repairs and renewals, the cost would exactly counter-balance and be the
measure of the depreciation.
But repairs are made in spots while the remaining parts are
allowed to drift along usually without affecting the efficiency of the
plant to much of an extent.
In some cases the renewals of parts may increase the value
of a machine beyond its original cost, as where cast iron parts are re-
placed by steel.
Such expenses may be charged against repairs or maintenance
and a reduction made in depreciation, or sometimes they are best regarded
as an additional investment of capital. The choice depends on the partic-
ular case.
-
GALCULATION DEPRECIATION:-
- The usual method of calculating an average depreciation is to
"write off" each year a certain percent of the value of the machine or
the plant as a whole, thus providing for an actual decrease in value.
For instance, if the life of a machine were estimated at
twenty years, the rate of depreciation to cover the cost would be five
percent a year on that cost.
Sometimes the rate is based on the net value left after pre-
vious depreciations instead of the original cost which results in more
of a sliding scale of decreasing values.

- The rate of depreciation, in this case, would be set at a
higher figure than in the former instance, and the greatest deprecia-
tion would appear in the first year.
When this method is applied to a plant as a whole, it is known
as the "Blanket" method.
- 13 -
This is a very simple way, particularly applicable to very
simple oonditions, but it breaks down and gives results far from the
truth in large and complex factories.
For the depreciation goes on at a very uneven rate in dif-
ferent parts of the plant and the "Blanket" method then fails to dis-
tribute this part of the burder, equitably over the product.
The results are still further from the truth when some depart-
ments are working to full capacity while others are in a state of semi-
idleness.
Theoretically, the most accurate plan would be to take a reval-
uation of all the property from time to time, in which case the difference
between any two valuations would represent the depreciation during that
period. -
Unfortunately, there are both the practical obstacles of the
difficulty and lab or of making such revaluations and the theoretical
consideration that such a revaluation must be estimated on a double base, -
viz: the condition and earning power of the machine.
RESERVE:-
An excellent way of approaching the depreciation question is
by the creation of a "Reserve Fund". It takes the form of a fund set
aside out of the profits to provide for all repairs and renewals as they
are needed.
To cover the estimate of depreciation it should be equal to it
in amount. This plan has the merit of providing for the depreciation of
the plant without changing the figures of the original valuation on the
books.
The reserve, so set aside, adds nothing to the resources of
the company, but it is purely a method of providing for depreciation
charges, before they actually eventuate in expenses for repairs.
The charges themselves are assessed on the product and go to
increase the cost of production as a true indirect expense.
RATE OF DEPRECIATION:-
Where there is any question as to the rate of depreciation,
it is the wiser course to choose the higher rate.
- 1.4 -
It may be called a pessimistic view but, in case of error,
it is error on the right side.
Any difference can be corrected when the time comes by simply
restoring the value where it belongs.
COST TO SELLING PRICE.

The sum of the labor and material cost is known as the "Prime
Cost". If this be combined with the indirect expense, we get the final
"Factory Cost". If the selling and administrative expenses are now
added, the cost of marketing the article will be obtained and this total,
plus the profit, gives the actual selling price.

Profit, 25.
–
Selling & -
Administra- º
tive Expen- Selling
| ses, 25 Total Price,
- Çost 175
# Indirect to
#Expenses, 50 Final Sell,
Factory 150
| Labor, 50: Prime Cost,
Cost, 125
| Material, 25 75 | |
- 10 -
operating the machine or progees. This includes such general operating
expenses as do not pertain directly to the machine or process in question,
but can nevertheless be associated indirectly with its operation. The
rate thus ascertained is charged to the cost of the product, the total
charge depending on the length of time consumed in the production.
In order to carry out this plan in a practical way, it is neces-
sary to arrange the machines of the same kinds in groups and thereafter
to make the charges against the machines according to a stated name or
process. Whenever possible, each group should be treated as a separate
department; but when a department comprises different processes and dif-
ferent machines, there must be a sub-division of charges in the depart-
ment itself. It is also possible to handle certain processes other than
machine work, provided the cost of all production passing through these
processes is affected uniformly.

After the classification or standardization of operations has
been determined upon, all operations or processes should be charged with
the full time of employees engaged therein, as well as with any supplies
or repairs relating to them. In addition to this insurance, floor space,
depreciation, interest ºn investment and any or all other items connected
with the manufacture of the product, and incident to the operation, should
also be charged. The charges just mentioned relate to expenditures which
can be identified absolutely as relating to the machire or process.



When these charges have all been made the general indirect ex-
penses, or expenses that are not and cannot be properly charged to any
particular machine or process, should be distributed among the various
departments according to some established basis. The department in turn
applies these general expenses to the product by a plan which will be
explained later.
Now that the total cost has been charged to the various ma-
chines or operations, the next step to be taken is to determine the number
of operating hours of the machines or process. From this is ascertained
the cost per hour, so that the product passing through these various oper-
ations may be charged at this rate. All expenditures chargeable to the
product, except material, will then be included for the particular opera-
tion or process.



There are many cases where material may be included in the
machine rate particularly where the process method is used; for instance,
the "Beam House" department in a tannery, the "Treating Department" of
an asbestos manufactory and the "cupola department" of a foundry.
The general working plan of this method is now seen. The ma-
chines or processes are used as a medium for transmitting the charges
- ll -

from their source to the product. They are adapted for this because a
greater amount of expenditure oan be identified with a machine or process
than with the product, especially as regards the indirect expenses. In
other words, they serve to gether the costs in such a way that the product
may be charged directly with them instead of indirectly. This is accom-
plished through the rate; that is, the cost to run the machine or process
per hour. By such means the amount of general expenses to be more or less
arbitrarily prorated is reduced to a minimum.

In order to clarify this, attention is called to certain of
these expenses ordinarily treated as indirect but which in this instance
become direct charges because of the method used in handling them.
Take as an illustration interest on investment.

Generally, where costs are figured, this constitutes a part of
the general indirect expenses and is distributed, together with the
other items of its class, over the production of the whole factory. Thus
it, loses its dignity, so to speak, as a separate item, being combined
with other expenses to form a single account. Too often it is omitted
altogether. By this method the investment in the machines and equipment
used in the several ope:ations or processes is set apart and the interest
on this amount is charged ºirectly to the machines or processes to which
it relates. This is obviously a more accurate method of distributing
interest charges or any other item of the same character, since it is
not necessary to take into consideration at this point any particular
class of product, the machines or processes being all that is involved.


It may be noted that as depreciation keeps an account of the
decrease in the value of the equipment, it at the same time furnishes
the base upon which the interest is to be computed for the then present
Period: Thus, as the value of equipment becomes less through deprecia-
tion, the interest decreases proportiorately.
The problem of depreciation itself finds a more accurate solu-
tion by this manner of handling it. As in the case of interest on in-
Westment, each machine or process is charged with the depreciation re-
lating to itself. When the whole depreciation is grouped in the general
indirect expense, any single department is either forced to help bear
the depreciation properly belonging to some other department, or is
burdening the rest of the shop with its own depreciation.

Other items, showing the advantage of this method of treatment
are insurance, rent, taxes, machine supplies, heat and power cost, etc.
Such items as insurance, rent, taxes, light, maintenance and buildings,
and other sººrises of similar character, are generally divided among the
several departments on the basis of floor space occupied. Together they

- 12 -
constitute an amount that may be designated as floor space cºst, the
total of which should be divided by the total floor space of the fac-
tory to find the amount per square foot or square yard. Each process
or machine then receives its share, in proportion to the part of the
total floor space it occupies.
The cost of machine supplies, such as oil, waste , and other
expenditures of this nature, for each group of machines or process,
presents no special difficulties and becomes an item with the rest in
the direct charge.
The distribution of power cost over the machine and process
necessitates the determination of the horse-power of each machine by
taking an indication of power. In this way the power is distributed
over the whole productive equipment of the plant. Allowance for horse-
power to cover transmission should be made where great exactness is
desired, especially where the transmission power is much greater for
Some machines than for others.
After this information has been obtained, the power account
should be charged with fuel, salaries of firemen and engineer, repairs,
insurance, supplies, inspection of boilers and engines, depreciation and
all other similar accounts relating to the boiler and engine room, to-
gether with an amount to cover interest on investment. This should
then be divided at the end of the month by the total horse-power hours
of all machines, as actually operated, in order to obtain the cost of
power per horse-power hour for each particular month. This rate per
horse-power should then be multiplied by the total horse-power hours
of each machine, in order to distribute the power among the various
machines and processes.
All other charges relative to the machine or processes, ex-
clusive of the general indirect expenses, should be charged to the ma-
chine or processes at the end of the month in the usual way except in
the case of labor and material. The former should be taken from the
time reports and the latter from the material requisitions, if a stock
system is used and, if not, from the invoices direct-
The next question to be considered, now that all of the di-
rect charges have been made against the machine or process, is the
matter of those expenses which cannot be properly charged to or iden-
tified with any particular process or machine. These are divisible
in two classes – those which belong to the plant as a whole, and those
which can be identified with departments as units but not on particular
machines in the department.

- 13 -
The first step is to divide the general indirect expenses
among the various departments on some suitable basis such, as for ex-
ample, the expense charged to the departments or cost of direct labor,
etc. This amount, so distributed, is then included in, and becomes, a.
part of the regular departmental indirect expenses, afterwards distribu-
ted among the various machines or processes.
The distribution of the departmental indirect, expenses, which
now includes the general indirect, is the last charge which goes to
make the final machine rate.
The question to be considered here is whether the system of
costs is based on a unit of measure; that is, pounds or tons, or per
hour. If the former is the case then the total department indirect ex-
penses should be divided by the total number of pounds or tons or any
other unit of measure produced and the rate thus obtained distributed
among these machines or processes at that rate per unit of measure. .
This transfers all of these departmental indirect expenses to the various
machines or processes to which they belong.
If the basis of cost is time, instead of quantity, the total
number of hours in which all machines or processes were engaged during
the montº should be divided into the departmental indirect expenses and
the rate per hour ascertained. This should then be multiplied by the
total operating hours of each machine or process and the amount entered
in the cost in that manner. -
If desired, the total departmental indirect expenses may be
divided by the total cºst of direct labor, and the rate used in dis-
tributing these expenses over the various machines or processes on the
basis of the labor cost, charged to each machine or process.
The working plan of the new machine rate method may now be
summarized as follows: -
1 - All expenses which can be possibly charged to ma-
chines or processes are so charged. This includes
labor, supplies, interest, etc., as outlined pre-
viously. It is this step that constitutes the es-
sence of this method.

2. The general indirect expenses are distributed among
the different departments and are then added to the
department indirect expenses.

3. The total department indirect expenses are then dis-
tributed over the machines or processes.
- 14 -
4. Combining the charge of one and three, the total
- machine rate is determined which includes ell items
of cust but material ,
To find the cost of any article is a simple process. Suppose
it to pass thrºugh several departments or processes. The number of
hours it is operated on in each process, multiplied by the machine rate
for that process, gives the different process costs.
To the sum of these or the total process cost add the material
cost taken from the invoice or material requisition and the final or
factory cost is obtained.
If the principles of the new machine rate plan are applied
through the operator of the machime instead of through the machine it-
self, a similar method of finding costs will be developed. It is known
as the "Sold-Hour Plan".

FIXED MACHINE RATE:-
t The "Fixed Machine Rate" is characterized by two special fea-
ures:
1. The rate is estimated on the basis that every ma-
chine in the shop will run full time.
2. All charges unabsorbed by the estimated fixed rate
are distributed through a supplementary rate, the
:* feature in this being its relation to idle
ime.
Estimate is made either by a careful analysis of all the ele-
ments of expense or by referring to the results of past experience. In
the latter case the average results of a period of years are generally
taken - . In either case it is supposed to include all production expenses
incident to the operation of each machine.
The total expense assigned to each machine is then divided by
the maximum number of operating hours for any chosen period to find the
machine rate per hour; i.e., the estimated cost of running the machine
one hour. This rate is then charged against the machine, irrespective
of the actual cost per hour or the actual time of operation.

If all the machines run full time, it is obvious that all the
charges as estimated will be absorbed into the product, but this is very

- 15 -
rarely the case. Besides the idleness due to dull times, there cre often
machines that because of great capacity or peculiar product are used
only a fraction of the whole time. The question arises as to what to do
with the charges written against a machine for the time that it is idle,
which seem to apply to nothing. If they are added to the cost of the
product, they increase it out of all proportion. For example, if a ma-
chine were busy only one day a week, the product made that day would,
under such a rule, have to bear the expenses of the whole week, includ-
ing charges that do not apply to it in any possible way. The result
would be inaccurate on the face of it,
To avoid such an evident fallacy, the costs as determined by
applying the rate to actual running time are subtracted from the estimated
cost to find the amount still unabsorbed. This is considered as an in-
direct expense estimated but not actually incurred, so it is subtracted
from the departmental or from the general factory expense account, as the
case may be , in order to make the proper adjustment.

This principle in itself is wrong. The plan of deducting the
rate of idle machines from the general expenses implies that there are
no direct expenses connected with the machines when they are not work-
ing. But this is not true; for interest, insurance, floor space charges,
and certain other items go on just the same.


- Evidently, the fixed rate will be unsatisfactory unless pro-
vision is made for the fixed or annual charges that accrue whether the
machines are idle or not; and these charges must be distinguished from
the charges arising out of actual operation, which may be āesignated as
operating charges,
NEW PAY RATE:-

The New Pay Rate is still another way of utilizing the prin-
ciple of direct labor cost in expense distribution. It is essentially
a departmental method and is rarely used for any other purpose.
Under this plan the indirect expenses connected with any op-
erating, department are first determined; and to these is added the de-
partment's share of the general operating expenses, which is determined
on any basis that seems best. Next, the percentage of expense to labor.
cost is determined as in the first method but, instead of this rate
being added to the total labor cost, it is applied to the employee's
wage per hour- For instance, if the indirect expenses were 62-1/2 per-
gent of the direct labor cost and a workman's pay was 32 cents per hour,
the new pay rate as applied to the product would be 32 cents plus 62-1/2

- 16 -
percent of 32 cents or 52 cents per hour. If the man worked five hours
on any one article that article could be charged with five times 52
cents or $2.60 for labor and indirect expense. By adding the material
cost to this the total cost is shown.

The principle involved and the conditions of its application
have already been sufficiently discussed under the direct labor cost
method. The only advantage of the new pay rate lies in the ease with
which the expenses are prorated over the product. Once the rate is de-
termined, it is a very simple matter to apply it to every article or
order.
For finding costs it is just as accurate as the direct labor
cost method and no more; but as a method it fails to present the data
necessary to analyze costs properly. It colleets charges in totals and,
in order to attain simplicity, neglects the proper classification and
arrangement. However practical it may be in some cases, this last con-
sideration disqualifies it as a part of any complete cost system.
- º --



•
N - 3
nº -
-
- - -
SECOND SEMESTER.
--
As most of the time of the Second Semester will be taken up
with work on problems, there will be little time for lectures on the
part of the instructor.
The syllabus has been so outlined that the subject of cost
accounting has been practically covered so far as principles are con-
cerned and the students should be able to intelligently understand and
work out the practical problems submitted.
Attention is called to the fact that the syllabus provides
that problems ll and 12 be worked out only in the class room and not
worked upon at home. The reason for this is that should students have
received ºnly outside assistance on all of the other problems, the in-
structor would now have the opportunity of seeing the most important part
of the problem work finished under his own personal observation,
The detailed quiz, as provided in the first semester, is
omitted in the second semester, as most of the time of the quiz will
be taken up in reviewing the problems turned in by the students and
the nature of this quiz will, of course, depend upon the way the prob-
lems were answered by the individual student.

SEVENTENTH SESSION.
QUIZ AND DISCUSSION: -
Review of students' answers to the mid-year examination.
LECTURE XIV: –
Classification of cost accounting systems.
SUGGESTIONS FOR LECTURE XVI: -
Departmental Cost Systems.
Accounting Cost Systems
Estimating Cost Systems
Special Order Systems
Product Systems
Combination of features of the various systems.
Show the operations of the systems by means of charts, etc.
Compare the various classes of systems as to the similar
features of each class of system. Also show wherein
they differ.
ASSIGNMENT FOR HOME STUDY. –
Read XII, XIII, and
Chapters XIV, XV, XVI and XVII.
Problem 6.
Particular at tention to charts .
vice.
C O S T A C C O U N T : M G.
: PROBLEM 6.
The Blank Mfg. Company manufactures a standard electrical de-
Their accounting system provides for the keeping of a complete
double entry set of books.
Due to the fact that the product menufactured is standard and
the raw material prices and selling prices of the article do not fluctu-
ate to any material degree, the accounting system provides for the prep-
aration of estimºted monthly financial statements including a Mºnufac- .
turing Statement, a Profit & Loss Statement, together with the Balance
Sheet.
The financial statements which are prepared at the end of each

year, after the actual inventory is taken, have shown the t the total
cost of the articles sold everages 80%
of the sales prices. Therefore,
it, will be seen that the company averages e gross profit of 20% of the
net sales.
An enelysis of the General Ledger at the end of Jenuary,
1915 shows the following:-
Cash - First National Bank . . . . . . . . . . . . . . . . . . . . . . . . ; 9,400.00
-- - Citizens' National Bank . . . . . . . . . . . - - - - - - - - - 4,000.00
rt - Petty Cash . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - 200. OC
Notes Receivable . . . . . . . . . . . . . - - - - - - - - - - - - - - - - 500.00
Accounts Reçeivable . . . . . . . . . . . . . - - - . . . . . . . . . . . 103,405.00
Machinery, Fixtures & Equipment . . . . . . . . - - - - - - - - - - - 38,750.00
Real Tstate & Buildin
- - - - - - - - - -
... 100,000.00
Bills Paye ble . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6,500.00
Accounts Payable . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - 34, 34C. CO
Reserve for Depreciation-Machinery, Fixtures &
Equipment . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 5,800.00
Capital Stock . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - 250,000.00
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - 51,531.00
Merchandise Sales . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - 50,843.00
Merchendise Inventory, January 1, 1915 . . . . . . . . . . . - 96,225.00
Materials & Supplies Purchased . . . . . . . - - - - - - - - - - - - - 34,223.00
Factory "ages - Productive . . . . . . . . - - - - - - - - - - - - - - 2,700.00
Factory "ages - Non-Productive - - - - - - - - - - - - - - - - - - 648. OO
Incoming Freight, Express & Cartage . . . . . . . . . . . - - - - 284.00
Discounts Allowed . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - 643. OO
Discounts Earned . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - 1,648.00
Office Rent . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - 500. Oſ)
Pecking Supplies . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - 160.00
Outgoing Freight, Express & Cartage . . . . . . - - - - - - - - - 240. OO
Cerfere & Sundry Expenses. . . . . . . . . . . . - - - - - - - - - - - - - - 128.00
Miscellaneous Factory Expenses . . . . . . . . . - - - - - - - - 256.00
Light, Heat & Power - Factory . . . . . . . . . . . . . . . . . . . . . 306. to

Light & Heat - Office . . . . . - - - - - - - - - - - - - - - - - - - - - - - - $ 78.00
Postage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90. OO
Office Salaries . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - 4,684.00
Printing, Stationery & Office Supplies . . . . . . . . . . . . 168.00
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250.00
Legal Expenses . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 125.00
Real Estate Taxes - Factory . . . . . . . . . . - - - - - - - - - - - - - 2OC, OO
Insurance - Factory . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - 480.00
Insurance - Office Fixtures . . . . . . . . . . . . . . . . . . . . . . . 76. OO
Repairs - Factory . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - 280.00
Telephone & Telegraph . . . . . . . . . . . . . . . . . . . . . . . . . . - - - 84, CO
Salesmen's Traveling Expenses . . . . . . . . - - - - - - - - - - - - - 460. OO
Salesmen's Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - 8OO. OO
Miscellaneous Office Expenses . . . . . . . . . - - - - - - - - - - - - 328. OO
From the information submitted herewith you are requested to
prepare the following:-
1. Manufacturing Statement
2. Profit & Loss Statement
3. Balance Sheet as at the end of the month.
In preparing these statements provide for a deprecistion of
(per month) of the total value of the techinery, Fixtures & Cauip-
ment, charging 90% of such depreciation to the factory operations and
include the balance of the depreciation as part of the administrative
expense S.
s o 1, U T 1 c N - P R o B L E M 6.
The analysis of the General Ledger at the end of January,
1915, as shown in the problem, represents the balances, both debit and
credit, of all the General Ledger accounts. The first step, therefore,
is to set them up in Trial Balance form as follows:-
THE BLANK MANUPACTURING COMPANY.
* R I. A. L. B. A. L. A. M. C. E.
JANUARY 31, 1915.
A Cash - First National Bank . . . . . . . . . . . . . . . . $ 9,400.00
A Cash - Citizens' National Bank . . . . . . . . . . . . 4,000.00
A Cash - Petty Cash . . . . . . . . . . . . . . . . . . . . . . . . . 200.00
A Notes Receivable - - - - - - - - - - - - - - - - - - - - - - - - - - 500.00
A. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . 103,405.00
A Machinery, Fixtures & Equipment . . . . . . . . . . . 28,750.00
A Real Estate & Building - - - - - - - - - - - - - - - - - - - - 100,000.00
L Bills Payable . . . . . . . . . . . - - - - - - - - - - - - - - - - - - $ 6,500.00
L Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . 34,340.00
L Reserve for Depreciation - Mechinery, Fix-
tures & Equipment . . . . . . . . . . . . . . . . . . . . . . . 5,800.00
L Capital Stock - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 250,000.00
L Surplus - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 51,531.00
P Merchandise Sales . . . . . . . . . . . . . . . . . . . . . . . . . 50,843.00
M Merchandise Inventory, Jan. 1, 1915 . . . . . . . 96,225.00
M. Materials & Supplies Purchased . . . . . . . . . . . . 34,223.00
M Factory Wages - Productive . . . . . . . . . . . . . . . . 2,700.00
M Factory "ages - Non-Productive - - - - - - - - - - - - 648.00
M Incoming Freight, Express & Cartage . . . . . . . 284.00
P Discount Allowed . . . . . . . . . . . . . . . . . . . . . . . . . . 640.00
P Discount Earned . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1,648.00
P Office Rent - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 500.00
M Packing Supplies - Factory . . . . . . . . . . . . . . . . 160.00
P Outgoing Freight, Express & Cartage . . . . . . . 240.00
P Carfare & Sundries . . . . . . . . . . . . . . . . . . . . . . . . 128.00
M Miscellaneous Factory Expenses . . . . . . . . . . . . 256.00
M Light, Heat & Power - Factory . . . . . . . . . . . . . 300.00
P Light, Heat - Office . . . . . . . . . . . . . . . . . . . . . . 78. OO
P Postage - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 90.00
P Office Salaries - - - - - - - - - - - - - - - - - - - - - - - - - - - 4,684.00
P Printing, Stationery & Office Supplies . . . . 168.00
P Advertising - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 250.00


P Legal Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . § 125.00
M Real Estate Taxes - Factory . . . . . . . . . . . . . . . 200.00
M Insurance - Factory . . . . . . . . . . . . . . . . . . . . . . . 480.00
P Insurance - Office Fixtures • * * * * * * * * * * * * * * 76.00
M Repairs - Factory --- - - - - - - - - - - - - - - - - - - - - - - 280.00
P Telephone & Telegraph . . . . . . . . . . . . . . . . . . . . . 84.00
P Salesmen's Traveling Expenses . . . . . . . . . . . . . 460.00
P Salesmen's Salaries . . . . . . . . . . . . . . . . . . . . . . . 800, OO
P Miscellaneous Office Expenses . . . . . . . . . . . . . 328.00
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $400,662.00 $400,662.00
The items forming the Trial Balance belong to one of the four
groupes of accounts and may be classified as follows:

A Asset Accounts
L Liability Accounts
P Profit & Loss Accounts
M. Manufacturing Accounts


For convenience in preparing the Manufacturing Statement,
Profit & Loss Statement and Balance sheet, it is good practice to indi-
:::: by initial upon the Trial Balance the group to which each item
elongs.
Selecting the Manufacturing Accounts "M", the Manufacturing
Statement is prepared as follows:-
THE BLANK ManufacTURING COMPANY.
M A N U R A C T U R I N G S T A T E M E N T.
For the month of January, 1915.
MERCHANDISE INVENTORY, January 1, 1915 . . . . . . . # 96,225.00

DIRECT CHARGES:-
Mâteria.IT&TSupplies Purchased . . . . . . . . . . . . . $ 34,223.00
Productive Labor . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700.00 36,923.00

INDIRECT MANUFACTURING EXPENSES:-
NSH-FFöðūStiveTEBOFT.T.T. . . . . . . . . . . . . . . * 648.00
Incoming Freight, Express & Cartage . . . . . . . 284.00
Packing Supplies - - - - - - - - - - - - - - - - - - - - - - - - - - 160.00
Light, Heat & Power - - - - - - - - - - - - - - - - - - - - - - - 300. OO
Real Estate Taxes - - - - - - - - - - - - - - - - - - - - - - - - - 2OC). OO
Factory Insurance - - - - - - - - - - - - - - - - - - - - - - - - - 486). OO
Factory Repairs - - - - - - - - - - - - - - - - - - - - - - - - - - - 280. OO
Miscellaneous Factory Expenses . . . . . . . . . . . . 256.00
Factory Depreciation . . . . . . . . . . . . . . . . . . . . . . 348. 75 2,956.75
Total - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $136,104.75
COST OF SALES:- -
80% of sāies ($50,843.00) ................. 40,674.40
MERCHANDISE INVENTORY, January 31, 1915 . . . . . . # 95,430.35
---
These monthly Manufacturing Statements of which this is the
first follºwing the closing of the books for the previous year will
give fairly accurate results where the conditions, as in the case of
the Blank Manufacturing Company, are as follows: (See problem
Paragraph 2).
1. The price of raw materials do not fluctuate.
2. The article manufactured is standard.
º
3. The selling price is fixed and uniform.
4. The results for previous years have shown the
gross profits to bear the same relation to
their respective net sales.
The monthly depreciation of 1% may be calculated for statement
purposes only and may then be entered upon the books at the end of the
year, one entry for the full 12% being made at that time. However, a
journal entry may be made and posted to the accounts at the end of each
month for the 1% depreciation.
To compile the Profit & Loss Statement return is now made to
the trial balance, the Profit & Loss Accounts marked "P" being taken
therefrom and arranged as follows:-
-
- 5 -
THE BLANK MANUFACTURING COMPANY.
P R O F I T & I, O S S
For the month of January, 1915.
SALES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Less Disºfºunt Allowed . . . . . . . . . . . . . . . . . . .
Net Sales . . . . . . . . - - - - - - - - - - - - - - - - - -
COST OF SALES, per Manufacturing Statement . . .
GROSS PROFIT - - - - - - - - - - - - - - - - - - - - - - - - - - - -
SELLING & ADMINISTRATIVE EXPENSES:-
Advertising . . . . . . . . . . . . . . . . - - - - - - - - . . . . . * 250.00
Salesmen's Salaries . . . . . . . . . . - - - - - - - - - - - 800.00
Salesmen's Traveling Expenses . . . . . . . . . . . 460.00
Outgoing Freight, Express & Cartage . . . . . 240.00
Office Rent - - - - - - - - - - - - - - - - - - - - - - - - - - - - 500.00
Light & Heat - Office . . . . . . . . . . . . . . . . . . . 78. OO
Office Salaries . . . . . . . . . . . . . . . . . . . . - - - - - 4,684.00
Printing, Stationery & Office Supplies . . 168.00
Postage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 90.00
Telephone & Telegraph . . . . . . . . . . . . . . . - - - 84.00
Carfare & Sundries . . . . . . . . . . . . . . . . . . . . - - 128,00
Legal Expenses - - - - - - - - - - - - - - - - - - - - - - - - - - 125.00
Insurance - Office Fixtures . . . . . . . . . . . . - 76.00
Depreciation - Office Fixtures . . . . . . . . . . 38.75
Miscellaneous Office Expenses . . . . . . . - - - - 328. OO
Total Selling & Administrative
Expenses . . . . . . - - - - - - - - - - - - - - - - - - - -
lºſ PROFIT - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
OTHER INCOME:-
Scººt Earned - - - - - - - - - - - - - - - - -
NET INCOME - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The Balance Sheet which follows shows the
condition of the company:-
S T A T E M E N T.
present financial
* 50,843.00
# 50,203.00
40,674.40
9,528.60


8.049.75
-º-
$ 1,478.85
1,648.00
# 3,126.85
- 6 -
THE BLANK MANUFACTURING COMPANY.
B. A. L. A. R. C. E. S. H. E. E. T.
JANUARY 31, 1915.
A S s E * S.
CURRENT ASSETs :-
ash - First National Bank . . . . . . . . . . . - - - - - - § 9,400.00
Citizens' National Bank . . . . . . . . . . . . . 4,000.00
Petty Cash . . . . . . . . . - - - - - - - - - - - - - - - - - 200.00
Notes Receivable . . . . . - - - - - - - - - - - - - - - - - - - - - - 500.00
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . 103,405.00 $117,505.00
MºRCHANDISE INVENTORY:-
Finished Stöck, York in Process & Raw Ma- -
terial (Estimated), per Manufacturing 95,430.35
Statement . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - -
FIXED ASSEºs: -
ReāITEstate & Building . . . . . . . . . . . . . . . . . . . . . $100,000.00



Machinery, Fixtures & Equipment. $38,750.66
Less Reserve for Depreciation. . 6,187.50 32,562.50 132,562.50
Total Assets . . . . . . . . . . - - - - - - - - - - - $345,497.85
-
I, I A B I L I T I E S & C A P I º A. L.
CURRENT LIABILITIES:-

Bills Payable T. . . . . . . . . . . . . - - - - - - - - - - - - - - - - . § 6,500.00
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,340.00 $ 40,840.00
CAPITAL STOCK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 250,000 - OO
SURPLUs:- -
lance, January l, 1915 . . . . . . . . . . . . . . . . . . . $ 51,531.00
Net Income for January, 1915, per Profit &
Loss Statement . . . . . . . . . . . . - - - - - - - - - - - - - - - 3,126.85 54,657.85
Total Liabilities & Capital . . . . . . $345,497.85
º
--

The arrangement of the Balance Sheet should be carefully
noted. All items should be listed under their proper classification
and the total shown for each. The classification of Assets and Liabil- .
ities may take the following order.
ASSETS. LIABILITIES.
- Current Assets Current Liabilities.
Merchandise Inventories Bonded Indebtedness
Investments Reserves
Fixed Assets Capital
Deferred Charges Surplus.
REMARKS.
There are often certain items which may be handled in dif-
ferent ways. "Discount Allowed $640.00" instead of being deducted from
the sales on the Profit & Loss Statement could be considered as an ex-
pense and included among Selling & Administrative Expenses.
"Discount Farned $1,648.00", classified as "Other Income",
might have been deducted from "Material & Supplies Purchased", which
appears under the Direct charges in the Manufacturing Statement. The
nature of the business or the views of the management usually determines
the course to pursue.

The connection of the figures between supporting and inter-
locking statements should always be shown; i.e., the Manufacturing
Statement should be referred to in connection with the cost of sales used
in the Profit & Loss Statement and also in connection with the Merchan-
dise Inventory in the Balance Sheet.
EIGHTEENTH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE: –
LECTURE XV : —
Plant asset records and their importance.
SUGGESTIONS FOR LECTURE XV: -
Book records and card records for plant assets. What they should
contain.
Walue for - -
l. Capitalization.
2. Insurance.
3. Fire Loss.
4. Depreciation.
5. Repairs and Maintenance.
6. Machine Efficiency Records.
Reconciling book values with apprais als.
Classification of mechinery, tools, fixtures and equipment.
Classification of buildings and real estate.
Value of symbols for designating the fixed property assets.
ASSIGNMENT FOR HOME STUDY; -
Problem 7.
PROBIEM 7.
An accounting system which was devised for a large retail coal
business provides for the keeping of a complete double entry system of
books. The General Ledger is ruled so as to show, the quantity (in 1bs.)
of coal purchased and the quantity of coal sold.
The total amount of coal on hand at November 1, 1915 was
4,974,400 lbs. and this coal was valued at $11,360.00. The purchases
of coal during the month were 5,500, 700 lbs., this quantity being pur-
ghased for $12,310.00. The coai sold during the month amounted to
$22,480.00, this amount representing 3,373.4 tons (2,000 lbs. to the ton).
In ascertaining your inventory at the end ºf the month allow
for a shrinkage in weight of one-half of one percent of the quantity
sold, this allowance being made to cover the loss in the sifting a nº the
rehandling of the coal.
An analysis of the labor for the month shows the following: -
Yard Labor . . . . . . . . . - - - - - - - - - - ... $260.00
Unloading Labor . . . . . . . . . . . . . . . 428.00
Delivering Labor . . . . . . . . . . . . . . 986.00
Office Salaries & Supervision... 325.00
The Transportation Records show the following charges furing
the month: -
Stable Labor . . . . . . . . . . . . . . . . . . $180.00
Wagon Repair . . . . . . . . . . . . . . . . . . 225.60
Depreciation of Equipment . . . . . 96.00
Veterinery Charges . . . . . . . . . . . . 40. OO
Steble Supplies & Expensos . . . . 53. OO
Horse Shoeing . . . . . - - - - - - - - - - - , 163. OO
Harness Repair . . . . . . . - - - - - - - - - 58.00
Feed Used . . . . . . . . . . . . . . . . . . . . 886). OO
The other expenses which were incurred during the month were
as follows: -
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . $200.00
Taxes . . . . . . . . . . . . . . . . . . . . . . . - - 75. OO
Insurance charged for the month 25.00
Miscellancous Expenses . . . . . . . . 78. OO
Postage, Printing & Stationer
for the month . . . . . . . . . . . . . . . 18. Oſ)
- 2 -
In addition to the above information the trial balance of
the General Ledger shows the following balances at November 20, 1915:-
cash on Hand and in Bank . . . . . . . $ 3,600.00
Accounts Receivable . . . . . . . . . . . . 15,428.00
Unexpired Insurance Premiums . . . 158. OO
Prepaid Taxes . . . . . . . . . . . . . . . . . . 87. O()
Coal Yard & Equipment . . . . . . . . . . 4, 200.00
Office Fixtures . . . . . . . - - - - - - - - - 190.00
Accounts Payable . . . . . . . . . . . . . ... 4,350.00
Wages Accrued but not paid . . . . . 266). OO
Reserve for Depreciation of
Equipment . . . . . . . . . . . . . . . . - - - - 680. O()
Capital Stock . . . . . . . . - - - - - - - - - - 15,000.00
Surplus, November 1, 1915 . . . . . . 8,995.00
Feed on Hand, November 30, 1915. 342.00

From the information submitted you are requested to prepare
a Trading Statement, Profit & Loss Statement and Balance Sheet. In the
preparation of the Trading and Profit & Loss Statements a column should
be provided for showing the total amount of each item of income and ex-
pense, and an additional column should be provided for showing the
average per ton for each of these items. Also submit an analysis ºf
ºrchenºise Account showing the following, both as to quantity and
C OS tº : -
Inventory on hand beginning of month.
Total amount of purchases during the month.
Total cost of sales during month.
Total cost of shrinkage during the month.
Inventory on hand at the end of the month.
S O I, U Tº I O N - P R O B L E M 7.
THE RETAIL COAL COMPANY.
- T R I. A. L. B. A. L. A N C E.
NOVEMBER 30, 1915.
-
P Merchandise Inventory, November 1, 1915 - $11,360.00
p Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,310.00
P Sales . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - $22,480.00
P Yard Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - 260.00
P Unloading Labor . . . . . . . . . . . . . . . . . . . . . . . - - 428.00
P Delivering Labor . . . . . . . . . . . . . . . . - - - - - - - - 986.00
p Office Salaries & Supervision . . . . . . . . . . . 325.00
P Stablo Labor . . . . . . . . . . . . . . . . . . . . . . . . - - - - 180.00
P Wagon Repair . . . . . . . . - - - - - - - - - - - - - - - - - - - - 225.00
P Depreciation - Equipment . . . . . . . . . . . . . . . . 96.00
p Veterinary Charges . . . . . . . . . . . . . . . . . . . - - - 40,00
p Stable Supplies & Expenses . . . . . . . . . . . . . . 53. OO
p Horse Shoeing . . . . . . - - - - - - - - - - - - - - - - - - - - - 163, OO
p Harness Repair . . . . . . . . . . . . . . . . - - - - - - - - - - 58. OO
P Feed Used . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - 880. OO
P Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 200.00
p Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - 75. OO
p Insuranco . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - 25.00
p Miscellaneous Expenses . . . . . . . . . . . . . . . . . . 78. OO
P Postage, Printing & Stationery . . . . . . . . . . 18.00
A Cash nm Hand and in Bank . . . . . . . . . . . . . . . . 3,600.00
A Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 15,428.00
A Unexpired Insurance Premiums . . . . . . . . . . . - 158.00
A Prepaid Taxos . . . . . . . . . . . . . . - - - - - - - - - - - - - 87.OO
A Coal Yard & Equipment . . . . . . . . . . . . . . . . . . . 4, 200.00
A Office Fixtures . . . . . . . . . . . . . . . . . . . . . . . - - 190.00
L Accounts Payable . . . . . . . . . . . . . . . . . . . . . . - - 4,350.00
I. Wages ſ.ccrued . . . . . . . . . . . . . . . . . . . . . . . . . . - 260.00
L Raserve for Depreciation of Equipment . . . 680. OO
L Capital Stock . . . . . . . . . . . . . - - - - - - - - - - - - - - 15,000.00
L Surplus . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - 8,995.00
A Foed-Inventory, November 30, 1915 . . . . . . . 342.00
Total . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - $51,765.00 $51,765.00
-
From the above the Trading & Profit & Loss Statement is con-
structed as follows: -
THE RETAIL COAL COMPANY.
TRADING & PROFIT & LOSS STATEMENT.
For the month of November, 1915.
Average
per ton.
TRADING OPERATIONS:-
SãIes. 3373.4 tons . . . . . . . . . . . - - - - - - - $22,480.00 6.664

Cost of Sales:-
MerchandiseTInventory, Nov. 1, 1915 $11,360.00
Merchandise Purchased . . . . . . . . . . . . . 12.3.10.00
Total . . . . . . . . . . . . . . . . . . . . . . . . . - -
Less Inventory, Nov. 30, 1915 . . . . . 8,345.99
Total Cost of Sales . . . . . . . . . . .
15.324.01 4.543
Gross Profit . . . . . . . . . . . . . . - - - - - - - - - 5–7. IB5:55 2.121
- ---
Expenses:
Delivery & Transportation Costs:
YEFTIEEEFT3250.00 .077
Labor Unloading . . . . . . . . . 428.00 . 127
Labor Delivering . . . . . . . . 986.00 .293
Labor Stable . . . . . . . . . . . . 180.00 .053
Feed Used . . . . . . . . . . . . . . . 880.00 .261
Wagon Repairs . . . . . . . . . . . 225.00 . O67
Depreciation - Equipment. 96.00 .028
Veterinary Charges . . . . . . 40.00 .012
Stable Supplies & Expenses 53.00 • Oló
Horse Shoeing . . . . . . . . . . . 163.00 .048
Harness Repair . . . . . . . . . . 58. OO • Ol?
Total Delivery & Transportation
Costs . . . . . . - - - - - - - - - - . . . . . . . $ 3,369.00 .999



Administrative Expenses:-
Office SãIāries & Süper-
vision . . . . . . . . . . . . . . . . . $325.00 .096
Rent . . . . . . . . . . . . . . . . . . . . 200.00 .059
Taxes . . . . . . . . . - - - - - - - - - - 75. OO - .022
Insurance . . . . . . . . . . . . . . . 25.00 - OO7
Miscellaneous Expenses . . 78.00 .023
Postage, Printing & Sta-
tionery . . . . . - - - - - - - - - - - 18. OO .005
Total Administrative Expenses. . 721. OO 212
Total Expenses . . . . . . . . . . . . . . . . - 4,090.00 I-2II
Net Profit . . . . . - - - - - - - - - - - - - - - - - - - - $ 3,065.99 -910
s
1915.
Nov. l
30
Dec. 1
M. E. R. C. H. A. N. D. I. S. E
Lbs.
Inventory . . . . / 4,974,400
Purchases for
Amount.
November . . . . 5,500, 700 12,310.00
Cost .00226 per
lb. . . . . . . . - - 10,475,100 $23,670.CO
Inventory Bal-
8tric 6 . . . . . . . . V 3,694,566 $ 8,345.99
A C C 0 U. N. T.
1915.
$11,360.00 Nov. 30
rt
n
30
30
Cost of Sales
(at .00226 per 1b.) J.
Shrinkage . . . . . . . . . . J.
Inventory (Balance). V
Lbs. Amount.
6, 746, 800 $15,247.77
• 33, 734 76. 24
3,694,566 8,345.99.
10,475,100 $23,670.00
The above is an exact reproduction of the Merchandise Account
as taken from the books of tho company. The "Beginning Inventory" is
the balance or ending Inventory brought forward from the previous month.
The "Purchases for the month" is the total as posted direct from the
Purchase Journal at the end of each month and credited to the controlling
account for accounts payable. From the total of these, which are shown
in both quantity and amount, we arrive a t our cost, .00226 per lb., as
shown above. Using this rate as a basis upon which to cost the sales, a
monthly Journal entry is made crediting the Merchandise Account and
debiting the sales account according to the number of tons sold (3,373.4)
which is reduced to pounds (6, 746,800) at the rate of 2,000 lbs. to the
ton. A monthly Journal entry is also made *:::::#5 the Merchandise
Account and debiting shrinkage Account with the 1/2% of cost of Sales
for Shrinkage. The "Balance" of the Merchandise Account then represents
the ending inventory which in turn becomes the beginning inventory for
the following month. Anticipating a question which will undoubtedly
arise, it might be stated that the quantities are recorded in lbs. and
not tons due to the fact that it is customery in this line of business
to buy on a basis of 2240 lbs. to the ton while seles are made to retail
consumers on a 2000 lb. ton basis. Hence the reduction to lbs. for
costing purposes is necessary.
From the foregoing reproduction of the Merchendise Account,
it will be seen that the analysis which students ere requested to submit
is as follows: -
THE RETAIL COAL COMPANY.
S C H E D U L E 0 F M E R C H P M D I S E A C C C U M T.
For the month of November, 1915,
Amount. Ibs.
Inventory, November 1, 1915 . . . . . . . . . . . . . . . . . . . . . $11,360.00 4,974,400
Purchases . . . . . . . . . . . . . . - - - - - - - - - - - - - . . . . . . . . . . . . 12,310.00 5,500, 700
Total - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $23,670.00 10,475,100
Shipments (Cost of Sales 6 .00226 lbs.) . . . . . . . . . 15,247.77. 6,746,800
Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,422.23 3,728,300
Shrinkage 1/2% of cost of selos . . . . . . . . . . . . . . . . . . 76.24 33, 734
Inventory, November 30, 1915 . . . . . . . . . . . . . . . . . . . . $ 8,345.99 3,694,566
-

- 5 -
THE RETAIL COAL COMPANY.
B. A. L. A N C E S H. E. E. T.
NOVEMBER 30, 1915.
--
CURRENT ASSETS:-
Cash on hand and in bank . . . . . . . . . . . . . . . . . . . # 5,600.00
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . 15,428.00 $19,028.00
INVENTORIES : –
Merchändise Inventory, per Trading & Profit
& Loss Statement . . . . . . . . . . . . . . . . . . - - - - - - - # 8,345.99
º Feed . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - 342.00 8,687.99
FIXED assºrs:- -
Coal Yard & Equipment . . . . . . . . . . . . . . - - - - - - - - # 4, 200.00
Office Fixtures . . . . . . . . . . . . . . . . . . . . . . - - - - - - 190. OO 4,390.00
DEFERRED CHARGES:-
Unexpired Insurance Premiums . . . . . . . . . . . . . . . # 158.00
Prepaid Taxes . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - 87. OO 245.00
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $32,350.99
I, I A B I I, I T I E S & C A P I " A. L.
CURRENT LIABILITIES: -
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . * 4,350.00
Wages Accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260.00 $ 4,610.00
RESERVE FOR DEPRECIATION OF EQUIPMENT . . . . . . . . . . - 680.00
CAPITAL STOCK . . . . . . . -- - - - - - - - - - - - - - - - - - - - - - - - - - - 15,000.00
SURPLUS - - - - - - - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . # 8,995.00
Net Profit, per Trading & Profit & Loss
º Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,065.99 12,060.99




$32,350.99
-
NINETEENTH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE
And Review of Problem 6.
LECTURE XVI:-
Investigating manufacturing conditions of a plant.
SUGGESTIONS FOR LECTURE XVI: –
Organization - Manufacturing, Selling and Administrative.
Operating conditions of the plant.
Product which is manufactured.
Records in use – financial, statistical, factory and cost-
Method of presenting reports to the management.
Method of recording examination information.
ASSIGNMENT FOR HOME STUDY: –
Study Chapter XII
Problem 8.
-
PROBIEM 8 (PART 1).
The New York Manufacturing Company, a corporation engaged in
the manufacture of ladies' evening gowns, evening cloaks and waists,
employs you to provide the necessary forms and instructions for the
operation of a simple departmental accounting system.
We will assume that you have spent the necessary time at their
office and, during that time, you have gained the following information.
The product manufactured consists of evening gowns, evening cloaks and
Waists.
At the beginning of the season when the styles are made, a
calculation blank or cost sheet, showing the detailed elements of costs
for each particular style number that forms part of the line, is pre-
pared. This detailed calculation cost blank contains the various de-
tailed elements of the material and labor costs and provision is made
upon this form for showing the percentage, this factory overhead being
distributed on the basis of the productive labor. This calculation

º: blank is used similar to and serves the purpose of a bill of ma-
erial.
While it may be advantageous to keep separate accounts for
the various direct material cost elements, you find at the present time
this would entail too much detail and, therefore, all such elements of
costs are to be kept under one main division of merchandise cost. How-
ever, separate accounts are tº be kept of the thread, buttons and boxes.
The labor may be classified and the pay-roll may be enalyzed
according to the following classifications:-
Cutting
Machine Operating
Hand Sewing
Inspecting, pressing and boxing.
In addition, it should be borne in mind that it will be neces-
sary to analyze both the merchandise costs and the labor costs according
to the classification of the product.
The various elements of factory overhead, as far as you are
able to ascertain, will include indirect labor, including factory clerks,
factory rent, factory supplies, machine repairs and parts, supervision,
light, heat and power, factory insurance, depreciation and factory sup-
plies.
In addition to the above £actory expenditures, you ascertained
that there are also expenditures for commission, advertising, telephone
and telegraph, office rent, postage, printing and stationery, paper and
twine, office salaries, traveling expenses and salesmen's salaries. .
From a Balance Sheet which was submitted to you during the
course of your examination you note that the assets and liabilities
accounts consist of eash ºn hand and in bank, accounts receivable,
reserve for bad accounts, notes receivable, merchandise inventory ( de-
partmentally arranged), machinery, tools and equipment, office furniture
and fixtures, reserve for depreciation, unexpired insurance premiums,
merchandise accounts payable, unpaid salesmen's commissions, loan: ac-
count, capital stock and surplus.
The books of the concern are closed twice a year; that is, at
the end of the spring season which extends from December 1st to May 31st
and the fall season which extends from June 1st to November 30th.
The books are closed and the financial statements are prepared
as a rule based upon a complete merchandise inventory which is generally
taken when the plant is entirely shut down.
It is not necessary for your system to provide for a monthly
financial statement but it should provide for such complete classifica-
tions as will enable the management to ascertain the departmental re-
sults of each department at such times as physical inventories are ascer-
tained. You are to establish the necessary department classifications
and submit the following:-
1. Complete chart of accounts;
2. All necessary forms and records properly ruled
and headed;
3. Description and method of keeping the detailed
accounts;
4. Complete description of all forms and records;
and - -
5. A summary of the method of procedure for the
correct operation of your system.
This information should be submitted in the form of a report
and the report should be addressed to the concern.
New York, N. Y., May 10, 1915-
The New York Manufacturing Company,
New York, N. Y.
Gentlemen: -
In accordence with our agreement, I have made an investigation
of the accounting methods of the New York Manufacturing Company. I now
submit a report containing my suggestions and a description of the ac-
counting system and forms which I have designed.
P U R C H A S E S.
ORDERS:-
When goods are purchased the Purchasing Agent should send to
the supply house a Purchase Order, approved by the manager, Form 4. The
duplicate of this order is to remain in the book for comparison with the
receiving record and the invoice upon receipt of the goods.
RECETPT OF GOODS:-
All goods should be received by the receiving clerk and re-
corded in the Receiving Book for which a stock book may be used. The
receiving book should contain the shipper's name, the quantity and kind
of goods, together with the order number which the shipper has been
instructed to place upon all shipments and invoices. This book should
be retained by the Receiving Clerk except such times when it is in use
by the bookkeeper for checking invoices for payment.
INVOICES, ENTRY & PAYMENT:-
The bookkeeper at some fixed period each day, preferably at a
time when the receiving book is least likely to be in use, should check
all invoices with the receiving record, carefully comparing the quantity
and kind of goods. He should then check them with the purchase order
book making sure the quantity and kind of goods are as ordered and the
price correct. Thereafter the necessary entries should be made in the
Purchase Journel, Form 5, noting carefully the distribution to be ef-
fected therein. The invoice should then be filed under its due date
in a regular stock box file prepared for this purpose. At the due date
of the invoice a check should be drawn for the proper amount and charged
Q through the cash book together with the discourt deducted, if any, to
the Accounts Payable account, this account having already been credited
With the amount per invoice through the purchase journal.
STOCK CIERK AND STOCK ROCM:-
All goods should be delivered to the stock room and there
arranged by the stock clerk for quick and accurate handling. Upon re-
ceipt of "Bills of Material", form 7, he should deliver to the holder
there of the material called for there on and require upon the face of
same a receipt for all meterial so delivered. At the end of each day
he should deliver all bills of material received during the day to
the bookkeeper to be charged in total to their respective classifica-
tions and credited to the Merchandise (Raw Material) account.


FACTORY: - -
As often as required the manager should send to the factory
foreman a Factory Order, form 6, for the number and styles of garments
to be made up. The foreman should in turn make "Bills of Meterial",
form 7, upon the stock room for the material for the various garments
to be manufactured. Thile a factory order may contain several styles
or numbers under one classification, it should not be made to cover those
of different classifications. The same may also be said of Bills of
Material issued by the foremen. The foreman should see that the time
of all operations under all classifications is faithfully and accurately
kept on the "Daily Time Report", form 8, and, at the close of each day,
these reports should be sent to the bookkeeper for use in making up the
weekly pay-roll and the analysis thereof, form 9.
ACCOUNTING RECORDS.
The following books and records are to be used to record the
transactions:
Sales Book . . . . . . . . . . . . . . Form l.
Sales Summary . . . . . . . . . . . " 2.
Order Register . . . . . . . . . . * 3.
Purchase Order . . . . . . . . . . * 4.
Receiving Book . . . . . . . . . . Stock Book.
Purchase Journal . . . . . . . . Form 5.
Factory Order . . . . . . . . . . . " 6.
Bill of Material . . . . . . . . * 7.
Bill of Material Summary. * 7b.
Daily Time Report . . . . . . - " 8.
Pay-Roll & Analysis . . . . . * 9.
Cash Book . . . . . . . . . . . . - - - * 10.
- 3 -
Petty Cash Book . . . . . . . . . Stock Book.
General Journal . . . . . . . . . ty 77
Customers' Ledger . . . . . . . " --
General Ledger . . . . . . . . . . rt --
SALES BOOK (Form 1):-
Upon receipt of an order, the same is immediately copied on an
order form, form 1, and submitted to the credit man or proper authority
to be passed upon. It is then entered into the order register, form 3,
and the register number noted thereon. The order is then sent to the
shipping department. Then goods have been shipped and so indicated there-
on by shipping clerk, it is returned to the office for extension, footing
and billing. This order then becomes the sales book page, is placed in a
binder, given the next consecutive number and posted to the debit of the
customers' account in the Customers' or Sales Ledger. The amount and the
date billed is also filled in beside the proper item in the order register

Dcompleting this record. At the end of the month a summary of sales is
made, form 2, under the various classifications. These classifications,
each of which has a sales account in the General Ledger, should be
credited with their respective sales, while the total of all sales is
debited to the customers' "Accounts Receivable" account.
ORDER REGISTER (Form 3):-
All orders when received are to be entered on the "Order
Register" and the next consecutive register number noted thereon. When
the shipment has been made and billed, the amount should be placed in
the column provided for that purpose and the date billed and sales book
folio number inserted. The amount of all orders registered and billed
in the same month should be entered in the outer column of the register,
while those registered in one month and not shipped until the following
month should be entered in the column second from the last. In this way
a reconciliation is effected with the sales book and the sales for the
month shown in two different ways; i.e.,
l. As per orders received (from register);
2. As per goods shipped (from sales book).
*URCHASE ORDER (Form 4):-
Purchase orders are in duplicate book form. The original is
intended to be sent to the supply house, contains the date of order,
order number, description of goods ordered, price, manager's approval
and purchasing agent's signature. The duplicate remains in the book
and is to be used for checking invoices and articles received.
RECEIVING BOOK: —
An ordinary stock book about 6 X 15 inches should be used for
this purpose. In it all goods received should be entered by the Re-
ceiving Clerk. Each item received should bear the - -
1. Date Received.
2. Shipper's Name.
3. Quantity and Kind of Coods; and -
4. Order Number.
YPURCHASE JOURNAL (Form 5):-
Invoices, after they have been found correct, should be entered
in the Purchase Journal. The amount should be placed in the total
column and a distribution made in the proper columns. At the end of
the month the totals should be debited to their respective accounts, the
items in the sundry column being posted in detail in the General Ledger
and the aggregate of all columns credited to the Accounts Payable ac-
count in the General Ledger.
FACTORY ORDER (Form 6):-
The Factory Order should be used by the manager for authoriz-
ing the Factory Foreman to manufacture stock. Any articles belonging
to one class may be placed upon one factory order but the same order
should not be made to include articles of different classes.
BILL OF MATERIAL (Form 7):-
The Bill of Material should be made out for all articles
about to be put into operation. It should be given to the stock clerk
who will, upon receipt of same, deliver all materials necessary for
the manufacture of the articles mentioned thereon, and cause the person
receiving same to sign his name upon the receipt included in this form.
At the end of each day the stock clerk should deliver all Bills of Ma-
terial to the Bookkeeper who will enter same upon the - -
BILL OF MATERIAL SUITARY (Form 7b):-
From this summary the charges are made to the various depart-
ment accounts end the aggregate amount credited to the Merchandise (Raw
Material) Account or to the account originally charged when purchased.
TIME TICKET (Form 8') :-
Time reports representing the daily work per workman and show-
ing the exact time or rate for each classification should be handed to
bookkeeper daily, who should make the extensions and at the end of the
Week make the proper analysis of same.
PAY-ROLL & ANALYSIS (Form 9) : —
- The daily time tickets furnish the information for the Pay-
CRoll and Analysis. Check should be drawn for the entire pay-roll and
charged to Pay-Roll account in the General Ledger. The totel, under
each classification, and the indirect expenses should be cherged to
their respective General Ledger accounts and the Pay-Roll Account should
then be credited.
CASH BOCK (Form 10):-
The Cash Book is so designed to give separate control of the
Sales and Purchase Ledgers, making the General Ledger self-belencing.
GENERAL LEDGER: -
A list of the accounts to be carried in this ledger forms
part of this report.
G. E. N. E. R. A. L.
The three departments, - Evening Gowns, Evening Cloaks and
Waists, - will at the beginning of each period be charged with the in-
ventory of both Finished and Unfinished stock on hand. Thereafter there
Will be charged to the respective departments - -
1. All purchases of Finished Product for
direct sele.
2. All Materials & Supplies used as shown
on Bills of Material (Form 7. )
3. All items of expense which can be as-
sociated with a particular department.
(Sundry columns, cash book, or sundry
column, purchase journal).
They should be credited at the end of each period with the
inventory.
I will be pleased to furnish any further information or ex-
planation which may be necessary.
Very truly yours,
2.
LIST OF GENERAL LEDGER ACCOUNTS.
ASSETS:-
Cash on Hand and in Banks
Accounts Receivable
Notes Receivable
Inventory
Machinery, Tools & Equipment
Office Furniture & Fixtures
Unexpired Insurance Premiums
LIABILITIES:-
Accounts Payable
Commissions due and unpaid
Bills Payable
Capital Stock
Surplus
RESERVE FOR BAD IDEBTS
RESERVE FOR MACHINERY, TOOLS & EQUIPMENT
INCCME: -
Sales - Evening Gowns
Sales - Evening Cloaks
Sales - Waists
OPERATING: -
Merchandise
Thread
Buttons
Boxes
Evening Gowns Department
Evening Cloaks Department
Waists Department
Factory Rent
Machine Repair & Parts
LIST OF GENERAL LEDGER ACCOUNTS (CONT* D).
OPERATING (CONT*D):-
Light, Heat & Power
Factory Supplies & Expenses
Cutting - Evening Gowns
Cutting - Evening Cloaks
Cutting - Waists
Machine Operating - Evening Gowns
Machine Operating - Evening Cloaks
Machine Operating — Waists
Hand Sewing - Evening Gowns
Hand Sewing - Evening Cloaks
Hand Sewing - Weists
Inspecting, Pressing & Boxing - Evening Gowns
Inspecting, Pressing & Boxing - Evening Cloaks
Inspecting, Pressing & Boxing - Waists
Indirect Labor
Factory Depreciation
SELLING & GENERAL EXPENSES:-
Salesmen's Salaries
Salesmen's Commissions
Advertising
Traveling Expenses
Office Salaries
Administrative Expenses
Postage & Stationery
Paper & Twine
Telephone & Telegraph
Postage
Office Rent
Pay-Roll
Depreciation for Office Furniture & Fixtures
Insurance -

__
Marks New York Manufacturing Co. Date
-
Salesman — |Received Folio I
Buyer - To Ship Date Billed
Address Shipped –
Shipping Directions Terms Cr. OK. Sales Book
- -------- --- - Folic -
2- Ship. Quan- Distribution
\_* | Check tity Order No. Register *-- Price. Amount E.G. I. E.C. W.
-
!
- |
O l
|
|
t
|
i
- –4– -T- |
T. O. T A L S. |- i_j
Form l - Sales Book.

JUNE, 1915.
| Total. E. G. E. C. W.
T5,445 FOT 3,326|od 2,143 bo 97.4 OO
G.I. G. 15 3.16 G.16
-
(Q.
Form 2. Sales Summary.
-
- - -

--- -
Register
©e Name,
S. B. Date
No, Billed
Current
Mo.
Form 3,
+
-
Order Register.
T

: New York, N. Y.
: M -
: Please deliver —--------------------------------------------------.
; :--------------------------------------------------------------------
------------------------------ -----------
|
Order number must Nºt YORK MANUFACTURING CO.
appear on all ship-
A 2516 ments and invoices. Per -
:
- –
t
|
|A 2517
T. -
i :
|
| :
:
| | | A 2519
+- - --- ----- - - -- - - - ---
Fort 4, ºrchese ºrder (Verº told Boek,

FACTORY ORDFP.
Order No. 120
Dept. - E. _G._ ------
TO For eman J. B. Smith Date. June 2, 1915]
Dete Bill of -
wanted waterial Description_ ºuantity
6/28 184 Evening Gowns Style 78 Blue 35
6/24 378 rt ty " 123 Pink 100
6/15 4C1 wº rº " 32 White 175
Completed Signed Supt.
-- For eman
&
Form 6. Factory Order.

BILL or Maºrtal.
Date,
Order No.
Required for
Classifice-
tion No. Article. Quen. Rate. Amount
-- I -
Cloth, Silks, etc.
| Trimmings, etc. i
| Buttons
| Threath |
Received the above in good order
:
(Signed)
Approved by Ordered by
Form 7. Bill of Material.
June, 1915.
Total. E.g. E.g. v. Total E.g. E.g. v.
|284300284300
||1787.00 | 1787 OO
99400 994bo
|| || |
!
|-T-T- --- -
º 3.001787.0099.4 poll
:
| G. 7 2. c.e G.7
| -
| |
| |
l – il - + - +– |--|-- º -
Form 7b. Bill of Material Summary.

| Time Ticket
- Name --- -------- Date- --
Tclassi: ſ -- - - - | -
bert, No. Description. Quan. Time. Rate Amt.
i
i
| - —i.
Form 8.
Daily Time Ticket.

Suppli
Fo- ãňd Su-nd-ry Accounts
Date Name lid Total Mdse. Expensé. Threed Buttons|Boxes || Name of Account Fo. Amount
º, Jouquin Freres 642 OO Evening Gowns -
L.B. Lowell Co. & Dept. Acct. 6 6.42 120
| others 5474 |OO || 5474 |OO
- 3 Brooks & Co. 79 |OO 79 00
- U.S. Button WKs. 83 00 83. OC
4 Thompson & Mor-
ris Co. 58 HOO 58 od
Singer S.M.Co. 79 iOO Machinery, Tools
& Equipment 2 79 00
8 Niagara F. I-Co. 27 OO Insurance 8 27 OO
| 12 Moffatt Estate 150 iOO Rent 8 150 00
J. Smith & others 27 GO 2700 -
14 Howe & Co. 33 00 Machinery. Re-
- - pair & Parts 8 33 00
15 public Service 24 |OO Light, Heat &
Corporation - i Power 8 24 OO
23 Moffatt Estate 50 HOO Office Rent 9 50 QQ
Kellogg & Co. 42 00 Printing & Sta-
tionery 9. 42 #00
27 Lynde & Co. 18 OO Paper & Twins 9 18 Q0
18|Factory Equip-
ment Co. 42 OO 4200
º
6828 OO iſ 5474 100 6900 79|OC 83100 58 00 1065 OO
G 3. Gºg-GT5. "TGT5. TGT5…" V
Ferm 5.
Purchase Journal-
-
:
".
--
:

Pay Roſſi, AND ANALysis.
Week Ending
W. A. G. E. S. D I s T R I, B J T I o N.
Bn., amount _EVENING GOWNS: EVENING ClOAKS - WAISTS. uper-haires: “sº-
Name. ſº. of Pay. Cut 'gi M.O. H'd S I.P& B Cut 'g| M.O. H'd, Si I. P.&B. Cut' g| M.O. H'd S. I. P. & Bivision Labºr Office men
| i ! -
|Labor-Cutting 273DO 143 99 78 OO 5200
|Labor-Machine Oper- g
at ing 116300 643OO 32200 198 OO -
|Labor-Hand Sewing 44600 : 9700 12200 27 OO
|Labor-Inspecting,
Boxing & Shipping 6000 30 OO 15 OO 15 º
Factory Supervision 27500 | 27500
Indirect Labor 7500 t 75 OC)
Office Salaries 37000 - 3700)
Salesmen's Salaries 26OOO 260 00
–––.oOo.---
- |
:
The abºve are total -
figures only as i
given in problem. | i
In actual use the -
individual names - - i -
will aſ pear above .
and extensions
made in proper :
columns.
:
- ------ - + -
| - 292203 43100 3430 (297.00, 30.100 78100 32300||12200 15 Od 5200 198001. 27 OO 15 00 275001 7.5.190 37,000 26000
-- G-13 G.10 G.ll G.12 G.12 G.10 G-ll G.12 G.12 glo G.ll G. 12 G.12 G-13–G–13–G-13–3–14
Form 9.
Dr. Cash. JUNE, lºlfi. - _
Sales Ledger General Ledger. --
1915 C.K. Post Pºt Cash Bºis: it. Hui-ºº: –
June 30 Customers' Accounts |
Receivable V S.L. | 10,47500 || 10,475 00
Notes Receivable V || G.I. * 329 OO
H-Hº-Hº- -
_1 | 10,47800 323.00 10,804 loo.
G. l y G. l
-
Cash Book – Form 10.
Cr. Cash. JUNE, 1915.
Purchase Ledger. General Ledger.
lºlà. Post. Discount Sundries|Petty Cash Total
-- T- F-
June 30. Accounts Payable E.I.
Loans paid G.4 1,00000
Salesmen's Com-
missions G. 3 3.7500
Advertising G. 14 225OO
Telegraph & Tele G. 14 72OO
Postage G.14 | 4800
Traveling Expense G. 15 32600 -
Pay-Roll G.13 2, 92200 12,44000
7,472 foot 4, 96400 | 13,44000
G. 3 V G.1







PROBLEM 8 (PART 2).
We will assume that a merchandise inventory has been taken as
at June 1, 1915 for the purpose of furnishing you with a basis for in-
stalling your departmental accounting system. This inventory shows the
following:-
Finished stock:
ić evening gowns . . . . . . . . . $ 475.00
12 evening cloaks . . . . . . . . 400. OO
35 waists . . . . . . . . . . . . - - - - 300. OO
Merchandise including all cloths
and silks in stock . . . . . . . . . . 14,525.00
Thread - - - - - - - - - - - - - - - - - - - - - - - - 48. OO
Buttons . . . . . . . . . . . . - - - - - - - - - - - 39. OO
Boxes . . . . . . . . . . . . . . . . - - - - - - - - - 27. OO
- As the New York Manufacturing Company only does work upon
special orders, there was no work in process at June lst which was the
end of their season. The finished garments were on hand owing to the
fact that these garments were returned by customers.
In addition to the above the balance sheet at June 1, 1915
showed the following assets and liabilities:
Cash on hand and in bank $12,750.00; Customers'
Accounts Receivable $35,480.00; Notes Receivable
$649.00; Machinery, Toois & Equipment *",728.00;
Reserve for Depreciation of Machinery, Tools &
Equipment $2,400.00; Office Furniture & Fixtures
$475.00; Unexpired Insurance Premiums #110.00;
Reserve for Bad Accounts $1,500.00; Accounts
Payable $6,174.00; Unpaid Salesmen's Commissions
369.00; Loans Payable $2,200.00; Capital Stock
25,000.00 and Surplus ######66.
In order to test the workings of your system, the management
have arranged to take stock at the end of June.
- From the above information you are requested to start your
accounts as at June 1, 1915.
---ooo---
The transactions which occurred during the month are shown
by the following totals. This information should be recorded in the
various summarizing records which you have designed for your department
accounting system. It will be noticed that the problem does not give
you the detailed transactions which occurred during the month but only
the totals of such transactions at the end of the month, These totals
should not be journalized but the information as recorded in your
various original records should be posted directly to the various ac-
counts affected, All invoices showing expenditures have been properly
approved and checked and have been entered upon the Purchase Journal
and the totals of this record at the end of the month show that the
following accounts have been affected.


Imported Finished Gowns Purchased $642.00; Merchandise
Purchases $5,474.00; Thread $79.00; Buttons $85.00;
Boxes $58.50; New Machines $79.90; Insurance £27.00;
Factory Rent $150.00; Factory Supplies $27.00; Machine
Repairs and Parts $33.00; Light, Heat & Power $24.00;
Factory Expenses $42.00; Office Rent $50.00; Printing
and Stationery $42.00 and Paper and Twine #18.00.
All orders received from customers which have accummulated
during the day are summarized and compiled daily and the information
for issuing the factory orders is obtained from these detailed customers'
orders. -
The factory orders are not used for compiling costs, however,
but are used merely for the purpose of giving the factory written in-
structions for beginning work.
A summary of all bills of material for the month shows that
the merchandise which has been issued from the raw material stock has
been used as follows.
Merchandise used for evening gowns $2,843.00;
Merchandise used for evening cloaks $i,787.00
and Merchandise used for waists $994.00.
All salaries, and wages are paid weekly and an analysis of the
pay-roll for the monthshows the following:
Labor Cutting - Evening Gowns #143.00; Evening Cloaks $78.00 and
Waists $52.00.
Labor Machine operating - Evening Gowns $643.00; cloaks $322.00
and Waists £198.00.
Labor Hand Beving - *::::: Gowns $297.00; Cloaks $122.00 and
Taists $27. OO.
Labor - Inspecting, . Pressing ºnd Boxing $60.00. This item is dis-
#ibit: š-šir to Gowns and the balance is &is-
tributed equally to Cloaks and Weists.
Factory supervision $275.00; Indirect tebor $75.60; Office Sal-
aries $370.00; Salesmen's Saleries $260.00.
Provide for e depreciation of $6a, 00 for the month; $50.50
of which should be charged as fectory overhead end $10.00 being in-
cluded in the administrative expenses.
The commissions earned by the salesmen during the month
amount to $412.00.
The Register of Sales shows that the total shipments during
the month, after deducting such merchandise as has been returned,
amount to the following:
Evening Gowns . . . . . . . . . . . . . . . . . $3,328.00
Evening Cloaks . . . . . . . . . . . . . . . . 2,143.00
Waists - - - - - - - - - - - - - - - - - - - - - - - - 974.00,
An analysis of the cash book receipts shows the t you have
collected from your custºmers $10,475, ºr end ºf the notes receive ble
you have collected $329.00. The payments as recorded ºn the credit
side of your cash book consist of the following, in addition tº this
pay-roll which has already been ment itned :-
Creditors. Accounts $7,472.50; Loans $1,600.00; Salesmen's Com-
missions $375.0C; Advertising $225.0°); Telephone & Telegraph
$72.00; Postage #48.60 and Traveling Expenses $326.00.
At June 30th an inventory was taken in accordance with your
&irections. The balance of the merchtridise on herd at that date, con-
sisting of cloths, silks, etc., was eccepted as shown by your merchtºn-
dise aceount. The Thread ºn hēnd amounted to $54.50. The buttons on
hand emounted tº $72.00 and the boxes on herd amounted to $46.00. The
work in process and finished stock were summarized and classified sº-
cording to the product classification and the totals for etch classifi-
eation were as follows :-
Evening Gowns $3,628.00; Evening Cleaks $1,573.ed;
Weists $947.00.
The unexpired insurance premiums as et June 38th amounted
to $97.00. Factory Indirect Expenses should be distributed to the
variºus departments on the basis of flirect labºr costs. The selling
and administrative expenses should be distributed to the various de-
partments on the basis of the cost of sales. These distributions of
expenses should be made when preparing the financis 1 statements.
---ooo---

After you have recorded all the detailed information in the
various summarizing records and have posted same to the various ledger
accounts, you are requested to prepare a Manufacturing & Profit & Loss
Statement departmentally arranged so as to show the financis l operations
of each department of the business. You are also requested to prepare
a Balance Sheet at June 30, 1915.

S C 1, U T. I O N - P R O B L E M 8 (Part II).
From the Inventory and Assets and Liabilities, as given on
page 1, the following Trial Balance is formed.
For opening the books this trial balance becomes the first
journal entry. The accounts are opened in the ledger and postings
made as shown below.
PROBLEM PAGE 1: -
Inventory:
10 Evening Gowns . . . . . . . . - - - - - - - - - G 2 75, ºt
12 Fvening Cloaks . . . . . . . . . . . . . . . . G 2 400. Cº.
35 Waists . . . . . . . . . . . . . . . . . . . . . . . . G 2 £60, 60
Merchandise . . . . . . . . . . . . - - - - - - - - - - - G 2 14,525.60
Thread . . . . . . . . . . . . . . . . . . . . . . . . . . . . G 2 48. OO
Buttons . . . . . . . . . . . . . . . . . . . . . . . . . . . G 2 39.00
Boxes . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . G 2 27. OO
Cash on Hand end in Bank . . . . . . . . . . . . . . G. 1 12,750.00
Customers' Accounts Receivable . . . . . . . . G. 1 35,400.00
Notes Receivable . . . . . . . . . . - - - - - - - - - - - - G 1. 649.00
Machinery, Tools & Equipment . . . . . . . . . . G 2 7,728.00
Reserve for Depreciation of Machinery,
Tools & Equipment . . . . . . . . . . . . . . . . - G 2 # 2,400.00
Office Furniture & Fixtures . . . . . . . . . . . G 3 475. OO
Unexpired Insurance Premiums . . . . . . . . . . . G 3 110.00
Reserve for Bad Debts . . . . . . . . . . . . . . . . . G 3 1,500.00
Accounts Peyable . . . . . . . . . . . . . . . . . . . . . . G 3 6,174.00
Unpaid Salesmen's Commissions . . . . . . . . . G 3 369. O()
Loans Payable . . . . . . . . . . . . . . . . . . . . . . . . . G 4 2,200.00
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . G 4 25,000.00
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G 4 35,363.00
$73,006.00 $73,006.00
Inventory, June lst :
After the Triel Balance has been posted to the various
General Ledger accounts, as per the preceding journal entry, by
referring to the Inventory account, (Ledger Page 2), it will be

noticed that these items should now be charged to the respective ac-
counts as shown by the inventory details.
JOURNAL ENTRY.
June 1, 1915.
Sundries to Inventory . . . . . . . . . . . . . . . - - - - - - - G 2 $15,814.00
Evening Gowns . . . . . . . . . . . . . - - - - - - - - - - - - G 6 + 475.00
Evening Cloaks . . . . . . . . . . - - - - - - - - - - - - - - G 6 400.00
Waists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G 7 300. OO
Merchandise . . . . . . . . . . . . . . . . - - - - - - - - - . . G. 7 14,525.00
Thread . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - . G 5 48.00
ttons . . . . . . . . . . . . . . - - - - - - - - - - . . . . . . . G 5 39.00
Boxes . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - G 5 27. OO

Unexpired Insurance:
The amount held as Unexpired Insurance now, becomes a charge
upon the current period. he journal entry follows:-
Insurance . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - . C. 8 : 110.00
To Unexpired Insurence . . . . . - - - - - - - . . . . G 3 § 110.00

PROBLEM PAGE 2: -
All invoices covering the purchases for the month are set up
and posted directly from the Purchase Journal.

Purchases:
See Purchase Journal, Form 5.

Bills of Material:
The Bills of Material are summarized at the end of each
month and postings are made direct to the accounts affected. See
Bill of Material Summary, Form 7b.
Pay-Roll:
All seleries and wages paid are posted from their totals
as shown at the end of each month. See Pay-Roll and Analysis,
Form 9.
Depreciation:
The depreciatiºn is handled through a journal entry as
follows:
JOURNAL ENTRY.
June 30, 1915.
Sundries to Sundries:
Factory Depreciation . . . . . . . . . . . . . ... G 14 § 50.00
Administrative Expense . . . . . . . . . . . . . . G 14 10.00
Reserve for Depreciation of
Machinery, Tools & Equipment. G 2 # 60.00
(Depreciation for June, 1915).
PROBLEM PAGE 3: -
Salesmen's Commissions:
The following is the journal entry for the commissions
due salesmen.

JOURNAL ENTRY.

Salesmen's Commissions . . . . . . . . . . . . . . . . . . . G 14 § 412.00
To Commissions Due and Unpaid . . . . . . . G 3 $ 412.00
(For June, 1915).
Sales:
The individual sales are analyzed at the end of each month
and postings made direct to the accounts affected, from the Sales
Summary. See Form 2.
Receipts & Disbursements:
O The Cash Receipts & Disbursements are entered on Cash
Book, Form 10 in total figures. In the regular process of business
items would appear and be posted each day especially to the Sales
Ledger and the Purchase Ledger. At the end of the month the totals

of these columns are posted to the controlling accounts for Accounts
Receivable end Accounts Payable.
Inventory, June 30th:
As the beginning inventory for June was charged to the
various accounts, closing out the Inventory Account at that point,
We now credit these various accounts with the amounts on hand, June
30th, and charge same to the Inventory Account.
JOURNAL ENTRY.
June 30, 1915.
Inventory . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - G 2 $20,999.00
To Sundries:
Evening Gowns . . . . . . . . . . . . . . . . . . G 6 # 3,628.00
Evening Cloaks . . . . . . . . . . . . . . . . . G. 6 1,873.00
Waists . . . . . . . . . . . . . . . . . . . . . . . . . G 7 947. OO
Merchandise . . . . . . . . . . . . . . . . . . . . G 7 14,375.00
Thread . . . . . . . . . . . . . . . . . . . . . . . . . G 5 64. OO
Buttons . . . . . . . . . . . . - - - - - - - - . . . . G 5 72. OO
Boxes . . . . . . . . . . . . . . . . . . . . . . . . . . G 5 40.00
(Per Inventory, June 30, 1915).
Unexpired Insurance:
A Journal Entry is made for the Unexpired Insurance as
follows: -
JOURNAL ENTRY.
Unexpired Insurance . . . . . . . . . . . . . . . . . . . . . . G 3 : 97. OO
To Insurance . . . . . . . . . . . - - - - - - - - . . . . . G 8 $ 97. OO
(Unexpired Insurance Premiums
as at June 30, 1915).

June 30, 1915 should be taken off.
When all postings have been mºde, a trial belºnce as of
full as follows: -
Statement, departmentally arranged, is prepared.
Folio.
The trial belance is given in
From this trial balence the Manufacturing & Profit & Loss
Nº. YORK MANUFACTURING COMPANY.
T. R. I. A. L. B. A. I. A N C F.
JUNE 30, 1915.

Cash on Hand and in Bank . . . . . . . . . . . A
Customers' Accounts receivable . . . . . A
Notes Receivable . . . . . . . . . . . . . . . . . . . A
Inventory:
Evening Gowns . . . . . . . . . $ 3,628.00
Evening Cloaks . . . . . . . . 1,873.00
Waists . . . . . . . . . . . . . . . . 947. OO
Merchandise . . . . . . . . . . . 14,375.00
Thread . . . . . . . . . . . . . . . . 64.00
Buttons . . . . . . . . . . - - - - - 72. OO
Boxes . . . . . . . . . . . . . . . . . 40. OO A
Machinery, Tools & Equipment.T.T.T. A
Reserve for Depreciation of Machin-
ery, Tools & Equipment . . . . . . . . . . . I
Office Furniture & Fixtures . . . . . . . . A
Unexpired Insurance . . . . . . . . . . . . . . . . A
Reserve for Bad Debts . . . . . . . . . . . . . . I.
Accounts Payable . . . . . . . . . . . . . . . . . . . I.
Commissions Earned . . . . . . . . . . . . . . . . . I.
Loans Payable . . . . . . . . . . . . . . . . . . . . . . L.
Capital Stock . . . . . . . . . . . . . . . . . . . . . . L.
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . I.
Thread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P
Amounts carried forward . . . . . . . . . . . .
$11,114.00
31,450.00
320.00
20,999.00
7,807.00
# 2,460.00
475.00
97.00
l,500.00
5.530.00
406.00
1,200.00
25,000.00
35,363.00
63.00
$72,325.00 $71,459.00
Amounts brought forward - - - - - - - - - - - - #72,325.00 $71,459.00
Buttons . . . . . . . . . - - - - - - - - - - - - - - - - - - - p 50.00
Boxes . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - P 45.00
6 Evening Gowns Department Account - 332.00
Merchandise & Mail Used . . . . . . . . . . P
Evening Cloaks Department Account -
Merchandise & Mail Used . . . . . . . . . . P 3.14.00
7 Waists Department Account - Mer-
chandise & Mail. Used . . . . . . . . . . . . - P 347. OO
8 Insurance . . . . . . . . . . . . . - - - - - - - - - - - . . P 40.00
Factory Rent . . . . . . . . . . . . . . . . . . . . . . . p 156). OO
Machine Repair & Parts . . . . . . . . . . . . . P 33. OO
Light, Heat & Power . . . . . . . - - - - - - - - . P 24.00
9 Office Rent . . . . . . . . . . . . . . . . . . . . . . . . P. 50.00
Printing & Stationery . . . . . . . . . . . . . . P 42.00
Paper & Twine . . . . . . . . . . . . . . . . . . . . . . P 18. OO
Factory Supplies . . . . . . . . . . . . . . . . . . . P 69.00
10 Cutting - Evening Goving . . . . . . . . . . . . P 143.00
Cutting - Evening Cloaks . . . . . . . . . . . P 78.00
Cutting - "aists . . . . . . . . . . . . . . . . . . . P 52.00
D 11 Machine Operating - Evening Gowns ... P 643.00
Mechine opereting - Evening Cloaks . P 322.00
Machine opereting — "aists . . . . . . . . . P 198.00
12 Hand Sewing - Evening Gowns . . . . . . . . P 297.00
Hand Sewing - Evening Cloaks . . . . . . . P 122.00
Hand Sewing - "aists . . . . . . . . . . . . . . . P 27. OO
Inspecting, Pressing & Boxing -
Evening Gowns . . . . . . . . . . . . . . . . . . . . . p 30.00
Inspecting, Pressing & Boxing -
Evening Cloaks . . . . . . . . . . . . . . . . . . . . . P 15.00
Inspecting, Pressing & Boxing -
Waists . . . . . . . . . . . . . . . . . . . . . . . . . . . . P 15. OO
13 Factory Supervision . . . . . . . . . . . . . . . . P 275. OO
Indirect Labor . . . . . . . . . . . . . . . . . . . . . P 75, OO
Office Selaries . . . . . . . . . . . . . . . . . . . . P 370. OO
Salesmen's Salaries . . . . . . . . . . . . . . . . P 260.00
14 Factory Depreciation . . . . . . . . . . . . . . . P 50.00
Administrative ºxpenses . . . . . . . . . . . . P 10. OO
Salesmen's Commissions . . . . . . . . . . . . . P 412.00
Advertising . . . . . . . . . . . . . . . . . . . . . . . . P 225. OO
Telephone & Telegraph . . . . . . . . . . . . ... P 72.OO
Postage . . . . . . . . . . . . . . . . . . . . . . . . . . . . P 48.00
15 Treveling Expenses . . . . . . . . . . . . . . . . . P 326.00
Sales Accounts - Evening Gowns . . . . . P 3,328.00
16 Sales Accounts - Evening Cloaks . . . . P 2,143.00
O Sales Accounts - Waists . . . . . . . . . . . . P 974. OO


Total . . . . . . . . . . . . . - - - - - - ...... $77,904.00 $77,904.00
T- -
- 7a -
Page 8 is inciuded in Page 7.
– 9 – Icdger Page 1.
C. A. S. H.
June 1 On Hand and in Bank. . J. $12,750.00 June 30 Sundries . . . . . . . . C. $12,440.00
30 Sundries . . . . . . . . . . . . C. 10,804.00
C U S T O M E R S + A C C O U N T S R E C E I W A B I, E.
June 1 Sundries . . . . . . . . . . . . J. $35,480.00 June 30 Sundries . . . . . . . . c. $10,475.00
30 Sales for June . . . . . . S. S. 6,445.00 -
N. O. T E S R. E. C. E. T. W. A. B. L. E.
649.00 June 30 Sundries C. $ 329.00
$
June 1 Sundries . . . . . . . . . . . . J.
– 10 - Ledger Page 2.
I N V E N T O R Y.
June 1 10 Evening Gowns . . . . . . . . J. $ 475.00 June 1 Sundries . . . . . . . . . . . . . J. $15,814.00
12 Evening Cloaks . . . . . . . J. 400.00 -
35 Waists . . . . . . . . . . . . . . . J. 300.00
Merchandise . . . . . . . . . . . . . J. 14,525.00
Thread . . . . . . . . . . . . . . . . . . J. 48.00
Buttons . . . . . . . . . - - - - - - - - J. 39.00
Boxes . . . . . . . . . . . . . . . . . . . J . . 27.00
$15 #14.00 $15,514.00
June 30 Evening Gowns . . . . . . . . . . . J. § 3,628.00
Evening Cloaks . . . . . . . . . . J . 1,873.00
Waists . . . . . . . . . . - - - - - - - . J. 947.00
Merchandise . . . . . . . . . . . . . J. 14,375.00
Thread . . . . . . . . . . . . . . . . . . J. 64.00
Buttons . . . . . . . . . - - - - - - - - J. 72.00
Boyes . . . . . . . . . . . . . . . . . . . J. 40.00
M A C H I N E R Y, Tº O O L S & E Q U 1 P M E N T.
June 1 Per Inventory . . . . . . . . . . . J. $ 7,728.00
30 Singer Sewing Machine Co. PJ 79.00
RESERVE FOR DEFRECIATION OF MACHINERY. TOOLS & EQUIEMENT.
June 1 Sundries. . . . . . . . . . . . . J. : 2,400.00
30 Depreciation . . . . . . . . J. 60.00
– 11 - Ledger Page 3.
O F. F. I. C. E. F. U R N + T U R E & F I X T U R E S
June 1 Per Inventory . . . . . . . . . . . $ 475.00
U N E X P I R. E. D I N S U R A N C E.
June 1 Sundries . . . . . . . . . . . . . . . . J. § 110.00 June 1 Insurance . . . . . . . . . . . . J.
30 Insurance Unexpired . . . . . J. 97.00
R E S E R W E F O R. B. A. D. D. E. B. T. S.
June 1 Sundries . . . . . . . . . . . . J .
A C C O U N T S P A Y A. B. L. E. º
June 30 Sundries . . . . . . . . . . - - - - - - - .# 7,472.00 June 1 Sundries . . . . . . . . . . . . J.
30 Sundries . . . . . . . . . . . . PJ
C O iſ M I S S I O N D U E & U N P A T D.
June 30 sunaries ................ c. § 375.00 June 1 sundries ........... . J .
30 Salesmen's Commissions J.
§
$
$
110.00
1,500.00
369.00
412.00
- 12 - Ledger Page 4
I, O A N S P A Y A. B. L. E.
June 30 Sundries . . . . . . . . . . . . . . . . C. § 1,000.00 June 1 Sundries . . . . . . . . . . . . J. § 2, 200.00
C A P I T A L S T O C. K.
June 1 Sundries . . . . . . . . . . . . J. $25,000.00
S U R P L U. S.
June 1 Sundries . . . . . . . . . . . . J. $35,363.00
P
– 13 - - Ledger Page 5.
T H R E A D.
June 1 Inventory . . . . . . . . . . . . . . . J. § 48.00 June 30 Inventory . . . . . . . . . . . J. § 64.00
30 Sundries . . . . . . . . . . . . . . . . PJ 79. OO
B U T. T. O. N. S.
June 1 Inventory . . . . . . . . . . . . . . . J. § 39.00 June 30 Inventory . . . . . . . . . . . J. § 72.00
30 Sundries . . . . . . . . . . . . . . . . PJ 83.00
B O X E. S.
June 1 Inventory . . . . . . . . . . . . . . . J. § 27.00 June 30 Inventory . . . . . . . . . . . J. § 40.00
30 Sundries . . . . . . . . . . . . . . . . PJ 58. OO
- 14 – Ledger Page 6.
-
E W E N E N G G O W, N S D E P A R T M E N T A C C O U M T.
June 1 Inventory . . . . . . . . . . .. . . . J. $ 475.00 June 30 Inventory . . . . . . . . . . . J. # 3,528.00
30 Jouquin Freres . . . . . . . . . . PJ 642.00
30 Merchand ise . . . . . . . . . . . . . BM 2,843.00
E V E N I N G C L O A K S D E P A R T M E N T A C C 0 U. N. T.
June 1 Inventory .
- - - - - - - - - - - - - - $ 400.00 June 3d Inventory . . . . . . . . . . . J. $ 1,873.00
30 Merchandise . . . . . . . . . . . . . BM 1,787.00 -
- 15 - Ledger Page 7.
W. A. I. S. T. D. E. P. A R T M E N T A C C 0 U. N. T.
June 1 Inventory . . . . . . . . . . . . . . . J. § 300.00 June 30 Inventory . . . . . . . . . . . J. § 947. OO
30 Merchandise . . . . . . . . . . . . . BM 994. OO
M. E. R. C. H. A. N. D. I. S. E.
June 1 Inventory . . . . . . . . . . . . . . . J. $14,525.00 June 30 Bills of Material ... BM $ 5,624.00
30 Sundries . . . . . . . . . . . . . . . . PJ 5,474.00 30 Inventory . . . . . . . . . . . J. 14,375.00
June
June
June
June
30
30
Unexpired Insurance . . . . .
Niagara Falls Insurance
Company . .
- - - -
Moffatt Estate . .
Howe & Company .
J. §
. PJ
F A C T O R Y
- 16 -
Ledger Page 8.
I N S U R A N C E.
110.00
27.00
June 30 Unexpired Insurance. .
R E N T.
- - - - - - - PJ #
M A C H I N E
- - - - - - - - - PJ &
150.00
R. E. P. A. I R S
33.00
& P A R T S.
P 0 W. E. R.
Public Service Corpora-
tion . . .
- - -
- - - - - - -
J.
#
97.00
June
June
June
June
3O
30
30
Moffatt Estate . . . . . . . . . .
- 17 -
O F. F. I. G. E.
$
50.00
P R + N T I N G &
R. E. N. T.
S T A T I O N E R Y.
§ 42.00
P A P E R & T W I N E.
$ 18.00
S U P P L H E S &
E X P E N S E S.
Kellogg & Company . . . . . . . PJ
Lynde & Company . . . . . . . . . kJ
F. A C T O R Y
Sundries . . . . . . . . . . . . . . . . PJ
#
69.00
Ledger Page 9.
- 18 – Ledger Page 10.
C U T. T. I N G - E W E M I N G G O W. N. S.
June 30 Pay-Roll . . . . . . . . . . . . . . . . PR § 143.00
C U T. Tº I N G - E W E N I N G C. L. O. A K S .
June 30 Pay-Roll . . . . . . - - - - - - - - - - FR § 78. OO
C U T. Tº I N G – W. A. I. S. T. S.
June 30 Pay-Roll . . . . . . . . . . - - - - - - PR § 52.00
- 19 — Ledger Page ll.
E W E N I N G. G. O. W. N. S.
M A C H I N E O P E R A T I N G
June 30 Eay-Roll . . . . . . . . . . . . . . . . PR § 643.00
--
HA g H I n e o P = F * g + n g = E V E m r n g c L o A. K. S.
June 30 Pay-Roll . . . . . . . . . . . . . . ... PR § 322.00
M A G H H N E O P E R A T I N G - W. A. I. S. T. s.
June 30 Pay-Roll . . . . . . . - - - - - - ... PR § 198.00
June
June
June
June
June
June
– 20 — Ledger Page 12-
H A N D S E W I N G – E W E N T N G G O W. N. S.
30 Pay-Roll . . . . . . . - - - - - - - - - PR § 297.00
H A N D S E W I N G - E W E N I N G C. L. O. A. K. S.
30 Pay-Roll . . . . . . . . . . - - - FR § 122.00
H A N D S E W I N G – W. A. I. S. T. S.
30 Pay-Roll . . . . . . . . . . - - - - - - FR § 27.00
I N S P E C T I N G, P R E S S I N G & B_0 X I N G - E W E N I N G G O W. N. S.
30 Pay-Roll - - - - - - - - - - - - - - - - PR # 30.00
I N S E E C T I N G, P R E S S I N G & B O X I N G - E V E N I N G C. L. O. A. K. S.
30 Pay-Roll . . . . . . . . . . - - - - - - FR § 15.00
I N S P E C T I N G, P R E S S I N G & B_0 X I N G W. A. I. S. T. S.
30 Pay-Roll .
- - - - - - - - - - - - - - -
PR §
15. CO
June
June
June
June
June
30
3C
30
30
30
– 21 -
F. A. C. T. O. R. Y S U P E R W T S I O N.
Pay-Roll . . . . . . . . . . . . . . . . PR $275.00
I N D I R. E. C. T L A B O R.
Pay-Roll . . . . . . . . . . . . . . . . FR § 75. OO
O. F. Fº I C E S A. J. A. R. I. E. S.
Pay-Roll . . . . . . . . . . . . . . ... FR § 370.00
3 A L E S M E N S S. A. L. A. R. I. E. S.
Pay-Roll - - - - - - - - - - - - - - - - FR $ 260 .00
Cash . . . . . . . . . . . . . . . . . . . . C. § 2,922.00 June 30 Sundries
- -
Ledger Page 13.
- - - - - - -
. FR § 2,922.00
– 22 - Ledger Page
F A C T O R Y D. E. P. R. E. C. I. A T I O N.
June 30 Reserve for Depreciation
of Equipment . . . . . . . . . . J. § 50.00
A D M I N I S T R A T L V E E X P E N S E S.
June 30 Reserve for Depreciation
of Furniture & Fixtures J. § 10.00
S A 1, E S M E N - S C O M M I S S I O N S.
June 3C Commissions Earned . . . . . . J. $ 412.00
A D W E R T I S I N G.
June 30 Sundries . . . . . . . . . . . . . . . . C. § 225.00
T E L E P. H. O. N. E. & T E L E G R A P. H.
June 30 Sundries . . . . . . . . . . . . . ... C. § 72. CO
P O S T A G E.
- - - - - - - - - - - - - - - . C. § 48. OO
June 30 Sundries
— 23 - Ledger Page 15.
T R A V E L T N G E X P E N S E S.
June 30 Sundries . . . . . . . . . . . . . . . . C. § 326. CO
S A L E S A C C O U N T S - E V E N I N_G._G._0 W. N. S.
June 30 Sales for June . . . . . . SS $ 3,328. CC
– 24 - Ledger Page 16.
S A I, E. S. A. C. C. O U N T S - E W E N I N G C. L. O. A. K. S.
June 30 Sales for June . . . . . . . J. $ 2,143.00
S A L E S A C G O U N T S - W A H S T S.
June 30 Sales for June . . . . . . . J. § 974.00
- 25 -
THE NEW YORK MANUFACTURING COMPANY.

M A N U F A c T U R T N G & P R O F I T & I, O S S S T A T E M E. N. T.
- For the month ended June 30, 1915.
Evening gowns Dept. Evening cloaks Dept. Waists Lept. Total-All Lepts .
BALES . . . . . . . . . . . . . . . . . . . $3,328.00 $2,143.00 $ 974.00 $6,445.00
COST OF SALES:-
Merchanºise & Material:
Merchandise & Mater- -
ial Used . . . . . . . . . . $ 332.00 $ 314.00 $ 347.00 $ 993. CC
Thread . . . . . . . . . . . - - 36. 10 17.45 9.45 63. CC
Buttons . . . . . . . . . . . . 28.65 13.85 7.50 50.00
Boxes . . . . . . . . . . . . . . 25. 79 12.46 6.75 45. OC
Labor - firect: -
Cutting . . . . . . . . . . . . 143. CO 78. OO 52.00 273. OC
Machine Cperating . . 64%. CO 322. OO 198.00 l, 163. CC
Hand Sewing... . . . . . . . 297.00 122. OO - 27.00 446. CC
"Inspecting, Pressing -
& Boxing . . . . . . . . . . 30. CO 15.00 15. CO 6C.OC
Lab or - Indirect:
Indirect Labor . . . . . 42.98 2O. 77 11.25 75. CC
Supervision . . . . . . . . 157.58 76.17 41.25 275. CO
Manufacturing Expenses:
Factºry Rent . . . . . . . 85. 95 4:1. 55 22.5C 150. OC
Machine Repairs &
Parts . . . . . . . . . . . . . 18.91 9. 14 4.95 33. CC
Light, Heat & Power, 13. 75 6.65 3. GC 24.00
Factory. Supplies ... 39.54 19.11 - 10.35 69. OC
Depreciation . . . . . . . . . 28.65 13.85 7.5° 50. CC
Total Cost of Sales. _l, 982.90 _l, C88.00 _764-19 _3, 769. CC
GRCss PROFIT ............ $1,405.10 $1,061.00 $ 209.90 $2,676. CC
- -
- -
- 258 –
M A N U F A C T U R I N C & P R O F I T & L O S S S T A T E M E N T (CONT' D).
Evening Gowns Dept. Evening Cloaks Dept. Waists Dept. Total All Depts.
GROSS PROFIT brought for-
ward . . . . . . . . . . . . . . - - - $1,405.10 $1,061.00 $ 209.90 $2,676.00
SELLING EXPENSES: –
Salesmen's Salaries . . 132. O8 $ 74.88 53. C4 §§§
Salesmen's Commissions 2C9, 29 118.66 84. C5 *::::.
Traveling Expenses . . . 165.6l 93.89 66.59 £º
Advertising . . . . . . . . . . 114.30 64.80 45.90 -
GENERAL EXPENSES: –
Insurance . . . . . . . . . . . . 20. 32 11.52 8. 16 *::::
Office Rent . . . . . . . . . . 25.40 14, 40 10.20 :::::
£rinting & Stationery. 21.34 12.10 8. 56 *:::::
raper & Twine . . . . . . . . 9. 13 5, 21 3.66 #:
Office Salaries . . . . . . 187. 96 106. 56 75.48 *:::::
Telegraph & Telephone. 36. 58 20. 73 14.69 43.3
Postage . . . . . . . - - - - - - - 24. 39 13. 8C 9.8l. 8.2
Depreciation on Furni–
ture & Fixtures . . . . 5.08 2.88. 2. C4 10.00
Total Expenses . . _383.09 1, 873, CC
NET PROFIT OR LOSS for
the month ended June - -
30, 1915 . . . . . . . . . . . - - $ 453.62 $ 521.57 – $ 172.19 $ 8.03.0C
NOTE: - The Selling and General Expenses were distributed to the various departments on the basis of
Cost of Sales.
- 26 -
NEW YORK MANUFACTURING COMPANY.
B. A. L. A N C E S H E E T.
JUNE 30, 1915.
A S S E T S.
CURRENT ASSETS : –
Cash on Hand and in Bank . . . . . . . . . . - $ll, 114, CO
Account S Receivable . . . . . . . . . . . . . . . . 31,450.00
Notes Receivable . . . . . . . . . . . . . . . . . . . 320.00
Merchandise Inventory:
Evening Gowns . . . . . . . . . . . . . . . . . . . $ 3,628.00
Evening Cloaks . . . . . . . . . . . . . . . - - - l, 873.00
Waists . . . . . . . . . . . . . . . . . . . . . . . - - - 947. OO
Merchandise . . . . . . . . . . . . . . . - - - - - - 14. 375.00
Thread . . . . . . . . . . . . . . . . . - - - - - - - - - 64.00
Buttons . . . . . . . . . . . . - - - - - - - - - - - - - 72. OO
Boxes . . . . . . . . . . . . . . . . . . . . - - - - - - - 40.00 20,999.00
Total Current Assets . . . . .
FIXED ASSETS : —
Machinery, Tools & Equipment . . . . . . . $ 7,807.00
Office Furniture & Fixtures . . . . . . . . 475. OO
Total Fixed Assets . . . . . . .
DEFERRED CHARGES : –
Unexpired Insurance . . . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . .
I, I A B I L I T I E. S.
CURRENT LIABILITIES: –
Accounts Payable . . . . . . . . . . . . . . . . . . . $ 5,530.00
Commission Payable . . . . . . . . . . . . . . . . . 406.00
Loans Payable . . . . . . . . . . . . . . . . . . . . . . - l. 300.00
Total Current Liabilities.
RESERVES : –
For Depreciation on Equipment . . . . . . # 2,450.00
For Depreciation on Office Furniture
and Fixtures . . . . . . . . - - - - - - - - - - - - 10. OO
For Bad Debts . . . . . . . . . . . . . . . . . . . . . . l, 500.00
CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . - - - - - -
SURPLUS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
NET PROFIT for the month of June, 1915,
per Manufacturing & Profit & Loss
Statement . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities. . . . . . . . .
$63,883.00
8, 282.00
97.00
$72,262.00
# 7, 136.00
3,960.00
25,000.00
35,363.OO
803. "O
$72,262. or
-



TWENTIETH SESSION.
QUIZ AND DISCUSSION ON PREVIOUS LECTURE: –
And review of Problem 7 and Chapter XII.
LECTURE XVII: –
Report of the investigation.
SUGGESTION FOR LECTURE XVIII:-
What a report should contain.
How it should be presented to the management.
Kinds of reports – examination reports and system reports.
Recommendations and changes suggested.
Results to be obtained.
Changes in organization.
Changes in operating conditions.
Changes in forms and records.


ASSIGNMENT FOR HOME STUDY: -
Problem 9.
p R o B L E M 9.
ESTIMATING COST SYSTEM (First Plan).
Verification of Estimates on the total amounts of
Material, Labor and Indirect Expenses.
Classes of Product handled in total only.
A manufacturing firm is supposed to have the following sched-
ule for estimating the Factory Costs.
This plan, in connection with estimating costs, would apply
tº most lines of businesses – manufacturing or trading.
The proof of the estimates is to be on material, labor and
overhead and not on the different classifications of the product. The
classifications of the product are handled in total only so far as the
ledger accounts are concerned.
Article.
Quantity.
5OO
450
400
350
3OO
250
Were - -
Total. - Material. Labor. Overhead.
$ 2.83 $1.83 * .50 * .50
3.50 2.00 . 75 . 75
4.32 2.30 1.01 1. Ol
5. 20 2. 70 1.25 l. 25
6. OO 3. OO 1.50 1.50
8.25 4.25 2. OO 2. OO
ll. OO 5. OO 3. OO 3. OO
The inventory at January 1, 1915 showed the following:-
Article. Material. Labor. Indirect.
A $1.83 * .50 * .50
B 2. OO . 75 . 75
C 2.30 l.01 1.Ol
D 2. 70 1.25 1.25
E 3. OO 1.50 1.50
F 4.25 2. OO 2. OO
The expenditures for the three months ended Merch 31, 1915
Purchases . . . . . . . . . . . . . . . . . $28,300.00
Direct Labor . . . . . . . . . . . . . . 12,975.00
Indirect Expenses . . . . . . . . . 13,500.00

- 2 -
The sales for the three months ended March 31, 1915 at selling
prices were - -
Quantity. Style. Selling Price.
3OOO A # 3.50
25OO B 4 - 50
2OOO C 5. OO
1500 D 6. OO
1OOO E 7. OO
800 F. 9. UO
500 G 14.00
The inventory at March 31, 1915 showed that the following
merchandise was on hand.
Quantity. Article.
400 A
600 B
500 C
3OO F.
2OO G
The three forms which may be used in the solution of this
problem will be found in the first plan of the Estimating Cost System
in the Text, Book.
The ledger accounts to be opened are - -
Material. Account
Labor Account
Indirect Expense Account
Sales Account
Balancing Account.
The Balancing Account is used for the purpose of having the
accounts arranged in double entry form. This account is supposed to
represent the controlling account for the other assets and liabilities
of the business in this problem.
If the actual inventory at March 31, 1915 does not agree with
the balance of material, labor and overhead, as shown by the book ac-
counts, adjusting entries are to be made so as to bring the book inven-
tory in agreement with the actual inventory.
Draw the necessary forms to properly record all the informa-
tion submitted, recording the transactions in these forms.
Post the original entries as shown by the forms to the various
ledger accounts affected.
Prepare the ending trial balance after all accounts are
properly adjusted and closed.

S O L U T I O N - P R O B L E M 9.
ESTIMATING COST PLAN (First Plan).
The three special forms in addition to the journal, general
ledger and trial balance used in this problem are - -
1. Schedule of Tstimated Costs, Form 52,
Text Book Page 302. Txplanation -
Paragraph 2, page 167.
2. Inventory Sheet, Form 61, Text Book
Page 312, Explanation - Page 167.
3. Analysis of Cost of Sales, Form 65,
Text Book Page 319. Explanation -
Pages 168 and 169.
After the Schedule of Estimated Costs has been prepared, the
Inventory Sheet is made, using the estimated rates as the basis for
making the extensions. The totals under each caption "Material", "Labor"
and "Indirect Expense" are debited to these accounts end the aggregate
total is credited to the Balencing Account.
The "Expenditures to March 31, 1915" are then debited to
# * respective accounts by means of a journal entry (See Journal entry
The sales for the three months ended March 31, 1915 should
be extended and the total, which is $61,950.00, should be credited to
the Sales Account. (See Journal Entry #2).
The cost of these sales are now set forth in the Analysis of
Cost of Sales using the estimated costs as shown by the Schedule of
Estimated Costs. The Material, Labor and Indirect Expenses accounts
are credited with the amounts they have contributed towards the cost
of the sales, as shown by the total under each classification end the
aggregate is debited to the Balancing Account.
Were our estimated cost records and compilation records abso-
lutely correct, the balances of the Material, Labor and Indirect Ex-
penses accounts would now agree with our ending invent ory figures. In-
stead we find the estimates have been placed too low and an adjusting
entry now becomes necessary to bring the book inventory in agreement
with the actual inventory. (See Journal entry #3).
The balance of the Sales Account now represents the gross
profit which, through Journal entry #4, is closed into the balancing
account.
NOTE.
The actual ending inventory at March 31, 1915 was valued in
accordance with the estimated costs as shown by the Cost Schedule. As
these costs were found to be incorrect, the inventory values would
have to be adjusted and adjusting entries would have to be made so that
the records would show more accurate inventory values. These adjust-
ments would be made after a new Cost Schedule was prepared.

SCHEDULE OF ESTIMETED COSTs.
D i s t r i bºuTtTito n,
Article.
---
---
T. TT
H
Total ||Meterial || Labor Indirect.
A 2 |83 1 83 50 50
B 3 #50 2 : 00 75 75
C 4 |32 2 30 191 101
D 5 20 2 70 125 25
E 6 OO 3 OO 150 15C
F. 8 25 4 25 200 200
G 11 OO 5 OO 3CO 3OO
|
Form 52 – Page 302.
(See also paragraph 2 - page 167).

INVENTORY SHEE".
Jenuary 1, 1915.
Form 61 - Page 312.
(See also page 167).
D 1 s t r i b u t i o n.
- Total, Materiel, Labor. Indirect.
Article tity Rat Amount-Rate–LAmou Rete. Amount *** *
A 500 2.82 1415 loo 1.83 915 bo , 50 250 loo! .50 250 00
B 450 3.50 1575 00 2.00 900 OO . . 75 337 50 75 337 50
C 499 4.32 1728 00 2.30 920 00 1.01 404 100 1.01 404 |00
D 350 |5. 20 1820 00 2,70 945 OO 1, 25 437 |50 l. 25 437 £3.
E 300 5.00 1800 00 3.00 900 OO 1, 50 450 |OO 1, 50 450 CO
F 250 (8.25 2062 (50 |4. £35 1062 50 2.00 500 OO 2.00 500 OO
|- 10400 50 56.42 50 2379 CO 2379 OQ
I, l L 2 L 3 I, 4

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INVENTORY SHEE. January 1, 1915.
D i s t r i b u t i o n.
Total Ilaterial Labor Indirect
Article Quantity Rate. Amount Rate Amount Rate Amount Rate Amount
400 2.83 1132|OO 1.83 732 00' .50 200 OO .50 sºlº
600 3. 50 2100; OQ 2.00 1200 OO .75 450 OO .75 450; OO
500 4, 32. 2160 #: 1150 OO 1. O1 505 OO 1.01 505 OO
O
i
300 8.25, 2475 00. 4.25 1275 00 2.00 600 00 2.00 6OO OO
200 lll .00 2200 OOH 5.00 1000 0013.00 600|00 3.00 60000
- 1OO67 OO 5357 OO 2355 OO sºlº

J O U R N A L.
Sundries to Balancing Account . . . . . . . . . . . . . . . . . . .
Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,300.00
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,975.00
Indirect Expenses . . . . . . . . . . . . . . . . . . . . . . . . . , 13,500.00
(Expenditures January 1 to March 31, 1915).
--- ooo---
Balancing Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $61,950.00
To Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Sales for three months ended March 31, 1915)
Style A . . . . 3000 . . . . $10,500.00
" B . . . . 2500 . . . . ll, 250.00
rt C . . . . 2000 . . . . 10,000.00
" D . . . . 1500 . . . . 9,000.00
-- E . . . . 1000 . . . . 7,000.00
F . . . . 800 . . . . 7, 200.00
-- G . . . . 500 . . . . 7. OOO. OO
Total - - - - - - - - - - - - - - - - - 5EI IGEONOO
rt
--- oſ)o---
Sales to Sundries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,328.50
Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indirect Expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Adjustment of Inventories).
--- oQc---
Sales - - - - - - - - - - - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . # 6,841.50
(To close account ).
--- odo---
$54,775.00
$61,950.00


$ 6,841.50
---
1915.
Mar. 31
31
1915.
Jan. 1
Mar. 31
Apr. 1
1915.
Tian. 1
Mar. 31
Apr. 1
1915.
Jan. 1
Mar. 31
Mar. 31
- 8 -
I, E D G E R.
B A L A N C I N G
-------
A C C O U N T.
1915.
Sales . . . . . . . . . . . . . . . J. $61,950.00 Jan. l Inventory . . . . . . . . . . . . . . . . . IS
Balance . . . . . . . . . . . . . W 10,067.00 Mar. 31 Expenditures . . . . . . . . . . . . . . J
31 Gross Profit . . . . . . . . . . . . . . J
$73, CITICO -
- Apr. 1 Balance . . . . . . . . . . . . . . . . . . V
M. A. T E R I. A. I.
1915.
Inventory . . . . . . . . . . . I.S. $ 5,642.50 Mar. 31 Cost of Sales . . . . . . . . . . . . . ACS
Purchases . . . . . . . . . . . J. 28, 300.00 31 Adjustment . . . . . . . . . . . . . . . . J
31 Balance . . . . . . . . . . . . . . . . . . . V
33 5
Balance . . . . . . . . . . . . . V ; ####
I, A B O R.
1915.
Inventory . . . . . . . . . . . I.S. $ 2,379.00 Mar. 31 Cost of Sales . . . . . . . . . . . . . ACS
Expenditures . . . . . . . . J. 12, 975.00 31 Adjustment . . . . . - - - - - - - - - - - J.
31 Balance . . . . . . . . . . . . . . . . . . . V
3 OO
Balance . . . . . . . . . . . . . V ; ;
I N D I R. E. C. T E X P E N S E.
1915.
Inventory . . . . . - - - - - - I.S. $ 2,379.00 Mar. 31 Cost of Sales . . . . . . . . . . . . . ACS
Expenditures . . . . . . . . J. 13,500.00 31 Adjustment . . . . . . . . . . . . . . . . J.
31 Balance . . . . . . . . . . . . . . . . . . . W
5, 879
Balance . . . . . . . . . . . . . / ,355.00
$10,400.50
54,775.00
$28,040.00
545.50
5,357. CO
33 942. 5
$11,870.00
1, 129.00
2. 355. OO
l , CO
$ll, 870.00
1,654.00
2 355. OC
$15.57 jº

– 9 –
L E D G E R (CONT*D).
S A L E S.
1915. - 1915.
Mar. 31 Cost of Sales . . . . . . . ACS $51,780.CO Mar. 31 Sales . . . . . . . . . . . . . . . . . . . . J. $61,950.00
31 Adjustment of Cost of
Sales . . . . . . . . . . . ... J. 3,328.50
31 Balancing Account . . . J. 6,841.50
#5i, 35 ºf 950. OO
- 10 -
T R I A L B. A. I. A N C F.
March 31, 1915.
Balancing Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,067.00
Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,357.00
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,355.00
Indirect Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,355.00
$10,067.00 $10,067.00

TWENTY-FIRST SESSION.
QUIZ AND DISCUSSION ON PREVIOUS TECTURE
And Problem 8.
CLASS WORK ON PROBLEM 10.
ASSIGNMENT FOR HOME STUDY; -
Problem 10 to finish.
COST AUCOUNTINC (Problem 10)
ESTIMATING COST SYSTEM (Second Plan).
verification of Estimates on each class of Product
According to Classification of Material used in Departments
only of material, labor and indirect expense.
And the Departmental Labor and Indirect Expense.
In the previous problem the estimates were based on totals
This problem is supposed
to represent a concern who desires a furthor and more detailed classi-
fication of their costs from an estimating standpoint.
All the accounts
are contained in one ledger.
The complete trial balance of the books as on April 1, 1915
showed the following:-
Cash . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - . . . $12,000.00
Accounts Receivable . . . . . . . . . . . . . - - - - - - - - - - - 20,000.00
Inventory . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - ... 10,067.00
Machinery & Tools . . . . . . . . . . . - - - - - - - - - - - - - - . 25,000.00
Accounts Payable . . . . . . . . . . . . . . . . . . - - - # 6,000.00
Capital . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - 61,067.00
The Inventory at April 1, 1915 was classified as follows: -
Material. Labor.
Article. Dept. 1 Dept. 2. Dept. l. Dept. 2. Indirect Total-
A # 300.00 & 200.00 $ 120.00 # 80.00 200.00 $ 900.00
B 700. OO 2OO. OO 300. OO 150.00 450.00 1,800.00
C 500. OO 350. OO 300. Oſ) 205. OO 505.00 l,860.00
F 450. OO 400. OO 375. OO 225. OO 600. OO 2,050.00
G 275. OO 175. OO 350. OO 250. OO 600.00 l, 650.00
Raw Material --- - - - - - - --- - - - 1,807.00
Total
Article.
#2, 225.00 $1,325.00 $1,445.00 $910.00 $2,355.00 $10,067.00
A schedule of Estimated Costs was prepared as shown below:-
Material. Labor.
Dept.I. Dept. 2. Dept. TI. Tept. 2. Indirect Total.
l.04 .86 . 33 - 22 .6l 3, O6
1.56 , 52 . 55 . 28 . 91 3. 82
1. 35 1.04 . 66 .45 1.22 4. "2
2.08 . 73 .83 . 55 1.52 5. 71
2. O8 l.04 - 99 . 66 1.82 6.59
2. 34 2.08 1. 38 . 83 2.43 9. O6
3. 12 2. O8 1.98 1. 38 3. 64 12. 20

The inventory under the classification of Article is intendod
to cºver Goods in Process of Manufacture and Finished Stock. The raw
material is handled separately.
It is proposed to keep accounts in the ledger and group the
sales according to the following classification; A & B being known as
Sales Classification S-l; C, D & E as S-2 and F & G as S-3, a Ccounts
being opened in the ledger accordingly.
The oxponditures for the nine months were as follows:-
Raw Material . . . . . . . . . . . . . . . . . . . . . . $59,070.00
Labor-Operating Dept. #1 . . . . . . . . . . 15,637.00
Labor-Operating Dept. #2 . . . . . . . . . 10,081.00
Indirect Expenses, per Schedule . . 26, 321.00
Selling Expenses, per Schedule ... 10,250.00
The following items are to be shown in the Purchese Journal
as they are usually entered in a record of this character.
Raw Material.
Supplies.
Repairs and Maintenence.
Rent.
Taxes.
Insurance.
Light, Heat & Power
Stationery & Printing.
Advertising.
Freight, Express & Cartage-Inward.

The tºtal, as shown by the Purchase Journal, should then be
posted to a controlling account for accounts payable and the details
charged to the classification affected.
The item of
- depreciation is to be taken care of by means of a
journal entry. -
All of the other items are to be hendled through the cash ac-
ºntº this account being journalized for posting into the ledger. In
addition to the cash item mentioned, the collections for accounts re-

ceivable amounted to $110,990.90 net &nd payments were made for accounts
payable amounting to $65,000.00.
A cash accºunt should be opened in the ledger beginning with
the amount shown ch the cpening triai balence.
º
4
A summary of the bills of meterial for the nine months ended
December 31, 1915 showed the following: -
Quantity. Quantity.
Article. Dept. I. DSEt. 3.
A 4,000 4,000
B 3,000 3,000
C 5,000 5,000
D l,000 1,000
E 2,000 2,000
F 1,500 1,500
G 2,500 2,500
From this schedule the information will be obtained for
charging the classifications affected and crediting the materiel taken
out of the raw material stock.
The sales for the nine months ended December 31, 1915 Were
as follows: -
Article. ºuentity. Rate.
A 4,900 $3.80
B 3,100 4. 60
C 4,950 5, 60
D 22O 6.30
E 2,010 8. OO
F 1,475 10.00
G 2,505 14.00
The actual inventory taken as on December 31st showed the
following:-
Raw Material on Hand . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - $6,215.00
Gnods in Process:
Material. LC. bor.
Dept. TT. T.Dept. 2. Dept. Trept. 2. Overhead.
A $ 250.00 & 175.00 : 110.00 : 70.00 § 198.00
B 550, 00 225.00 250, 00 100.00 385. OC
C 450. OO 300. OO 225.60 175.00 440.00
D £75.06 175. OO 175. OO 75, CO 275. OC
E 125. OO 80. OO 75, to 35.00 121.00
F 500. OO 275. OO 210. Oſ) lº 5.00 412.50
G 300.00 165. Of 200. Of 125. OO 357.50


$2,450.00 $1,395, on 1,245. On 745.60
£2,130.00
_
-----------

The forms required in this problem are as follows: -
Inventory Record
Schedule of Estimated Costs
Analysis of Cost of Sales
Purchase Journal
Bill of Material
Pay-Toll Analysis
Profit & Loss.
The forms for the schedule of estimated costs, inventory
record and analysis of cost of sales will be of the same character
as the forms used in the previous problem excepting that they will have
i. be modified and changed to show the details as required by this prob-
eIII -
For the Purchase Journal a form Similar to form 6 in the Text
Book may be modified and changed to meet the requirements.
A Bill of Material similar to #23 in the Text Book mey be used
or, if desired, it may be changed to cover both operating departments on
one sheet.
The Analysis of Pay-Roll could be a form similer to #38 in
the Text Book.
The Profit & Loss form should be a form similar to #68 in the
Text Book omitting the column for administrative.
After the books have been closed a Balance Sheet should be
drawn up.
All forms in this problem should be drawn up and filled out.
- 5 -
SCHEDULE OF INDIRECT FXPENSES.
Labor-Indirect . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - $ 9,125.00
Factory Supplies . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - 2,312.50
Light, Heat & Power . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - 3,312.50
Supervision - Salaries . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - 6,125. OO
Freight, Express & Cartage - Inward . . . . . . . . . - - - - - - - - - - - - - 187.50
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - 1,375. OO
Meintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - 250. OO
Repairs . . . . . . . . . . . . . . . . . - - - - - - - a - - - - - - - - - - - - - - - - - - - - - - - - - 633.50
Factory Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - 2,500.00
Taxes - Factory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - 125. OO
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - _375.00
Total . . . . . - e - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $26,321.00
---
--
SCHEDULE OF SELLING EXPENSES.
Salaries - General . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ 5,750.00
Telephone & Telegraph . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 125.00
Stationery & Printing . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - 125. OO
Postege . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 187. 50
Legei Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - 62.50
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250.00
Traveling Expenses . . . . . . . . . . . . . . . . . . . . . . * - - - - - - - - - - - - - - - - 2,500.00
Advertising . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - l, 250.00
Total . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - $10,250.00
-
-
S O I, U T I O N - P R O B L E M 10.
EXPLANATION OF SOLUTION
AND
COURSE OF PROCEDURE.
The following explanation of the Journal Entries and forms
are given in the order postings are to be made, all journal entries
having been numbered for convenience in referring to them.
Journal, ENTRY No. 1:-
This is the opening entry and places upon the books the Assets
and Liabilities of the firm as of April 1, 1915.
INVENTORY RECORD: -
The Inventory Record gives the detail for the item $10,067.00
in the opening entry. Postings are made to the Overhead, Raw Material
and Department Accounts as shown and the total is credited to the Inven-
tory Account.
JOURNAL ENTRY No. 2: —
This entry is made for the purpose of recording the cash re-
ceived from customers. Information of this character would as a rule
be obtained from the Cash Book.
JOURNAL ENTRY No. 3: —

In this entry the sundry accounts are cherged and cash credited
in aggregate with the disbursements which in regular process of business
Would be posted from the credit side of a cash book from day to day or
at the end of each month when special columns are used. The detail for
the Labor and Salaries is first made up on the pay-roll form and a check
drawn for the total amount. This is charged to the accounts affected
directly from the cash book as shown, no postings in this case being made
from the Pay-Roll form. It would be quite proper, however, to charge
the full amount of the pay-roll check to a Pay-Roll account. In this
instance postings would be made from the Pay-Roll form to the debit of
the Labor and Salary accounts end the total credited to the Pay-Roll ac-
count, thus balancing same.

JOURNAL ENTRY No. 4 : —
The reserve created through this entry can be shown on balance
sheet under the liabilities or handled as a deduction from the asset
value of tho Machinery and Tools.
PURCHASE JOURNAL:-
The figures shown indicate the total invoices for goods pur-
chased and expenses incurred under the different captions. In actual
practice the detailed entries would show the transactions with each
creditor, the totals of the various columns being obtained at the end
of the month.
SUMMARY OF BILLS OF MATERIAL:-
This record represents the total amount of goods manufactured
during the period under all classifications as called for on Fectory.
(or Production) Orders. See form 13, page 256, issued from time to
time. The rates per the Estimated Cost Schedule are used for estimating
the material used. The total is credited to Raw Material Account and
the departments are charged with their respective portions per schedule.
SALES AND COST OF SALES:-
This schedule is made from the sales book, all invoices being
analyzed. The total sales are debited to " Accounts Receivable" and each
sales classification is credited with its respective seles. The Classi-
fied Sales Accounts are then debited with the cost of sales and the Ma-
terial, labor and Overhead accounts credited with the emount contribu-
ted by each per the estimated cost schedule rates.
JOURNAL ENTRY No. 5: –
Just as the Department Material Accounts are charged with the
material used and the Department Labor accounts with the cost of labor,
the Overhead Account is now debited with all indirect expense items and
the latter detailed as counts are belanced.
JOURNAL ENTRY No. 6: -
This entry is made so as to facilitate the charging of each
Department Sales Account with the respective percentege of the total
selling expenses.
JOURNAL ENTRY No. 7: -
It will be seen that the cost of sales of each sales depart-
ment bears the following relation to the total cost of sales:-
Dept. S-l 24.7%
* 5–2 34.9%
" s–3 40.4%
Total 100.0%
The distribution of the Selling Expenses are made on this basis.
JOURNAL ENTRY No. 8:-
The balance of each Department Sales Account now represents
the Net Profit of that department. Through this entry they are brought
into the Profit & Loss Adcount. -
JOURNAL ENTRY No. 9:-

Were the Schedule of Estimated Costs absolutely correct, the
balances of the Raw Material Account, Department Material Accounts,
Department Labor Accounts and Overhead Account would correspond exactly
with the inventory as on December 31, 1915. This, however, is not the
condition in this problem and the adjusting entry becomes necessary to
bring these accounts into agreement with the physical inventory. The
net difference represents either a profit or a loss and is credited or
debited to the Profit or Loss Account as the case may be. At the end
of the period the differences above mentioned, if too great, indicate
that the schedule requires revision. In this entry it will be noted
that all the adjustments may be termed reasonable with the exception
of the Overhead. This rate proved too high and, in the schedule of Es-
timated Costs for the following period, attention should be given to
the changing of this element of cost.
NOTE: –
The actual ending inventory at March 31, 1915 was valued in
accordance with the estimated costs as shown by the Cost Schedule. As
these costs were found to be incorrect, the inventory values would have
to be adjusted and adjusting entries would have to be made so that the
records would show more accurate inventory values. These adjustments
would be made after a new cost schedule was prepared.
J. E. No. 1:
$12,000.00
20,000.00
10, O67.00
25,000.00
J. E. No. 2:
$110,000.00
J O U R N A L.
April, 1915.
l.
Sundries to Sundries:
L. 6 Cash
L. 2 Accounts Receivable
L. 31. Inventory
L. 4 Machinery & Tools
Accounts Payable
Capital
(To open accounts).
Per Trial Balance as on this
date.
---ooo---
December
31.
L. 6 Cash
To Accounts Receivable
(Cash Receipts for nine months
ending December 31, 1915).
---oOo---
L. 3 # 6,000.00
L. l 61,067.00
L. 2 $110,000.00

J. E. No. 3:
# 65,000.00
15,637.00
10. O81. OO
9. 125.00
6. 125. OO
5, 750. OO
125.00
187.50
62.50
250.00
2,500.00
-
-
-
-
J. E. No. 4:
# 1,375.00
J. E. No. 5:
$ 26, 321.00
-----------
22
. 12
J O U R N A L (CONT'D).
Sundries to Cash
Accounts Payable
Dept. 1 - Labor
Dept. 2 - Labor
Indirect Labor
Salary - Supervision
Salary – General
Telephone & Telegraph
Postage
Legal Expense
Commission
Traveling Expense
(Cash Distribution for nine months
ending December 31, 1915.)
---oCo---
Depreciation
To Reserve for Depreciation
(For nine months ending December 31, 1915. )
---oCo---
Overhead
To Sundries:
Factory Supplies
Repairs & Maintenance
Freight, Express & Cartage-Inward
Rent
Taxes
Insurance
Light, Heat & Power
Indirect Labor
Salaries-Supervision
Depreciation
---ooo---
L.
L.
L.
L.
L.
L-
L.
I.
L.
L.
L.
6
$114,843.00
5 § 1,375.00
13 # 2, 312.50
14
15
16
17
18
19
2O
21
22
883. 50
187.50
2,500.00
125.00
375. OO
3,312.50
9, 125.00
6, 125. CO
l, 375.00
J. E. No. 6 :
$ 10,250.00
J. E. No. 7:
# 2, 531.75
3,577.25
4, 141.00
J. B. No. 8:
$ 3,512.25
3, 742.65
1, 754.50
L., 32
L. 33
L. 34
L. 32
L. 33
L. 34
J O U R N A I, (CONT*D) .
Selling Expense
To Sundries:
Commission
Traveling Expense
Stationery & Printing
Salaries – General
Telephone & Telegraph
Postage
Legal Expense
Advertising
---ooo---
Sundries to Selling Expenses
Dept. S-1 ( 24.7%)
ty S–2 ( 34.9%)
11 S-3 (40.4%)
(Distribution of Selling Expenses on a
basis of Material, Labor and Indirect
Charges).
---ooo---
Sundries to Net Profit
Dept. S-l
Dept. S-2
Dept. S-3
(Net Profit of each department per
balances of Department Sales Accounts).
---ooo---
L. 23
L. 24
L. 25
L. 27
L. 28
L. 29
L. 30
L. 26
C. 36
$ 250.00
2,500.00
125. CO
5,750.00
125,00
187.50
62.50
l, 250.00
$ 10,250.00
$ 9,009.40
J. E. No. 9:
$
243. 40
56.25
2,057.05
J O U R N A I, (CONT*D).
Sundries to Sundries:
L. 9 Dept. 2 – Material
L. ll Dept. 2 - Labor
L. 12 Overhead
Raw Material
Dept. 1 - Material
Dept. 1 - Labor
Profit & Loss Account
(Adjustment of Inventories).
---oOo.---
L.
L.
L.
L.
7 :
8
10
36
192. OC
395.00
80.10
1,689.60

SCHEDULE OF ESTIMATED COSTS.
- | Material Labor Indi-
Article Dept.1 Dept.2"Dept.1 Dept. 2 rect || Totel
I rt- - - -T t
| . i | - º - :
i º - - # | -
A | 104 86. 33 22 61 doe
|
B 156 52 55 2d 91 due
º ! i
C | 135 104 66 45 l 22, 472
- .
i :
- D 2C8 73 83 55 1 52, 57.1
i -
F. 208 104 || |9: 66 1 82 659
!
F 234 208 || ||3: 83 2 43 906
|
G #12 * 1 98 1 38 3 64; 1320
|
|
H | :
| H |
- | |
H-H----
|--|--|--|--|--|-- --- i
- +==== -:
Form 52 – Page 302 (Modified to
meet requirements of problem).

P U R C H A S E J O U R N A L.
- Name of Ray º [Insur - Sundry Accounts
Date | Credit or Folid Total Material Supplies tenancé Rent Taxes ance Name Fblio. Amount
Dec. 31 59070 OG 5907000 -
2312. 5d 231250
25O OC - 25000
633, 5C 63350
2500 OO 2500 OC
125 OO 12500
375 00 375 OO
3312|| 50 Light,
Heat &
POWer L. 19 331250
125] CO - Stationery
& Printing L. 25 | 12500
1250 00 Advert is —
t ing L. 26 125OOO
187 50 Freight,
Express &
Cartage-
- Inward L. lb 187:50
701.41 OO 5507000 231250 8.8350 |2500 OO 1250oſ375po 4875OO
—
T. 3 L - 7 L. 13 L. 14 L. lé, L. 17 L. 18 V
Form 6 - Page .246 (Modified tº meet requirements of Problem).

PAY ROLL.
For the period ending December 31, 1915.
|
Operating Operating t
Department Department Indirect Super- Office
No. Name. Amount No. 1. No. 2. Labor. vision | Salary:
Labor-Dept. 1, 15637|00 15637 00
Labor-Dept. 2 10081 00 10081 OO
Indirect La-
bor 9125 OO 912500
Supervision 6125 OO 6125 (OO
Salaries- -
General 5750 OO 5750 OO
46718 OO 15637 [OOT 10081 [OOT 91.2500|6125 OOT #750 00
Form 38 - Page 286 (Arranged for two operating departments).

s U M M A R Y - B I L L S o F M A. T E R T A L.
Material
Dept. 1. Dept. E. Total
Quan-
Article tity Rate Amount Rete Amount Rate Amount
A. | 4000 | 1.04 || 4160 00 .86 3440 001.90 7600 00
B 3OOO | 1.56 4G80 OO . . 52 1560 OO 2.08 6240 00
- C 5000 | 1.3 6'50 OO 1.04 52OO OO 2.39 11950 00
D 1OOO 2. O8 2080 (OO . , 7.3 730 OO 2, 81 2810 OO
E 2000 2. C8 416O |OO | 1. Q4 2080 00 3; 12 6240 00
F. 1500 2.34 3510 |OO 2.08 312C OO 4.42 6 630 OO
G
|
2500 3. 12 780O OO 2. O8 52OO poſs to 13OOO OO
|
33140 loo 21330 OO 54,470 00
| ---
L. 8 L. 9 T. 7
Form 23 - Page 269 (Modified to meet requirements of problem).

- A N A. L. Y S I S. O. F. S. A. L E S & G O S T 0 F S A L E S. -
i., SALES. -- COST OF SAT,ES. -------
Ar- Material. Labor.
|ti- || No Total – -
cle Sold|Rate Sales Dept. 1. Dept. 2. Dept. 1, Dept. 2. Indirect || Totals
| -
|- Amount Rate. Amount Rate Amount || Rate Amount Rate. Amount Rate. Amount || Rate Amount_
aſs 4900 |3.80 18620 00 1,04 5096 OO . 86. 4214 OO .33 1617 OO .22 1078. OO .. 61 2989 OO 3.06. 14994 |00
| " (B 3100 4.60. 14260 oq1.56 4836 OO .. 52 1612 OO .55 1705 OO .28 868 OO . 91 2821 OO 3.82 ll:342 OO
-
..!? 4.3595-69| 2772000. 1.35| 66825o 1.04 5.14sloo .66 3267|ool .45 2227 soli.22 goggloo 4.72 23364 |QQ
2 (D 220 |6.30 l386 OO 2. O8 457 6O) . 73 16O 60|| . 83 182 60 - 55 121 OO }l. 52 334 40; 5. 71 1256 20
(*|2010|8.00 1605666||3.öä 4136||3|1.6%. 23.5% .33| 1335|33 || 13% gºi.; 33.5%; ; ; 133.5%
3% 1475 10.00 la 750 00 2.34 3451 50 2.08: 3068 OO 1.38 2035, 50 . 83 1224|25 || 2.43. 3584 25||9. O6. 13363 50
| (G|2505 ha.00 35070|00 3.12| 7815|60 2.08 521.0|40||1.98 || 4959, 90 l. 38' 3456 90|3.64 9118 2012.20 30561 |OO
|- 127886 OO 3252O OO 21503 || 40 15756 90 LO3O2 25 285.44 O5 | 108626 60
Sales Account T-
l (A B) L 32 32880 |OO 9932 |OO 5826 OO 3322 OO 1946 OO 5810 00. L. 32 26836 OC
Sales Account
2 (C D E) L
33 451.86 |OO 11320 90 739.9 OO 5439 50 36.75 | LO 1CO31 |601| L. 33 37866 LO
Sales Account
| 3 (F G) L 34 4982O |OO 11267 |10 8278 |40 6995 |40 4681 15 12702 |45|L. 34 43924 50
e _|127886 |00 32.520 OO 21503 |40 I5756 90 1O3O2 25 285.44. Of 108626 60
L. 2 L. 8 L- 9 L- 10 L. ll L. 12
Form 65 - Page 319 (Modified to meet requirements of problem).
sº Triſºn” or PROFIT AND Loss.

For the – ending— 19
Depart S A L E S Gross Profit Selling Expense Net Profit
ments. Amoun Cost Amount % Amount ſº Amount | }
S - 1 32880 |OO 2.6836. OC - 6044 OO 2531 75 3512 25
S - 2 451.86 OO 37.866 10 7319; 90 2577 25 3742 65
s — 3 || 49820 loo! 42924, 5d 5895 50 4141 100 1754 50
| 9009 40 ſ
| |
- | i |
|
!
|
Adjust- --
ment of ... " '
Inven-
tory 1689| 60
Total. 127886 |OO 108626 60 19259 40 1025O OC 10699 OC)
Approved correct -
Form 68 – Page 322–323 (Modified to meet requirements of problem)


Arti-
cle
INVENTORY RECORD.
|
- Haterial __ Labor. iſ
Dept. 1. Dept. 2. Dept. 1. Dept. 2. Indirect
- T- H
20000
i
45000
.
60000
60000
:
i;
|--
(L.7)
i
i
1800
1860
2O50
1650
-—April 1, 1915.
_Total.
Ra te Amount Rate amount Rate amount Rat e. Amount
| | | | | |
900 00
OO
OO
OO
OO
1807 loo
Rate. Amount Rate. Amount i
-
A soo od 200 00 | 120 00 8000,
i - - : t
B | 700 00 200 OO 300 00 150 OO.
| - º i . | |
C ; 500 00 350 od 300 00 20500
| | - - i
F 450 OC 400 |OO . 375; OO i 22500 |
& 275 QQ 175 00 350. O() 250 oo
i Ma- |
ter— i
ial
i |
|
-F#5Too T1325 loo 1445 100 910 00||
L. 8
Form 61 - Page 312
L. 9
L. 10
L.ll
235590
---
L. l.2
(Modified to meet requirements of roblem).


Account
Account
Balance .
L. F. D. G. E. R.
C A P I T A L.
Apr. 1 Balance . . . . . . . . . . . . . J. $ 61,067.00
---oCo ---
A C C O U N T S R E C E I W A B I, E.
- - - - - - - - - - - - J. $ 20,000.00 Dec. 31 Cash . . . . . . . . . . . . . . . . J. $110,000.00
- - - - - - - - - - - - A of S 127,886.00
---oCo ---
Account
A G C O U N T S P A Y A. B. I, E.
- - - - - - - - - - - - - - - J. $ 65,000.00 Apr. 1 Balance . . . . . . . . . . . . . J. $ 6,000.00
Account
Dec. 31 Sundries . . . . . . . . . . . . P. J. 70,141.00
---oCo ---
M A C H I N E R Y & T O O L S.
............. J. $ 25,000.00
Balance
Account
---oC)o---
R E S E R W E F O R D E → R E C I A T I O N.
Dec. 31. Depreciation . . . . . . . . . J. # 1 375, CO
Account
No. 6 :
Apr. 1
Dec. 31
Account
Balance
- - - - -
- - - - - - - -
Accounts Receivable . .
No. 7 :
Apr. 1
Dec. 31
Account
Inventory . - -
Accounts Payable . . . .
No. 8:
Apr. 1
Dec. 31
Account
Apr. 1
Dec. 31
31
Inventor
No. 9:
D E P A R T M. E. N. T.
D. E. P. A R T M E N T
- - - -
J.
I.R.
P. J.
y
- - - - - - - - - - -
Bill of Material . . . .
I.R.
B.M.
Inventory
Bills of Mate
- -
rial . . .
Adjustment of Inven-
tory . .
- - - -
---oCo---
I, E D G E R (CONT'D)
C. A. S. H.
# 12,000.00 Dec. 31 Sundries . . . . . . . . . . . . J. $114,843.00
110,000.00
---000---
R A W. M. A. T E R I. A. L.
$ 1,807.00 Dec. 31 Bills of Material . . . B.M. $ 54,470.00
59,070.00 31 Adjustment of Invento-
ry - - - - - - - - - - - - - - - - J. 192.00
--- 000 ---
1 - M. A. T E R I. A I, I N P R O C E S S.
$ 2,225.00 Dec. 31 Cost of Sales . . . . . . . C of S $ 32, 520.00
33, 140.00 31 Adjustment of Invertory J. 395, OO
---000---
8 - M A T B R I. A I, I N E R O C E S S.
$ 1,325.00 Dec. 31 Cost of Sales . . . . . . . C of S $ 21, 503.40
21,330.00 - -
243. 40
I, E D G E R (CONT'D).
Account No. 10:
D E P A R T M E N T 1 - I, A B O R I N P R O C E S S.
Apr. l Inventory . . . . . . . . . . . I.R. $ 1,445.00 Dec. 31 Cost of Sales . . . . . . . C of S $ 15,756.90
Dec. 31 Cash . . . . . . . . . - - - - - - - J. 15,637.00 31 Adjustment of Inven-
tory . . . . . . - - - - - - - - J. 80. 10
---ooo---
Account No. 11:
D E P A R T M E N T 2 - L. A B O R I N P R O C E S S.
Apr. l Inventory . . . . . . . . . . . I.R. § 910.00 Dec. 31 Cost of Sales . . . . . . . C of S $ 10,302.25
Dec. 31 Cash . . . . . . . . . . . . . . . . J. 10,081.00
31 Adjustment of Inven-
tory . . . . . . . . . . . . . . J. 56.25
---000---
Account No. 12:
O W E R H E A D I N P. R O C : E S S.
Apr. 1 Inventory . . . . . . . . . . . I.R. # 2,355.00 Dec. 31 Cost of Sales . . . . . . . C of S $ 28, 544.05
Dec. 31 Indirect Expenses . . . J. 26, 321.00
31 Adjustment of Inven-
tory . . . . . . - - - - - - - - J. 2,057.05
---oCo---
Account No. 13:
F. A C T O R Y S U P P L I E S.
Dec. 31 Accounts Payable . . . . P. J. $ 2,312.50 Dec. 31 Overhead . . . . . . . . . . . . J. $ 2,312.50
--- oOo. ---
Account No. 14:
Dec. 31. Accounts Payable
... P.J. §
I, E D G E R (CONT*D).
E P A T R S & M A I N T E N A N C E.
883. 50 Dec. 31 Overhead . . . . . . . . . . . • J.
---OOO---
Account No. 15:
F. R. E. I. G. H. T., E X P R E S S & C A R T A G E - I N W A R D.
Dec. 31 Accounts Payable .... P. J. § l67. 50 Dec. 31 Overhead . . . . . . . . . . . . J.
---ooo---
Account No. 16:
R E N T.
Dec. 31 Accounts Payable .... P. J. $ 2,500.COTDec. 31 Overhead . . . . . . . . . . . • J.
--- ooo---
Account No. 17:
T A X B S.
Dec. 31 Accounts Payable .... P. J. § 125.00 Dec. 31 Overhead . . . . . . . . . . . . J.
---000---
Account No. 18:
I N S U R A N C E.
Dec. 31 Accounts rayable .... P. J. § 375.00 Dec. 31 overhead ..... . . . . . . . J.
$
$
883. 50
187.50
2,500.00
---oſ) or ---
125.00
375, OO
I, E D G E R (CONI : D)
Account No. 49:
L I G. H. T., H E A T & P. O. W. E. R.
Dec. 31 Accounts Payable ..... P. J. # 3,312.50 Dec. 31 overhead . . . . . . . . . . . . J.
---oCo---
Account No. 20: -
I N D I R. E. C. T. L. A B O R.
Dec. 31 Cash . . . . . . . . . . J. $ 9,125.00 Dec. 31 overhead . . . . . . . . . . . . J.
---ooo---
Account No. 21
S a I, A R I E S – S U P E R W I S I O N.
Dec. 31 Cash . . . . . . - . J. # 6,125.00 Dec. 31 Overhead . . . . . . . . . . . . J.
---oCo---
Account No. 22:
D. E. P. R. E. C. I. A Tº I O N.
Des. 31 Reserve . . . . . . . . . J. $ 1,375.00 Dec. 31 overhead . . . . . . . . . . . . J.
---ooo---
Account No. 23:
C O M M I S S I O N.
Dec. 31 Cash . . . . . . . . . . J.- $ 250.00 Dec. 31. Selling Expense . . . . . J.
3,312.50
9,125.60
6, 125.00
1,375.00
---ooo- --
250. OC
Account
Dec. 31
Account
Dec. 31
Account
Accounts Payable . . .
No. 26:
Dec. 31
Account
Dec. 31
Account
Accounts Payable . .
Dec. 31
I, E D G E R
(CONT*D)

E X P E N S E.
Dec. 31. Selling Expense
---ooo---
S T A T I O N E R Y
- - - - - - - - - -
. P. J. §
125. OO
&
Dec. 31 Selling Expense
P R I N T I N G.
---oCo---
A D W E R T I S I N G,
. P. J. §
1,250.00
Dec. 31. Selling Expense
---ooo---
S A I, A R I, E. S
J. $
5,750.00
-
Dec. 31. Selling Expense .
G E N E R A L.
---oCo---
T E L E P. H. O. N. E.
§
125.00
&
Dec. 31 Selling Expense
T E L E G R A P H.
---oOo.---
-
- - J.
§
$
$
$
2,500.00
125. OO
l, 250.00
5,750.00
- - - J.
125.00
I, E D G E R (CONT'D).
Account No. 29:
P O S T A G E.
Dec. 31 Cash . . . . . . . . - - - - - - - - J. $ 187.50 Dec. 31 Selling Expense . . . . . J. $ 187.50
---oCo ---
Account No. 30 :
L E G A L E X P E N S E.
Dec. 31 Cash . . . . . . . . . . . . . . . . J. $ 62.50 Dec. 31. Selling Expense . . . . . J. § 62.50
---oCo---
Account No. 31:
I N W E N T O R Y.
Apr. 1 Balance . . . . . . . . . . . . . J. $ 10,067.00 Apr. 1 Sundries . . . . . . . . . . . . I.R. $ 10,067.00
---oCo---
Account No. 32:
D E E A R T M. E. N. T. S - 1.
Dec. 31 Cost of Sales . . . . . . . C of S $ 26,836.00 Dec. 31 Sales . . . . . . . . . . . . . . . A of S $ 32,880.00
3l Selling Expenses . . . . J. 2,531.75
31 Net Profit . . . . . . . . . . J. 3, 512.25
---oſ)o---
I, E D G E R (CONT'D).
Account No. 33:
D E P A R T M E N T S - 2.
Dec. 31. Cost of Sales . . . . . . . C of S $ 37,866. 10 Dec. 31 Sales ......... - - - - - - A of S $ 45,186.00
31 Selling Expenses . . . . J. 3,577.25
31 Net Profit . . . . . . . . . . J. 3, 742.65
---oCo ---
Account No. 34:
D E P A R T M E N T S - 3.
Dec. 31 cost of Sales . . . . . . . C of S $ 43,924.50 Dec. 31 Sales . . . . . . . . . . . . . . . A of S $ 49,820.00
31 Selling Expenses . . . . J. 4, 14l.00
31 Net Profit . . . . . . . . . . J. 1,754.50
---oCo---

Account No. 35: -
S E L L T N G E X P E N S E .
Dec. 31 Sundries . . . . . . . . . . . - $ 10,250.00 Dec. 31 Sundries . . . . . . . . . . . . J. $ 10,250.00
---ooo---
Account No. 36:
P R O F I Tº & L O S S.
Dec. 31 Department Prof its . . J. $ 9,009.40
31 Adjustments . . . . . . . . . J. l,689.60
---oCo---

Account
No.
B. A. L. A N C E S H E E T.
DECEMBER 31, 1915.
Capital . . . . . . . . . . . . . . . . , - - - - - - - - -
Accounts Receivable . . . . . . . . . . . . -
Accounts Payable . . . . . . . . . . . . - - - -
Machinery & Tools . . . . . . . . . . . . . . .
Reserve for Depreciation . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . .
Inventory:
Raw Material . . . . . . . . . . . . . . . . .
Material - Dept. 1 . . . . . . . . . . -
Material - Dept. 2 . . . . . . . . . . .
Labor - Dept. l - - - - - - - - - - - - - -
Labor - Dept. 2 . . . . . . . . . . . . . .
Overhead . . . . . . . . . . . . . . . . . . . . .
Profit & Loss Account (Net Profit
Total . . . . . . . . . . . . . . - - -
- - - - - - - - -
$6,215.00
2,450.00
l, 395.00
l, 245.00
745. OO
2. l89.00
- - - - - - -
$61,067.00
$37,886.00
- ll, 141.00
25,000.00
1,375.00
7, 157.00
14,239.00 -
10.699,00

$84,282.00 $84,282.00


B. A. L. A N C F. S. H. B. B. T.
DECEMBER 31, 1915.
ASSETS : —
Cash . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - . . . . $ 7, 157.00
Accounts Receivable . . . . . . . . . . . . . . . . . . - - - - - - - - - 37,886.00
Inventory:
Rºy Mºtºrial . . . . . . . . . . . . . . . . . . . . . . $6,215.00
Material - Dept. l - - - - - - - - - - - - - - - 2,450.00
Material - Dept. 2 - - - - - - - - - - - - - - - l, 395.00
Lab or - Dept. l • * * * * * * * * * * * * * * * * * 1,245.00
Labor - Dept. 2 - - - - - - - - - - - - - - - - - - 745.00
Overhead - - - - - - - - - - - - - - - - - - - - - - - - - 2.189-00 14, 239.00
Machinery & Tools . . . . . . . . - - - - - - - - - - - - - - - - - - - - - 25,000.00
Total Assets . . . . . . . . . . . . . . . . . . . . . . .
* LIABILITIES: -
* ========
Accounts Payable . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - $ll, 141.00
Capital . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - ... 61,067.00
Reserve for Depreciation . . . . . . . . . . . . . . . . . . . - - - 1,375.00
Surplus, per Statement of Profit & Loss . . . . . . . 10.699. OO
Total Liabilities . . . . . . . . . . . . . . . . . . .
$84,282.00
$84 282.OO


TWENTY-SECOND SESSION.
REVIEW OF PROBLEM 9.
INTRODUCTION OF PROBLEM 11:
CLASS WORK ON PROBLEM ll:
To be worked out in class room only.
TWENTY-THIRD SESSION.
REVIEW OF PROBLEM 10.

TWENTY-FOURTH SESSION.
CLASS WORK ON PROBLEM 11.
TWENTY-FIFTH SESSION.
CLASS WORK ON PROBLEM ll.
TWENTY-SIXTH SESSION.

CLASS WORK ON PROBLEM ll.

C O S T A C C, O U N T I N G - P R O B L E M ll.
SPECIAL ORDER SYSTEM
BASED ON THE PRODUCTIVE LABOR METHOD.
The Balance Sheet of the Jones Manufacturing Company showed
the following items at January 1, 1914: -
Cash . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - # 18, 188.70
Notes Receivable . . . . . . . . . . . . . - - - - - - - - - - - - - 7, 130.43
Accounts Receivable . . . . . . . . . . - - - - - - - - - - - - - 7, 548.77
Finished Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,313. Ol
Work in Process . . . . . . . . . . . . . . . . . . . . - - - - - - - 658. O6
Raw Material . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - 45,307.79
Plant Account . . . . . . . . . - - - - - - - - - - - - - - - - - - - - 47,471.05
Notes Payable . . . . . . . . . . - - - - - - - - - - - - - - - - - - - $ 25, 848.91
Accounts Payable . . . . . . . . . . . . - - - - - - - - - - - - - - 7,316.21
Surplus . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 19,452.69
Capital . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - 100,000.00
º Total . . . . . . . . . . . . . . . . . - - - - - - - - - - $152,617.81 $152,617.8l
Complete stock records for the Raw Material and Finished Stock
were kept and a classification of the inventory showed that the follow-
ing articles were on hand at January 1, 1914:
RAW MATERIAL:
Material
Quantity. Cost. Classification.
23,646 $11,841.50 800
34, 713 21,022.62 340
15,033 12,073.62 410
3.96 370. O5 127
FINISHED STOCK: -
Article. Quantity. Amount.
A 150 $ 8,420.16
B 192 14, 735.29
C 32 2,894.43
D l 263. 13
º

Production Orders were issued to the Factory for the following
articles:
1005 of Article A
1724 ſt n B
321 11 r1 C
4. ºr º D
The forms used for recording these instructions and informa-
tion were a combination Production Order & Cost Sheet.
In order to complete these production orders it was necessary
to order additional material. Therefore proper purchasing instructions
and orders were placed for the following material:
Material
Classification. Quantity. Price.
800 120,000 -50
340 215,000 .60
410 32,000 .80
127 3,000 . 90
During the month all material which had been ordered was re-
ceived and the Reports of Material Received were prepared and attached
#. the invoices for entry upon the stock records and Accounts Payable
ouchers.
The following shows the details of the material received to-
gether with the direct charges for freight. The prices shown upon the
Purchase Orders were assumed to be correct.
MATERIAL. RECEIVED: -
Material
Classification. Gross. Tare. Net-
800 120,050 50 120,000
340 215, 100 1OO 215,000
4LO 32, C25 25 32,000
127 3,005 5 3,000
The freight upon this material was as follows: -
Material
Classification. - Charges.
8OO $ 600.00
340 l, 200.00
410 100.00
127 - 100.00
These freight charges being added to the original material
cost will make the total cost $219,360.00. A rate per unit should be
established for charging the material into process and for stock taking
purposes.
All expenditures were distributed and, entered upon Accounts
Payable Vouchers. These vouchers were recorded according to date and
number in a Register of Accounts Payable which was so designed so as to
facilitate the postings to the accounts affected.
The Register of Accounts Payable showed the expenditures for
the month to be as follows:
Raw Material . . . . . . . . . . . . . . . . . . . . . - - - - - - - ... . . . . . . . . . . . $217,300.00
Raw Material - Freight & Cartage . . . . . . . . . . . . - - - - - - - - - - 2,000.00
Supplies . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 410.63
Repairs & Maintenance . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - 2,279.72
Insurance . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 769.88
Water Rents . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 517. 55
Productive Labor . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - 14,127.53
Indirect Labor . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,607.40
Superintendent & Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,452.25
Taxes . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - -------- 716.26
Stationery & Printing - Factory . . . . . . . . . - - - - - - - - - - - - - - 233, 88
Telegraph & Telephone - Factory . . . . . . . . . . . . . . . . . . . . - - - 49. 97
Light, Heat & Power . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - ---- 6,908.36
Salary - General, Office & Salesmen . . . . . . . . . . . . . . . . --- 26,001.65
Printing, Stationery & Postage - General Office . . . . . . . 1,604.89
Legal Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13.68
Light & Heat - General Office . . . . . . . . . . . . . - - - - - - - - - - - - 1,034.69
Telephone & Telegraph - Office . . . . . . . . . - - - - - - - - - - - - - - - 686.8l.
Commission . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 5, 617.95
Traveling . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7, 137.93
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - 22,379.29
General Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - 3,317.36
Collection . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 404.22


Total Expenditures . . . . . . . . . . . . . . - - - - - - - - - - - - $323, 171.90
-- - 4 -

Depreciation amounting to $4,747.10 is entered through the
journal and same is considered to be an indirect manufacturing expense.


The Pay-Roll was compiled upon a form similar to Form 39 be-
fore same was attached to the Accounts Payable Voucher. All direct and .
indirect workers as well as the supervision labor were properly entered
and classified upon this Pay-Roll form.

In this problem it is assumed that the time reports showed
the total quantity produced as well as the Pay-Roll information and the
reports showed that the production order was completed.


The material requisitions for the month were summarized and
this summary showed that the following material had been issued from
the Raw Stock Room and had been delivered to the operating departments
of the factory.
Product;
Chargeable. Article. Quantity. Amount.
A. 800 119, 707 $ 60,452.24
B 340 174,688 105,791.42
C 410 25,875 20,780.46
D 127 2,024 1,889.13

The entire amount of productive labor for the month as
entered upon the Register of Accounts Payable was charged to work in
process. The indir egt manufacturing expenses chargeable to work in
process amounted to $25,693.00.

The summary of all the production reports showed that the
following articles were produced. In ascertaining the total cost of
the articles produced it will be necessary to include the indirect
manufacturing expenses as part of such cost. These indirect expenses
are distributed and entered upon the Cost Sheets according to the
productive labor method.


P R O D U C T I O N.
Material.
Article. Quantity. Class. Amount. Labor.
A 100,468 800 $ 50, 736.73 $ 2,000.00
B 172,393 340 104,401.63 10,000.00
C 32, 129 410 25, 803.45 1,000.00
T 37.8 127 352. 32 100.00
During the month the following sales were reported which
should be costed according to the information shown by the Cost Sheet
or Finished Stock Record .
Sales Price
Article. Quantity. £er Article.
A l,010 $ 90.00
B l, 800 110.00
C 330 J.35. OO
D 5 300. OO
Five articles of B were returned during the month. The infor-
mation for recording this transaction should be entered upon forms
similar to Form 63-A and B.
The following Cash Receipts and Cash Payments were reported
during the month.
CASH RECEIPTS : –
---
TAC Counts Receivable . . . . . . . . . . - - - - - - - . $324,870.00
Notes Payable Discounted . . . . . . . . . . . . - 10,000.00
Notes Receivable . . . . . . . . . . . . . . . . . . . - - 5,000.00
Interest - Notes Receivable . . . . . . . . . . 210.00
CASH PAYMENTS: -
No Gºs Payable . . . . . . . - - - - - - - - - - - - - - - - - 25,000.00
Accºunts Payable . . . . . . . . . . . . . . . . . . . . . 310,875.60
Interest - Notes Payable . . . . . . . . . . . . . 600.00

Provide a reserve amounting to $2,000.00 to cover Doubtful
Accounts.
Design all the necessary forms and records which are necessary
to record the information properly.
Enter all transactions upon these forms and records.
Post all information to the ledger accounts affected. Prepare
Balance Sheet as at January 31, 1914, and a Statement of Profit & Loss
for the month of January, 1944.
S O L U T I O N - P R O B L E M ll.
JONES MANUFACTURING COMPANY.
Journal Entries and Course of Proceedure.
The following is a list of the necessary Journal Entries
and Forms. They are arranged in the order in which they should be made
and posted into the ledger.
JOURNAL ENTRY No. 1:
Opening entry to place upon the books the Assets and Liabil-
ities as at January 1, 1914.
RAW MATERIAL STOCK RECORD : —
Raw material stock on hand January 1, 1914 is entered under
each material classification. These entries aggregate $45,307.79 and
this amount corresponds to the amount charged to the Raw Material Ac-
count as shown in Journal Entry l.
FINISHED STOCK RECORD : –
The finished stock on hand January 1, 1914 is entered on the
Finished Stock Records, the detailed entries aggregating $26,313.01 as
shown in Journal Entry No. 1.
PRODUCTION ORDER AND COST SHEET : —
This form should be filled out in as much detail as possible.
PURCHASE REQUISITION: –
This form is filled out for the additional material required.
PURCHASE ORDER: -
This form is made out upon receipt of the Purchase Requisi-

tion. The Purchasing Agent will send same to the firm from whom the
goods are to be bought .
REPORT OF MATERIAL RECEIVET): -
This form is filled out in duplicate and the Receiving Clerk
will record the material received on arrival of the goods ordered.
ACCOUNTS PAYABLE wouchER:-
A voucher is drawn in favor of creditor for their invoice
covering goods received.
REGISTER OF ACCOUNTS PAYABLE:-

All vouchers are to be entered and the proper distribution of
same made. Total under Vouchers Payable is posted to the credit of the
Accounts Payable Account. Miscellaneous and Operating Accounts are
debited as shown. -
NOTE: While the voucher illustrated shows but the purchase
made from one concern, it can be assumed vouchers were pre-
pared for all expenditures.

Journal, ENTRY No. 2:
- - A charge is made for depreciation to overhead account and
credited to the Reserve for Depreciation Account.
FACTORY PAY-ROLL:-
Distribution is made of all wages and salaries. No postings
are made from this form. This gives the detail for Salary and Labor
items as shown among the expenditures.
REPORT OF MATERMAL DELIVERED: -
This report is a summary of all the material requisitions, one
of which is illustrated. The total is posted to credit of "Raw Mater-
ial Account" and to the debit of "Work in Process Account" also proper
entries are made on Raw Material Stock sheet, Form 12, under Material
Delivered. The last unit cost is used as a basis for pricing the ma-
terial requisitions and report of material delivered.

JOURNAL ENTRY No. 3: -
A charge is made to Work in Process Account for the productive
labor for the month.
JOURNAL ENTRY No. 4: -
A Transfer is made of the indirect manufacturing expenses as
shown in Overhead Account to "Work in Process".
PRODUCTION ORDER AND COST SHEET: -
The production is entered upon the cost sheet. Distribution
is made of the Indirect Manufacturing Expenses (overhead) upon the basis
of productive labor. Keep in mind that the total productive labor for
the month charged to "Work in Process" was $14,127.53 while but $13,100.00
of this has now entered into Finished Stock. The proper proportion of
overhead must therefore be left in Work in Process Account to cover goods
in the course of manufacture but not completed. The overhead rate is
181.86% of the productive labor. Make summery of costs of different ar-
ticles and charge the total cost of the production to the Finished Stock
Account crediting the Work in Process Account with the same amount.
Also proper entries are made on Finished Stock Records A, B, C and D.
The total cost under each Sales classification is divided by the number
of articles produced and show cost per article.
CREDIT GERTIFICATE:-
This form is prepared in duplicate. The original is intended
for the customer receiving credit and acts as a credit memo. The cost
of goods returned is entered on the duplicate. The necessary postings
to the Sales, Finished Stock and Accounts Receivable accounts are then
made. An entry should also be made on the Finished Stock Record "B".
REGISTER OF SALES & COSTS : —
The basis for costing sales is taken from the Average "Cost
per Article" as shown upon the Finished Stock Record. The sales account
is credited at selling prices under each classification and the total
of all sales is debited to the Accounts Receivable Account. The
Finished Stock Account is credited with the cost of sales and the debits
to the res: ective sales accounts are then made. The balances then shown
in the Sales Accounts, after considering the merchandise returned, if
any, represents the gross profit upon each sales classification. Proper
entries for the sales at cost should then be made on the various Finished
Stock Records.
JOURNAL ENTRIES 5 and 6: -
A debit and credit for cash is made showing receipts and
expenditures.
JOURNAL ENTRY No. 7:
- A charge of $2,000.00 is made for Bad Accounts and a reserve
account credited.
TRIAL BALANCE:-
The Trial Balance as of January 31, 1914 should be taken off
after all postings have been made to the ledger accounts. The balances
of the raw material stock records and the finished stock records should
be in a greement with the controlling accounts. -
BALANCE SHEET: -
This statement is prepared from the foregoing trial balance.
PROFIT & LOSS STATEMENT: —
The sales and cost of sales are taken from the balances of the
four Sales Accounts as shown by the Trial Balance. The Selling and
Administrative Expenses are apportioned over the various departments . .
on the basis that the cost of sales bears to the total selling and ad-
ministrative expenses.
NOTE: -
A Production Order of the previous month, upon which work
amounting to $658.06 was charged, remained uncompleted and still in
process at the end of the current month covered by this problem.
SELLING & ADMINISTRATIVE EXEENSES: -

In actual practice, of course, these expenses would be shown
in detail in the ledger, separate accounts being opened for each item
composing the selling and administrative expenses. However, in order
to eliminate bookkeeping detail, all these expenses have been grouped
and posted under one account.

OWERHEAD ACCOUNT : –


In practice a separate account might be opened for each item
which composes the indirect expenses but, in order to eliminate the de-
tails of bookkeeping, all manufacturing overhead expenses have been
grouped for posting to the one Overhead Account.



J. E. No. l:
# 18, 188.70
7, 130.43
7,548.77
26,313.01
658.06
45,307.79
47,471.05
J. E. No. 2:
# 4,747.10
J. E. No. 3:
# 14,127.53
J O U R N A. L.
January 1, 1914.
Sunºries
To Sundries:
3 Cash
6 Notes Receivable
4. Accounts Receivable
Finished Stock
ll Work in Process
12 Raw Material
8 Plant. Account
l
3
Notes Payable L. 7 # 25,848.91
Accounts Payable L. 5 7,316.21
Surplus L. 2 19,452.69
Capital L. l l CO,000.00
(To open accounts, per Balance Sheet
as at that date).
---oCo---
L. 15 Overhead
To Reserve for Depreciation L. 9 $ 4, 747.10
(Provision for Depreciation for month).
---ooo---
L. ll †ork in Process -
- To Productive Labor L. 14 § 14,127.53
{Transfer of Productive Labor per Pay Roll)
---ooo---
J. E. No. 4:
$ 25,693.00
J. E. No. 5:
$340,080.00
J. E. No. 6:
$ 25,000.00
310,875.60
600.00
J O U R N A L (CONT'D)
L. ll Work in Process
To Overhead Account
(Transfer of overhead to operating
account).
---oCo---
L. 3 Cash
To Sundries
Accounts Receivable
Notes Payable Discounted
Notes Receivable
Interest, — Notes Receivable
(To record oash receipts).
---oCo---
Sundries
To Cash
L. 7 Notes Payable
L. 5 Accounts Payable
L. 20 Interest - Notes Payable
(To record cash disbursements).
---oCo ---
I.
L. .
L.
L.
L.
L.
15 # 25,693.00

4 $324, 870.00
7 10,000.00
6 5,000.00
2O 210.00
3 #336,475.60
J. E. No. 7 :
$ 2,000.00
J O U R N A L (CONT*D).
L. 20 Selling & Administrative Expenses
To Reserve for Doubtful. Accounts
(To provide for doubtful accounts).
---ooo---
L. 10 $ 2,000.00
I, R D G E R.
Account No. 1:
- C. A P + T A L.
Jan. 1 Balance . . . . . . . . . . . . . . . J. $100,000.00
---oCo---
Account No. 2:
S U R P L U. S.
Jan. 1 Balance . . . . . . . . . . . . . . . J. # 19,452.69
---ooo---
Account No. 3: C. A. S. H.
Jan. 1, Balance • . . . . . . . . . . . J. # 18, 188.70 Jan. 31 Sundries . . . . . . . . . . . . . . J. $336,475.60
31 Sundries . . . . . . . . . . . J. 340. O80.00 -
- 21, 793. 10 #355.255.75
---oſ)o---
Account No. 4:
A C C O U N T S R. E. C. E. I. W. A. B. L. E.
Jan. 1 Balance ............ J. $ 7,548.77 Jan. 31 Returned Sales . . . . . . . . C.C. § 550.00
31 Sales . . . . . . . . . . . . RS & C 334. 950. OO 31 Cash . . . . . . . - - - - - - - - - - - J. 324, 870.00
in 373.7% #345.455.77
---oOo.---
Account No. 5: A C C O U N T S P A Y A. B. L. E.
Jan. 3TCash . . . . . . . . . . . . . . . J. $3IO, 575.50TJān. TTBalance . . . . . . . . . . . . . . . J. # 7,316.2.
- - - 3l Sundries . . . . . . . . . . . . . . RAP 323, 171.90

19, 612.5l 330.455. II:
I, E D G E R (GONT' D).
Account No. 6 :
N. O. T E S R E C E I W A B L E.
Jan. 1 Balance . . . . . . . . . . . . J. # 7, 130.43 Jan. 31 Cash . . . . . . . . . . . - - - - - - - J.
2,130.43
---ooo---
Account No. 7:
N. O. T E S P A Y A. B. L. E.
Jan. 31 Cash . . . . . . . . . . . . . . . J. $ 25,000.00 Jan. l Balance . . . . . . . . . . . . . . . J.
3l Cash . . . . . . . . . . . . . . . . . . J.
10,848.91
---oſ)o---
Account No. 8:
E L A N T A C C O U M T.
Jan . l Balance . . . . . . . . . . . . J. $ 47,471.05
---000---
Account No. 9:
R E S E R W E F O R D E P R E C I A T I O N.
Jan. 31 Overhead . . . . . . . . . . . . . . J.
---oCo ---
Account No. 10:
R E S E R W E F O R B. A. D. D. E. B. T. S.
Jan. 31 Reserve . . . . . . . . . . . . . . . J.
---oCo---
$ 5,000.00
# 25, 848.91
10.000.00
F-35.535.5i
$ 4, 747.10

Account No. ll:
Jan. 1 Balance . . . . . . . . . . . . J.
31 Raw Material . . . . . . . RMD
31 Productive Labor . . . J.
31 Overhead . . . . . . . . . . . J.
ll, 173.45
Account No. 12:
"an - l Balance - - - - - - - - - - - - J -
31 Accounts Payable . . .RAP
31 Freight & Cartagº ...RAP
75,694.54
Account No. 13:
Jan. l Balance . . . . . . . . . . . . J.
31 Work in Process . . . . C. S
31 Returned Sales . . . . . C. C.
19,481.99
Account No. 14:
Jan. 31 Accounts Payable . . .
31 Finished Stock . . . .
31 Work in Process
L E D G E R (CONT*D).
W 0 R K I N P R O C E S S.
# 658.06 Jan.
188,913.25
14,127.53
25. 693. OO
#355.351.4
---000---
R A. W. M. A. T E R I. A. L.
$ 45,307.79 Jan.
217,300.00
2 - OOO. OO
$554.307.75
---oCo---
T O C. K.
F I N T S H E D S
$ 26,313.01 Jan.
218, 218.39
384. 50
$33A. SIE, GC
P R O D
---oOo.---
U C T T W E
31. Cost of Sales
I, A B O R.
R A P $ 14, 127.53
Jan.
---ooo---
31 Work in Process
-
- - - - - -
- - - - - - - - -
- - - - - -
CS
$218, 218.39
$188,913.25
RS & C $225,433.91
$14,127.53
No. 15:
. . RAP
I, E D G E R
O W E R H E A D
$ 20,945.90
4. 747. 10
#TE5.533TCC
Jan. 31 Workin; Process . . . . . . .
Account
Jan. 31 Accounts Payable
31 Reserve for Deprecia-
tion . . . . . . . . . . . . .
Account No. 16:
Jan. 31. Cost of Sales . . . . . .
Account No. 17:
Jan. 31 Cost of Sales . . . . . .
31 Returns - - - - - - - - -
Account No. 18:
Jan. 31 Cost of Sales . . . . . .
---ooo---
S A L E S A.
RS & C # 56,650.90 Jan. 31
---o Oo---
S A L E S B.
RS & C $138,420.00 Jan. 31
C C - 550. OO 31
$135,370.00
---oCo---
S A L E S C .
R S & C# 29,465.70 Jan. 31
---oſ)o---
(CONT1 D).
A C C O U N T.
$ 25,693.00
Accounts Receivable ... Rs & C # 90,900.00
RS & C $198,000.00
C C 384. 59
{ISS. 354.50
Accounts Receivable . . .
Cost of Returns .
Accounts Receivable . . . RS & C § 44, 550.00
L. F D G E R (CONT*D).

Account No. 19:
S A L E S D.
Jan. 31 cost of Sales ...... Rs & C { 897.31 Jan. 31 Accounts Receivable ... RS & C $ 1,500.00
---ooo---
Account No. 20:
S E L L T N G & A D M T N I S T R A T L V E E X P E N S E S.
Jan . .31 Selling Expense (Ac- Jan. 31 Interest . . . . . . . . . . . . . . J. $ 210.00
counts Payable). . . RAP # 35,135.17
3i Administrative Ex-
pense (Accounts
Payable) . . . . . . . . . RAP 33,663.30
31 Interest . . . . . . . . . . J. 600.00
31 Bad Debts (Accounts
Receivable) . . . . J. 2. OOO. OO
$7i, ië8.4% #Ti 355.47
---ooo---
Article "A".
ºn 1 150 56.13 8420 is
|
|
|
|
STOCK - FINISHED_PRODUCTS AND EARTS - -
Maximum ------------------
Style - - - - - ----- - - - - - - - - - - - Minimum
- - - - ----------
- - - ---------- - ------------- - ------------ -
----- -------------------
E r o d u c e d Used or Sold Balance
--
| Date Quan, go st Amount Quan. Amount Quan. Amount. .
1914. -
i
" 31 1005 56.09 5637401 1010 5665690 145 314327
i
i
º
|
: |
-
+
|
-
i
-------------—-i------------4----- -— l
Form 56 – Page 307.


----- --------------------------------------------------------------------- "
|
| _ _ _ _STOCK - FINISHED PRODUCTS AND PARTS. ___
Style --------------------- -- --- ---- Minimum . . . . . . . .
Article "B" ---
-
------ E. r_o_d u_c e_d Used or Sold Balancs.
| Date Quan. Cost Amount. Quan. Amount. Quan. Amount:
1914, ! i -
Jan, 1 192 76.75, 1473.529 |
"..., 34 1724 .331, 132588.11 . |--
(Ret 3) 5 76,90 38450 1800. 138420 co, 121 °28790
-
| | | | | ||
| º
-
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| | ||
| | | |
—---|-- | ——
FORM 56 – Page 307.
Maximum –.

t
i
sºn,
Article
Minimum
-----------------
--- - -
---------
1914,
Jan. 1
- -
i.
t -
- + H
º t
| - : º
- i
r º -
- i i
t i º
------ ----- –– - --- ---------------------------------
P r o d u c e d'
--------------------------------------------4------------------------ ---- ---
|
| ]
ſ
. º f
Quan. Cost . Amount Quan. Amount. Quan.
| ! -: : ſ
31 321 63.17 28é2299|| 330 294.65 70
!
|
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|
Used or Sold
li
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32 @A5 283443
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| | | | | |
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-
i
---
---
__STOCK - FINISHED PRODUCTS AND PARTS.
Maximum
Bºn
------
---
------------
-----------------
--- -- - -
lance.
Amount.
Form 56 – Page 307.

STOCK - FINISHED FRODUCTS AND PERTS.
- Maximum
| style . . . . . . . Minimum — –––
Article "D"
----- –
H + r o d u c e d | Used or Sold Balance.
- I -- -- -
| Date Quan. Cost. Amount Quan • Amount Quan. Amount.
|
––
l
|
1914.
Jan. l l Bºlº 26313;
: 31| 4 ||B855 63418, 5 897.31 --- ---
! i |
| i
| t
- - -
i :
| | || - ſ
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-------- L
T -
Form 56 - Page 307.
---
-- - ------
- - - - - - - - - - - - ----- -
ACCOUNTS PAYABLE WOUCHER.
No. 4264

| Favor of Pittsburg Steel Corp. Date Jan. 10, 1914,

------------- - -
- ------ -------
------------------------------------------------------------------- ----------.
---
Date of Amount of Deduc - Amount
Invoice Description | Invoice. tion Payable
----------------------------- -- ----- == -------------- ==== === --------
|
-
Jan 7 120000 classification 800
at .50 6000000.
215000 Classification 340
at .60 12900300
| | | |
32000 Classification 410
at . 80
ſ
2560600
i - |
3000 classification 127
at .90 L_270000 21730000
| i |
|
|
i
!
| | | |
|
ſ
i
i
| :
i i i |
| --~~ k--- - --- | :
-
--
Approved for Payment: Correct :
Ches. A. Bennett, Treas.
J. P. Foster,
| Charge account Raw Material Auditor.
-- -------
-
---------------4---------------4
Form 7a – Page 247.
|
t
- --------- - -- i
FACTORY PAY-ROLL -
For month ending January 31, 1914.
- ------------------------------- -------------------------------------------------------- ------------

Employees
Distribution. |
i
| - ---------
|Class.C.K. No. Name Rate Time Amount | Direct Indirect Super.
i --------- ===I-= -------------- i FFF ====== ==========
:
All War-
ious Sundry (Productive i
| Labor) 1412753 (14127 (53.
Sundry (Indirect . -
| Labor) | 260740 ſ 260740
Sundry (Superin-
tendent and Of-
fice - Factory) 645225 | 645225
- - : -
| : |
| |
|
| i |
---------- T- ----------- +- ſ +– i |
23.87131412753 260740-645°125
--- --------------------------------------------- __ ſº- : ----------
Form 39 - Page 287.
o

MATERIAL REQU
Raw Material Stockroom Devartment.
--------------------------
ISITION,
No. —6954 —
ºrt-º-º-º-
Date Jan. 15, 1914.
-
---
-
1000 60
Description Charge.
- ---- - Order -
Article. Size Teight|Antº: Rate Amount
Classification 800 1-1/4 x
6 * 850 - 505 505 |OO
Received by - -
H. Hoover
(Drill Press Hand)
Approved by
- -
F. Dobson. Foreman.
Form 19 - Page 265.

T-
-- - - -
S T O C. K.
Classification_lio. 800, 340, 4.0 __
RAW MATERIAL. - .
Maximum
Article Location Minimum
class. Ordered Received Delivered Balance Reserved º
No. Ref. Quan. Ref. *:::: Quan. Rate. Amount. Ref Quan.Rate Amount Quan.Rate Amount For Quan §§
800 /14 invey. 23646 .. 501 1184150
120000 .505. 6060000 1/31 119707. 505,60452 2423969 11989:26
340 l/l/14 Invity, 34713 .611. 2102262
215000 .606 13020600 1/3i 174688.606 16579, 42.75025 4543.120
410 A/14|Invty. 15033 .803| 1207362
32OOO .. 803; 25.70000 1/31, 25875. 803 º 4621158 1699.316
127 1/1/14 Invity. 396 |. 935 37005 -
| 3OOO .933 280000 1/3] 2024.933|1889 13 1372 128092
| .
; :
7569.454
Førºw Materia Tstock Record (Page 255),

T - - -
REGISTER OF ACCOUNTS PAYABLE. For January 1914.
t - - -
C. R. E. D. I. T. D E B I. T.
TT. TV OUI. Accounts Payable. WOUGH When and How Paid Miscellaneous Accounts. Operating Accounts. Property Accºunts
- - Ou C her º, ºr T - Māotöry T. Se TT - * * ºf ºrchiv-º-R-E-8c+-Fºtºr-
Date tº + Favor of Terms Fo. Payábie. pºteºk-No BankAmountil Name Fo. Amount. †. #. #ºe † : tºº.
Jan. 7 4264 Pittsburg 167 217300 loc Raw Mater-
Steel Corp. 2AC 30 ial L 12 21730CCC
net 2OOO |OO Raw Mater-
ial, Freight;
& Cartage:L 12 200000
| 410 63 41063
2279 72 2279.72
- 769 88 . - 76988
517 55 51755
- | 14127 53 Productive I. 14 |
Labor - 1412753
26O7 40 - : 26??40
6452 25 - - 645225
- 716 26 - - 71626
233 88 - 23388
49 97 4997
- 6908 º: 69C836
26001 || 6 26OO165
ič04|3.3 160489
613 68 6.1368
1034 69 103469
686 8l. 68681
- 5617 95 5617 | 95
7137 93 7137 93
22.379 29 - 22379 23
3.317 36 33.1736
404; 22 **. 40422
| -
ſ - - - F --- H. --- -F - --- | -II
- 323.7i. 9d 233427 53 20945 (90 35135||7|336633C
- L. 5 -- - - - , ----- -->
V L. 15 L. 26 L. 20
were 9, an an - a-as 251 – 252 (see also ºcs icº. ºve):

REPORT OF MATERIAI, DELIVERED .
- No.
Dept. Date Jan. 31. 1916 .
Törder TFroductſ ~~~~. --------
No. Chargeable Article. Guantity. Rate. Amount .
A 800 ll.97.07 60452 24.
B 340 174688 10579]. 42
C 410 25875 2O78O 46
D 127 2C24 1889 |13
| -
188913, 25
(Work in Process
Dr. 11)
(Raw Material Cr.
12).
Approved: Correct:
F. Dobson For eman. R. Palmer
stock Clerk.
Form 25 - Page 271.

JONES MANUFACTURING COMPANY.,
NEW YORK.
G R E D I T C E R T I F I C A T E.
Business --- Date -- - -
Salesman — No. —
Favor of
Address ---
A r tº i o l e selling Price. Cost Price.
Description Quan.|| Rate Amount Rate Amount
T-
B 5 moloo 550 oq 76 90 3.8450
. T}r. skiss- L. lf? |I-13 Dr.
| Finished
| º | Stock 8
Gr. Alects. Rec. L. 4 1-gi Cr. Säles
|= = i –– |B -
correct ––
Form 63b - Page 317 (Duplicate)
Jones Manufacturing company,
NEW YORK.
G R E D I Tº C E R T I F I C A T E.
Business - Dateljan. 31, 1914.
Salesman No. — 320–
Favor of r
Address
A r t i o l e selling Price
Description Quan. || Rate Amount. -
B | 5 || Llo od 550 loa -
-
|Approved Correct -
Form 65A - Page 316 (Original)


R. E. G. I. S. T E R O F S A L E S C O S T S. - -
For period ending—January— 1914–
| l S S . C. o S tº o f S a l e S.
T I t; I - -
No Ramel. Quán §§ie B C D B C D Total Remarks
T :
101C 90900 OO | 56650.90 i 56,650
- -
18OO 19800000 198000 OO 188429 oc i 13842O
330 4455OOO 44550 (OO 2.94.65 70 - 294.65
5 15OOOO 1500 OO 89731 897
i
| !
i. i : l
| || i - | || |
| || | | || | ||
|| | ||
| || - | i || |
- i |
| || | -
t | . |
|
| :
i |
| | |
| * |
| - | i
-
||
---------------------- - -i-T-
334.95000 198000 OO 44.550 00 1500 90 138420 Od 2.94.65; 7C 897| 31|| 225433 91
| - ! l__
T. & L. 17 L. J.8 L. 19 I. _ ] 7 L. 18 L. l. 9 L. 13
JONES MANUFACTURING COMEANTY.

S t a t e m e n t , o f P r o f i t & L & S. S.
- For the month of January, 1914.
De H S a l e s Gross Prof it E x p e n s e s Net Profit,
pt. Amount cost. Amount iſ sell. Adminº Total || || Amount ſº
_ ---
A 90900 OO 56650 96. 3424910 17923 j42 16325.68
B 1974.50 fool 138o35|5C 5941450 43660 63 1575387
C} 44.550 |OO 294.65 7C 1508430 932O 60 57637C
T} 1500 |OO 89.7 31 &O269 - 283 82 3.1887
3344CO 00 225049 4l 109350 59 71188.47 38162. 12
Form 68A. & 68B – Pages 322 & 323.
PRODUCTION ORDER & COST SHEET. No. 89–
- Dept. Jen, l, 1914–
tº-º-º: *::::::::::::::::::::::::::::
Signed Foreman. ". F. Maynard
- Supt .
Quantity Description Diagram. --
- - - - - - - - - - 1005---------|----------------Article.-A----------------------------------------------------------
|- - - - - - - - - - 1784..............................."...... 3.................!...............................…!
------------321................................".......c...........................................................
- 4. " D -
—M at e-r-ţ a l T, a b o r S u m m a r y.
Guantityhacº” amount Late ºus Raté Amount Analysis. Amount
|-100468. J.A., 800. ... 50736.73...... - - - - - - - - - - - - - - - - - - - - - - - - - - ... 2000.00|Mat...Cost. 181294.11:
|-1723.93.1.B.240.1-10446163.............................. 10000.00|Lab. Cºst...13199.99.
|... 32.129.J.C.. 1410..... 2580345 ||....... ------------------------- ..1000-100] Indirect £3834 26.
378 D lz7 35232 ſ --- 100 00|Total Cost 218218.39
181294.13 13100 00 *-
Dunlice to No. 89 T
Dept. Jen, l, 1914
Dete "ant cd Jan. 31, 1914 You are hereby euthorized to mºnº-
completed &l. 1914. facture tho articles, as stated.
signed El-Dobson. Foremun. — "i. F. Mºyner 6–
Supt.
Quentity - Description Die gram
3.1.1944.01.163.25803.45.35:33.18.1894.1%
Q.l...1QQQQQQ1...1000...QQ1...1QQQQ... 13.00...Q.
4. º, ºn tº A ºn
5 8 218218 3
ost per Article 56 ().9 76.91 as 17 | 158 55
Form 15a and 15% (origin; ) and duplicate) Peres 258 and £59.


i
To James J. Brown. Eurchasing Agent.
Please order the following articles:
* U R C H A S E R E Q U I S I T I O N.
|
Ho. 1246–
J an. 1, - l 914. -
-
----- .. - f --- H Fºur-"
For the *3rºr Date Date bhºse -
| *** no. Quantity Description wanted ordereapra Ho
--------------- |-- ––––f--------------------------
i - -
|
120,000 classification No. 800 Jan.19 Jan 1 1575
215,000 11 " .340 10 . . . 1575
| 32,000 11 * 410 "... 10 " |l 1575
3,000 11 * 127 17 ić 11 l 1575
|
-
: | |
| | | |
| | | |
i | | | |
| - -
i
I-
Approved : Signed : -
- F - M. –E ---
*-*-***r-supt, –º-ºšsk clerk.
Form 1 - Page 238.
-

-------------------- - ---
P U R C H A S E O R D E R.
To Fittsburg Steel Corp. - No. 1575
Place our order number on all invoices
- -- ſº O
and packages. Address Trenton.
shipment ,
Address Pittsburg, Pa. º, __- Jan. 2, 1914.
Terms As usual. Ship to Raw Material Stores.
5 end duplicate invoices for each Via Erie R. R. .
HT5-56– --- == ------- - - i
ship. ed on
or before Description Quantity
- T ----------------------- -
Jan. 5 Class if ication 800 120,000
11 34O 215,000
n 410 32 OOO
º 127 3,000
y
|
|
-
you are hereby authorized tº furnish the above material as stateſ. "
Acknowledge receipt of this order.
JONES MANUFACTURING COMPANY.
* . Per Jas. J. Brown, --------. .
! --- Purchasing Agent.
Form 2* - Page 239.
º
Favor of
F- -----------------------------------------------------
A r tº i o l e S
Class if ication 800
it. 340
11 41C
11 127
Date Received Jan. 9, 1914
-
Received by Tom Watson,
i Receiving Clerk.
---------------------
*
REPORT OF MATERIAL RECEIVED.
Purchase Order No.
Pittsburg Steel Corp . . .
#
No. 3029 .
1575 . .

Q u a n tº i t
- - -
215, 100
3
O
O
5
----------- ––– --
Date of Invoice
Entered by
Gross
-------------
º
===
|
|
i
|
Tare
--- == ---
5
i
-
i
Jan .
7
y
Form 3° - Page 241.
--
!
--------!
H


REPORT OF MATERIAL RECEIVED. No. 3O29
Purchase Order No. 1575
Favor of Pittsburg Steel Corp.
Q u a n tº i tº y -
Articles Gross Tare Net Rate Cost; Charges |Total Cost
| classification 800 120,050 50 | 120,000 * 60,000 00 sodo 60, 60000
11 340 215, 100 100 215,000 60 |129,000 00 º 130, 20000
11 410 32,025 25 32,000 80 25, 600 00 10000 25, 70000
n 127 3,005 5 3,000 90 2,700 00 10000|_2,80000 |
219, 30000
Date Received—Jan.-9, 1914— Date of Invoice Jan.7, 1914
Received by Tom Watson Entered by BFL
Receiving Clerk
Form 3b – Page 242.
Account
NO.
JONES MANUFACTURING COMPANY.
T R iſ A L B. A. I. A N C F.
JANURRY 31, 1914.
Cepital . . . . . . . . . . . . . . . . . . . . . . . . . . . - - $100,000.00
Surplus . . . . . . . . . - - - - - - - - - - - - o - - - - - - - 19,452. 69
Cash . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - $ 21,793. 10
Account S Receivable . . . . . . . - - - - - - - - - - 17,078.77
Accounts Payable . . . . . . . . . . . . . . . . . - - - 19, 612.51
Notes Receivable . . . . . . . . . . . . . . - - - - - - 2, 130.43
Notes Payable . . . . . . . . . . . . . . . . . . . . . . . 10,848.91
Plant Account . . . . . . . . . . . - - - - - - - - - - - - 47,471.05
Reserve for Depreciation . . . . . . . . . . . . 4, 747. 10
Reserve for Bad Debts . . . . . . . - - - - - - - - 2,000.00
"ork in Process . . . . . . . . . . . . . . . . - - - - - 11, 173.45
Raw Material . . . . . - - - - - - - - - - - - - - - - - - - 75,694.54
Finished Stock . . . . . . . . . . . - - - - - - - - - - - 19,48l. 99
Sales-A . . . . . . . - - - - - - - - - - - - - - - - - - - - - - 56,650.90 90,900.00
Sales-B . . . . . . . . . . . . . . . . . . . . . . . . . . ... 138,035.50 197,450.00
Sales-C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,465. 70 44, 550.00
Sales-D . . . . . . . . - - - - - - - - - - - - - - - - - - - - - 897. 31 1,500.00
Selling & Administrative Expenses . . . 71, 188.47
Total . . . . . . . . . . . . . . - - - - - - - $491,061. 21 #491,061.21
JONES MANUITACTURING COMPANY.
B. A. L. A N C F. S. H. E. E. T.
JANUARY 31, 1914.
A S S C T S
CURRENT ASSETS : —
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . # 21,793. 10
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . 17,078.77
Notes Receiveble . . . . . . . . . . . . . . . . . . . . . . . . . 2, 130.43
Invent ories:
Finished Stock . . . . . . . . . . . . $19,48l. 99
Work in Process . . . . . . . . . . . 11, 173.45
Raw Material . . . . . . . . . . . . . . 75,694.54 106,349.98
Total Current Liabilities . . . . . . . . $147,352.25
PROPERTY: —
Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,471.05
Total Assets . . . . . . . . . . . . . . . . . . . . .
I, I F. B I L I " I E S.
CURRENT LIABILITIES: —
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . * 19,612.51
*** **śi ºi:ii::::::::::::: *-º:#
RESERVE FOR DEPRECIATION . . . . . . . . . . . . . . . . . . . . . 4, 747. 10
RESERVE FOR BAD IDEBTS . . . . . . . . . . . . . . . . . . - - - - - - 2,000.00
CAPITAL - - - - - - - - - - - - . . . . . . . . . . . . . . . . .......... 100,000.00
SURPLUS, Jan. 1, 1914 . . . . . . . . . . . . . $19,452.69
Net Profit for January . . . . . . . . 38, 162.l2 57,614.81
Total Liabilities . . . . . . . . . . . . . . . .
$194,823. 33
TWENTY-SEVENTH SESSION.
INTRODUCTION OF PROBLEM 12:
To be worked out in class room only.
CLASS WORK ON PROBLEMI 12.
TWENTY-EIGHTH SESSION.
REVIEW OF PROBLEM ll.
CLASS WORK ON PROBLEM 12.
TWENTY-NINTH SESSION.
CLASS WORK ON PROBLEM 12.
THIRTIETH SESSION.
CLASS WORK ON PROBLEM 12.

C O S T A C C O U N T I N G - P R O B I, E M 12.
THE A. B. C. MANUFACTURING COMPANY.,
ASBESTOS MANUFACTURERS OF BRAKES, BRAKE BANDS AND BRAKE LINING.
This problem is based on the Special Order and Product methods
of manufacturing and on the following systems of cost finding: -
) Machine Cost
) Process Labor Cost
) Productive Labor Hours
) Productive Labor Cost.
The following facts and figures have been obtained from the
accounts and records of the A. B. C. Manufacturing Company during the
three months ended March 31, 1915.
The operating departments of the plant are as follows:
Dept. 1 — Power
º 2 - Weaving
17 3 - Treating
it. 4 - Brake
17 5 - Assembling.
The Weaving and Treating Departments are conducted according
to the Product method. The Brakes and Assembling Departments are con-
ducted according to the Special Order Method .
The basis of the costs in the various departments are as
follows: -
) Weaving and Brakes - Machine Cost
) Treating - Process Cost
) Assembling – Productive Labor Hours
) Distribution of General Operating Ex-
penses - Productive Labor Cost.
Schedules are shown giving the information for the opening
entries, the details of the factory expenditures and the details of the
cash receipts and expenditures.

OPENING ENTRIES AFFECTING GENERAL LEDGER ACCOUNTS
JANUARY l, 1915.
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - # 2,000.00
Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000.00
Accounts Receivable . . . . . . . . - - - - - - - - - - - - - - - - - - - - 81,000.00
Factory Ledger . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - 79, 232.10
Plant Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000.00
Accounts Payable . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - § 11, 215.10
Notes Payable . . . . . . . . . . . . . . . . . . . -- - - - - - - - - - - - - - - 66,490.00
Bad Debt Reserve . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - 4,000.00
Reserve for Plant Accounts . . . . . . . . . . . . . - - - - - - - - 9,300.00
Discount Reserve . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - 2,430.00
Capital Stock . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - 175,000.00
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 797.00
Total . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - ... $287,232.10 $287,232.10
OPENING ENTRIES AFFECTING FACTORY LEDGER ACCOUNTS
JANUARY l, 1915.
Raw Material . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - $ 34,000.00
Finished Stock - B . . . . . . . . . . . . . - - - - - - - - - - - - - - - - 10,846.42
11 " - BL . . . . . . . . . . . . . . . . . . . . . . - - - - - - 15, 161.78
17 " - BB . . . . . . . . . . . . . . . . . . - - - - - - - - - - 8, 223.90
Work in Process - Department 1 (Coal) . . . . . . . . . . 750. OO
11 th n 11 2 (Supplies) . . . . . . 3,675.00
tº ºr 11 th 3 . . . . . . . . . . . . . . . . . 3, 175.00
17 it º 17 4 (Supplies) . . . . . . 1, 150.00
11 11 º 11 5 : —
Material . . . . . . . . . . - - - - - - - - - - - ... $1,250.00
Direct Labor . . . . . . . . . . . . . . . . . . . . 750. OO
Overhead . . . . . . . . . . . . . . . . . . . . - - - - 250. OO 2,250.00 .
General Ledger . . . . . . . . . . . . . . . . . . . . . . . . T $ 79.232.10
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 79,232.10 $ 79,232.10
SCHEDULE OF FACTORY EXPENDITURES
For the three months ended March 31, 1915.
D E P A R T M E N T A L.
300,000 lbs. yarn . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - . . $ 75,
75,000 lbs. steel . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 25,
Department 1 - Direct Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3,
Department 1 - Supplies . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - 7,
Department 2 – Direct Labor . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - 24,
Department 2 – Indirect Lab or . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - 4,
Department 3 – Direct Labor . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - 15,
Department 3 – Indirect Labor . . . . . . . . . . . . . . . . . . . - - - - - - - - - 3,
Department 4 – Direct Labor . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - 8,
Department 4 - Indirect Labor . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - 2,
Department 5 - Direct Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12,
Department 5 - Indirect Labor . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - 2,
Repairs & Maintenance - Labor - Department l . . . . . . . . . . . . . . .
17 11 11 rt it. 2 . . . . . . . . . . . . . . - 2,
rt rt rt 17 11 3 . . . . . . . . . . . . . . - l,
ºw rf rt ty 11 4. . . . . . . . . . . . . . - -
11 17 ty t? rt 5 . . . . - - - - - - - - -
11 ty 11 - Supplies- 11 l . . . . . . . . . . . . . . -
ºr ºf rt tr º 2 . . . . . . . . . . . . - - - l,
ir rt 11 . tr 17 3 . . . . . . - - - - - - - - -
11 º 11 rt rt 4. . . . . . . . . . . . - - - - 2,
11 17 rº n rt 5 . . . . . . . . - - - - - - -
Fire & Liability Insurance – Department l . . . . . . . . . . . . . - - - - -
in 17 17 17 rt 2 . . . . . . . . . . . . . . . . . .
it tº ºr rt ty 3 . . . . . . . . . - - - - - - - - -
11 tº tr t rt 4 . . . . . . . . . . . . . . . . - -
11 tº 77 rt rf 5 . . . . . . . . . . . . . . . . . .
G E N E R A L O P E R A Tº I N G,
General Operating - Indirect Labor . . . . . . . . . . . . . . . . . . . . . . - - - 12,
11 11 - Factory Expenses . . . . . . . . . . . . . . . . . . . . . . .
rt 17 - Printing, Postage & Stationery . . . . . . . . . 2,
t? 17 - Experimental - Labor . . . . . . - - - - - - - - - - - - - l,
11 tº - t? - Supplies . . . . . . . . . . . . . . . .
ty rt - Supplies . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - 2,
- 17 11 - Freight, Express & Cartage . . . . . . . . . . . . . l,
Repairs & Maintenance - Labor - General Operating . . . . . . . . . . 2,
t º rt - Supplies - General Operating . . . . . . - 2,
Fire & Liability Insurance - General Operating . . . . . . . . . - - - -
Total ....................... . . . . . . . . . . . . . . . . . . . . . $213,
-
OOO. OO
OOO. OO
OOC). OO
958. OO
000. OO
000.00
OOO. OO
OOO. OC)
000.00
OOC). OO
OOC). OO
500.00
100.00
000.00
OOO. OO
100.00
2OC). OO
400.00
OOC). OO
500. OO
OOC). OO
2OC). OO
100. OO
2OO . OO
10O. OO
1.O.OO
90.00

500. OO
500. OO
OOO. OO
OOO.OO
500.00
OOO.OO
OOO. OO
OOO.OO
000.00
308.00
266.00
- 4 -
All items in the Statement of Factory Expenditures are to be
credited to the Controlling Account for accounts payable except the ex-
penditures for labor, the total amount of labor being credited to a Pay-
Roll account in the General Ledger. The following items, in addition to
those stated in the Statement of Factory Expenditures, should be credited
to Accounts Payable and charged to General Ledger accounts: -
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . #2,000.00
Printing, Postage & Stationery . . . . . 1,500.00
Express, Freight & Cartage . . . . . . . . . 2,800.00
Depreciation rates used for both buildings and machinery are
8% for the year for Departments l and 4 and 10% for the year for Depart-
ments 2, 3 and 5.
Interest on Buildings and Machinery should be figured at 6%
per annum on the valuation of each department.
The valuation of the Plant Account has been divided among the
various departments as follows: -
Buildings - Department 1 . . . . . . . . . . . . . . . . . . . . $ 12,000.00
t? 17 2 . . . . . . . . . . . . . . . . . . . - 15,000.00
11 rt 3 . . . . . . . . . . - - - - - - - - - - lo,000.00
ºr ºr 4. . . . . . . . . . . . . . - - - - - - - 12,000.00
ty rt 5 . . . . . . . . . . - - - - - - - - - - 4,000.00
Machinºry, Tools & Sprinkler System:
Department l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000.00
17 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 20,000.00
17 3 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 15,000.00
tº 4. . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - 3,000.00
17 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - l,000.00
Total . . . . . . . . . . . . . . . . . . . - - - - - - - ... $100,000.00
--

The total of the General Operating expenditures are to be 1,ro-
rated over Departments l, 2, 3, 4 and 5 according to the direct labor
charged to each department. The percentage used as a basis for this
distribution is approximately 38.4%.
The data received from the Power Department showed that - -
Dept. 2 used 50 horse-power and ran 18,000 hrs.
tº
3 tº 40 tº tr :1 º 18 OOO 17
17 4. 17 5 rt th 11 11 3 º OOO 11
ºw 5 rt 5 11 11 iſ 17 3 - OOO tº
Rate on Total Horse-Power Hours - OO31272.
The Summary of Material Requisitions of raw material delivered
into process showed 310,000 pounds of yarn delivered to the Weaving
Department and 81,000 pounds of steel to the Brake Department.
The production of the Weaving Department was 297,000 pounds
net of Brake Lining. Waste of no value 3,000 pounds, a new rate of
cost of yarn being at 25-1/4¢ per pound.
The total running time of the machines was 18,000 hours, the
gharges for the period being $52,805.48, making the raté approximately
$2.9336 per machine hour.
After considering the work in process at January 1, 1915, the
total machine hours on production were 18, 100 hours and the rate as es-
tablished was $2.93.36 per hour. -
Calculate and journalize costs to show - -
Material - Cost and Rate
Operating Expenses - Cost and Rate
Cost of Weaving per pound - Total Cost and Rate
Cost of Weaving - Total transferred to Treating Department.
After passing through the Treating Department five feet of
Brake Lining are equal to one pound. The production of the Treating
Department was 298,000 pounds.
The inventory on hand in the Treating Department at March 31,
was $2,303.94. The Treating cost of Production was $33,082.64. In
preparing entries summarize this information so as to show how the cost
is obtained and show cost per pound and per foot of Treating; also the
total cost of Weaving and Treating by the pounds and feet.
1,400,000 feet at 10.817% per foot was transferred to Finished
Stock - BL.
90,000 feet at 10.817% per foot were transferred to the Brake
Department. -
A later transfer was made of 15,000 feet of Brake Lining from
Finished Stock - BL to Brake Department.
c As H R 3 c E 1 P T s.
MARCH 31, 1915.
Accounts Receivable (Discount $14,250.00) . . . . . . . . . . . . . . . . . $460,750.00
Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - * - - - - - - - 25,000.00
Total . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . . . $485,750.00
C. A. S. H. P. A. Y. M. E. N. T. S.
March 31, 1915.
Accounts Payable (Discount $3,851.43) . . . . . . . . . . . . . . . . . . . . . . $124,529.67
Notes Payable . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - 66,490.00
Pay-Roll . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 91,000.00
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - 35,000.00
Advertising . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 65,000.00
Taxes . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,000.00
Telegraph & Telephone . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - 700. OO
Traveling Expenses . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10,000.00
Salaries - Salesmen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - 20,000.00
Salesmen's Commissions . . . . . . . . . . . . . . . . . . . . . . . . . -- - - - - - - - - - - 10,000.00
Salaries - Office . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - 18,000.00
Salaries - Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 30,000.00
Legal Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000.00
Sundry Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.090-92
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - $477, 719.67
---
--
The production of the Brake Department was - -
14,000 Brakes
16,000 Brake Bands.
There are in each Brake 4 pounds of Steel and 3 feet of Lirling
and in Brake Bands l-1/2 pounds of Steel and 3 feet of Lining.
Machine Hours run 18,000 hours on Brakes.
Machine Hours run 18,000 hours on Brake Bands.

The total machine hours were 36,000; charges for the period
were $16,978.91, making the rate 47.1632 per hour.
Machine Hours on Production of Brakes - 18,000 hours.
Machine Hours on Production of Brake Bands - 18,000 hours.
Journalize to show the following separately for Brakes and
Brake Bands:
Weaving, Treating and Steel cost
Brake Department Operating Cost
Total Cost and Rate per Brake or Brake Bands.
Rate for Brakes – 47.1632 per hour.
Rate for Brake Bands - 47.1633 per hour.
Total Cost of Production of the Department is transferred to
the Assembling Department, the total cost being $53,380.82.
Calculate cost of Treating and show cost and rate of Brakes
and Brake Bands separately; also the total production cost separately.
The production of the Assembling Department was - -
14, 100 Brakes
13,900 Brake Bands.
Journalize to show cost of Brake - -
Department Cost for Brakes $2,26423
17 17 " Brake Banás $1.355l.
Direct Labor for each,
Operating Expenses for each.
Total Cost of each.
Rate Brakes – $2.94728
Rate Brake Bands – $2.04.135
11
n



The balance in process in the Assembling Department at March
31st was divided as follows: -
Material .......................... $3,861.54
Labor - - - - - - - - - - - - - - - - - - - - - - - - - - - - - l, 750-90

On the production 20,000 Labor Hours on Brakes at an average
of 30¢ an hour were reported and 25,000 Labor Hours on Brake Bands at
an average rate of 20% an hour were reported, thereby making the total
45,000 Labor Hours. The total Department charges for period showed a
Labor Hour rate of 18, 1554%.
There were l, 380,000 feet of Brake Lining sold which were
produced at a cost of 10.817; per foot, the selling price being 20%
per foot.
16,000 Brakes produced at a cost of $2.94.728 a Brake were
sold for $6.60 per Brake.
16, 500 Brake Bands produced at a cost of $2.04135 per Brake
Band were sold at a price of $5.25 per Brake Band.
The Reserve for Bad Debts was adjusted so that the balance
would equal 3% on the ending balance of the Accounts Receivable.
Also, a Reserve for Discount was provided the net amount of
which was equai to about 3% of the balance of the Accounts Receivable
and Accounts Payable at March 31, 1915.
Prepare all necessary entries to record the transactions sub-
mitted inserting and filling out the summarizing records so that post-
ings may be made to the Ledger accounts affected directly from such
forms.
Prepare a Trial Balance of the General and Factory Ledgers
together with the necessary financial reports which would ordinarily be
submitted to the management of the A. B. C. Manufacturing Company.

THE A. B. C. MANUFACTURING COMPANY.,
ASBESTOS MANUFACTURERS OF BRAKES, BRAKE LINING & BRAKE BANDS.
EXPLANATION AND COURSE OF PROCEEDURE.
JOURNAL ENTRY No. 1 : –
This entry is made for the purpose of recording the infor-
mation_to open the General Ledger Accounts per trial balance of January
l, 1915. All items are posted to the accounts as stated.
JoURNAL ENTRY No. 2:
This entry affects the Factory Ledger Accounts per trial
balance January 1, 1915. All items are posted to the accounts stated,
thereby starting the accounts with the proper opening balance. It will
be not iced that the factory ledger is controlled by the Factory Ledger
Account in the General Ledger. For this reason any transaction affect-
ing the accounts in both ledgers will have to be so journalized as to
maintain this control throughout.
R&GISTER OF ACCOUNTS PAYABLE: –
From the accounts payable vouchers entries are made in the
Register of Accounts Payable which shows the proper classification and
distribution of the expenditures.
PAY-ROLL:-
When the proper items of factory expenditures have been
entered in the Register of Accounts Payable, those remaining represent
expenditures for labor and should be entered on the Pay-Roll as required
and a proper distribution made to the department accounts. The total
of all labor is credited to the lay-roll account and the various depart-
ments and general operating accounts are debited with their portion.
JOURNAL ENTRY No. 3 : —
- Each department is charged tº this entry with their portion
of the depreciation on the Building and Machinery, Tools and Sprinkler
System for three months at the rate per annum given.
journal ENTRY No. 4:-
In a like manner the departments are here charged with interest
on the valuation of the Buildings and Machinery for three months -
JOURNAL ENTRY No. 5: -
This entry is necessary in order to maintain the control of the
factory ledger in the general books and also to provide for the ºr oper
credits to the reserve accounts.
JOURNAL ENTRY No. 6 : –
The departments are charged with their prorate share of the
General Operating Expenses. It is first necessary to close out all the
accounts to a "General Operating Account".
f
JOURNAL ENTRY No. 7: -
In this entry each department is debited with its share of the
general operating expenses on the basis of the direct labor charged to
each department. While the rate 38.4% is given in the problem, the
journal entry should show how it is computed. ...
POWER COST & DISTRIBUTION: –
The data received from the Power Department is entered upon
this form and the extensions made showing the Horse Power Hours used by
each department. The necessary post ings have been made to Department 1
(Power) Account so that the analysis of cost upon the Power Cost and
Distribution Record can be made. The cost per Horse Power Hour is ob-
tained by dividing the total cost of all Power (13410.00) by the total
Horse Power Hours used in all departments (1650000). The amount for
distribution to each department is then found by multiplying the Horse
Power Hours used by this rate. Postings are made directly from the
Power Cost & Distribution. She et as shown.
SUMMARY OF MATERIAL REQUISITIONS: -
This form provides the summary for posting of all the material
requisitions for raw stock issued during the period. In practice the
totals here shown would consist of many smaller items. The postings shown
on form are self-explanatory. The proper entry should also be made on
the Stock Record for Raw Material showing the quantity and amount of each
classification used and the balance. The total of all balances per Raw
Stock Record for raw material should at all times agree with the balance
of the Raw Material Account in the Factory Ledger.
JOURNAL ENTRY No. 8: -


The total production of the Weaving Department is transferred
and charged to the Treating Department. By dividing the cost of the raw
material used by the Weaving Department ($75,000.00) by the weight pro-
duced (297.000 lbs.), the new rate of 25-1/4% is established. The operat-
ing expenses as shown in the Weaving Department Account, $52,805.48.
divided by the running time of the machine, 18,000 hours, establishes
the rate per machine hour 2.93-1/3 or approximately 2.93.36. . . The Product
System using the machine cost method for distribution of indirect expense

is here demonstrated.
JOURNAL ENTRY No. 9 : — -
Finished Stock - BL and the Brake Department are here charged
with the Brake Lining delivered to them from the Treating Department.
The total cost and the cost per pound and per foot of Treating are here
shown in detail as well as the total cost of Weaving and Treating by the
pounds and feet. Proper entries should be made upon the Finished Stock
Record for the Brake Lining delivered to Finished Stock. The Product
System using the process cost method is here shown.
JOURNAL ENTRY No. 10: –
The Brake Department is here charged with the Brake Lining
delivered from Finished Stock at the cost established and already ex-
plained. The proper entry on Finished Stock Record affecting Brake
Lining should also be made.
JOURNAL ENTRY No. 11 : –
This entry records the cash receipts which would ordinarily
be posted directly from the cash book.
JOURNAL ENTRY No. 12 : –
This entry records the cash disbursements which would ordinar-
ily be posted directly from the cash book.
JOURNAL ENTRY No. 13 : –
In this entry a full explanation is made of the cost in the
Brake Department. The manner in which the rates are established is
shown in detail. This entry demonstrates clearly the Special Order Sys-
tem using the machine cost method.
JOURNAL ENTRY No. 14: -


This entry explains fully and shows in detail how costs are
found in the Assembling Department. The Special Order System using the
Productive Labor Hour for the distribution of indirect expenses is here
set forth. Pro per entries should be made upon finished stock records
effecting brakes and brake bands.
SUMMARY OF SALES & COSTS : —
The sales and their cost are here shown together with the
gross profit on each classification and the cost per unit to manufacture.
Post ings are made as shown and proper entries should be made upon the
Finished Stock Record.
JOURNAL ENTRIES Nos. 15 and 16:-
These are adjusting entries which are self-explanatory.
GENERAL : —
When all postings have been made from the Journal Entries
and Forms as described, the General Ledger and the Factory Ledger are
both in condition for taking off trial balances.
From these trial balances both the Profit & Loss Statement.
and the Balance Sheet as shown in Exhibits "A" and "B" respectively are
compiled.

G E N E R A L J C U R N A L.
JANUARY, 1915.
J. E. No. 1: —
- l.
Sundries to Sundries:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. 10 $ 2,000.00
Notes Receivable . . . . . . . . . . . . . . . . . G. 10 25,000.00
Account S Receivable . . . . . . . . . . . . . . G. lo 81,000.00
Factory Ledger . . . . . . . . . . . . . . . . . . . G. 10 79,232.10
Plant Account . . . . . . . . . . . . . . . . . . . . G. ll 100,000.00
Accounts Payable . . . . . . . . . . . . . . G. ll
Notes Payable . . . . . . . . . . . . . . . . . G. ll
Bad Debts Reserve . . . . . . . . . . . . . G. ll
Reserve for Plant Account . . . . . G. 12
Discount Reserve . . . . . . . . . . . . . . G. 12
Capital Stock . . . . . . . . . . . . . . . . . G. 12
Surplus . . . . . . . . . . . . . . . . . . . . . . . G. 12
(To open accounts on this date per General
Ledger trial balance January 1, 1915).
--- oOo.---
J. E. No. 2 : —
Factory Ledger . . . . . . . . . . . . . . . . . . . . . . G. 10 $ 3,825.00
To Sundries:
Reserve for Plant Account . . . . . G. 12
Interest . . . . . . . . . . . . . . . . . . . . . . G - 14
(Provision for Depreciation and Interest
on Plant and Equipment for the three months
ended March 31, 1915.)
---oOo.---
J. E. No. 3: —
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. lo $485,750.00
Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. 14 14,250.00
To Accounts Receivable . . . . . . . . . . . G. LO
Notes Receivable . . . . . . . . . . . . . . G. 10
(To record cash receipts for the period).
---oCo ---
§ 11,215. 10
66,490.00
4,000.00
9,300.00
2,430.00
175,000.00
18, 797.00

$ 2,325.00
l, 500.00
$475,000. Oſ
25,000.0


G E N E R A L J O U R N A I,
J. E. No. 4 : —
(Adjusting Discount Reserve so that balance
will equal a 3% reserve on balances of Ac-
(CONT'D).
counts Payable & Accounts Receivable at Mar.
31, 1915.
Reserve Jan. 1, 1915 . . . . . . . . . . . . . . $2430.00
Reserve on Accounts Receivable Mar.
31 – $64.625.00 . . . . . . . . . . $1938.75
Less Reserve on Accounts
Payable Mar. 31–$10000.00 300.00 1638.
75
Adjustment . . . . . . . . . . . . . . . . . - - - - - - - 791. 25
-
-
— — — ooo---
Sundries
To Cash . . . . . . . . . . - - - - - - - - - - - - - - - - G. 10
Discount . . . . . . . . . . . . . . . . . . . . . . G. 14 -
Accounts Payable . . . . . . . . . . . . . . . . . . ... G. Ll #128,381.10
Notes Payable . . . . . . . . . . . . . . . . . . . . . . . G. ll 66,490.00
Pay-Roll . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. 13 91,000.00
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . G. l? 35,000.00
Advertising . . . . . . . . . . . . - - - - - - - - - - - - - G. 14 65,000.00
Taxes . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - G. 14 2,000.00
Telegraph & Telephone . . . . . . . . - - - - - - - G. lº 700. OO
Traveling Expenses . . . . . . . . . . . . . . . . . . G. 14 10,000.00
Salaries-Salesmen . . . . . . - - - - - - - - - - - - - G. 15 20,000.00
Salesmen's Commissions . . . . . . . . . . . . . . G. 15 10,000.00
Salaries—Office . . . . . . . . . . . . . . - - - - - - - G. là 18,000.00
Salaries—Officers . . . . . . . . . . . . . . . . . . . G. 15 30,000.00
Legal Expense . . . . . . . . . . . . . . . . . . . . . . . G. 16 2,000.00
Sundry Expenses . . . . . . . . . . . . . . . - - - - - - G. 16 3,000.00
(To record cash disbursements for the
period).
---ooo---
J. E. No. 5: –
Bad Debt Reserve . . . . . - - - - - - - - - - - - - - - G. ll $ 2,061.25
To Miscellaneous Income . . . . . . . . . . G. 14
(Adjusting Bad Debt Reserve so that balance
wiil equal 3% of ending balance of Ac-
gounts Receivable or $ig38.75 instead of
$4,000.00).
---oCo ---
J. E. No. 6 : —
Discount Reserve . . . . . . . . . . . - - - - - - - - - G. 12 $ 791. 25
To Discount Account . . . . . . . . . . . . . G. 14
$477, 719.67
3,851.43

2,061.25
791. 25
1915.
Jan.
Mar.
Jan.
Jan.
Jan.
Mar.
l
31
l
31
G E N E R A L L E D G E R.
C. A. S. H. -
T 1915.
Balance . . . . . . . . . . . . . J. l $ 2,000.00 Mar. 31 Sundries-Cash Bk. . . . . J.
Sundries-Cash Bk. . . . . J. ll 485. 750.00
10,030.33 $457.750.55
---oſ) or --
N 0 T E S R E C E I W A B L E.
Balance . . . . . . . . . . . . . J. l $ 25,000.00 Mar. 31. Cash . . . . . . . . . . . . . . . . J.
---oCo---
A C C 0 U N T S R B C E I V A. B. L. E.
Balance . . . . . . . . . . . . . J. 1 # 81,000.00 Mar. 31 Cash . . . . . . . . . . . . . . . . J.
Sales Summary . . . . . . . 71 458, 6.25.00
$64,625.00 $535.535.jö
---oſ)o---
F. A C T O R Y L E D G E R.
Balance . . . . . . . . . . . . . J. 1 # 79,232.10 Mar. 31. Cost of Sales . . . . . . . 71
Register of Accts. Pay. 56 120,866.00
Pay-Roll . . . . . . . . . . . . .67 92,400.00
Reserve & Interest . . . J. 5 3. 825.00
$66,209.74 $255,333ić
--- oOo.---
12
ll
ll
$477, 719.67
$ 25,000.00
$475,000. Cº.
$230, 113.36
- - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Adjustment
- - - - - - - -
G E N E R A L L E D G E R (CONT*D).
P L A N T A c c o U. N. T.
J. l $100,000.00
--- oOo.---
A C C O U N T S P A Y A. B. L. E.
J. 12 #128,381.10 Jan. 1 Balance . . . . . . . . . . . . . J.
Mar. 31 Register of . Accts. Pay. 56
$10,000.00
--- ooo--- -
N 0 T E S P A Y A. B. I, E.
J. 12 $ 66,490.00 Jan. l Balance . . . . . . . . . . . . . J.
---000---
B A D D, E B T S R E S E R W E.
J. 15 # 2,061.25 Jan. l Balance . . . . . . . . . . . . . J.
$1,938.75
---oſ)o---
R E S E R W E F O R P I, A N T A C C O U N T.
Jan. 1 Balance . . . . . . . . . . . . . J.
Mar. 31 Factory Ledger . . . . . . J.
;
$ 11,215.10
127, 166.00
§I35.35TIO
$ 66,490.00
$ 4,000.00
# 9,300.00
2.325. OO
§TIE250C

G E N E R A L L E D G E R (CONT'D).
D I S. C. O U N T R E S E R W E.
Mar. 31 Adjustment . . . . . . . . . . J. 16 $ 791. 25 Jan - l Balance . . . . . . . . . . . . . J. 1 # 2,430.00
$1,638.75
---oCo---
C A P T T A L S T O C. K.
Jan. l Balance . . . . . . . . . . . . . J. 1 #175,000.00
--- ooo---
S U R P L U. S.
Jan. 1 Balance . . . . . . . . . . . . . J. l $ 18, 797.00
---OOO---
- - D I W I D E N D S.
Mar. 31 Cash . . . . . . . . . . . . . . . . J. 12 # 35,000.00
--- ooo---
I N S U R A N C E.
Mar. 31 Register of Acots, Pay, 56 & 2,000.00
---ooo---

G E N E R A L L E D G E R (CONTD).
e o s T A G E, P R T N T 1 N G & S T A T 1 on E R Y.
Mar. 31 Reg. Accounts Payable 56. $ 1,500.00
---oſ)o---
E x P R E S s, F R E I G H T & C A R T A G E.
Mar. 31 Reg. Accounts Payable 56 # 2,800.00
---000---
P A Y R O L II.
Mar. 31 Cash . . . . . . . . . . . . . . . . J. 12 $ 91,000.00 Mar. 31 Pay Roll . . . . . . . . . . . . 67 $ 92,400.00
$1,400.00
---ooo---
P R O F I T & I, O S S .
Mar. 31 Interest-Factory Led. J. 5 § 1,500.00
Bad Debts Res. Adj. . . J. 15 2. O61.25
§-3. EEiº
---oſ)o---
D T S C O U N T.
Mar. 31 Accounts Receivable. . . J. 11 § 14, 250.00 Mar. 31. Accounts Payable . . . . J. 12 $ 3,351.43
$9,607.32 - 31 Adjustment Reserve . . J. 16 791, 25
, 642.68
---oCo---

Mar.
Mar.
Mar.
Mar.
Mar.
31
31
31
31
G E N E R A L I, E D G E R (cont"D).
A p w E R T 1 s T N G.
Cash ............. ... J. 12 + 65,000.00
---000---
- T A X E S.
cash ................ J. 12 & 2,000.00
---ooo---
T E L E G R A P H & T E L E P. H. O. N. E.
Cash . . . . . . . . . . . . . . . . J. 12 3 700.00
---oCo---
T R A V E L I N G E X P E N S E S.
Cash . . . . . . . . . . . . . . . . J. 12 # 10,000.00
---oCo---
S. A. L. A. R. I E S – S A. L E S M E. N.
Cash . . . . . . . . . . . . . . . . J. 12 $20,000.00
---oCo---

Mar - 31
G E N E R A L I, E D G E R (Conrºd).
S. A. L E S M E. N'S C O M M L S S I O N S -
Cash . . . . . . . . . . . . . . . . J. 12 # 10,000.00
---oſ)o---
- S. A. L. A. R. I E S - O F. F. I. C. E.
Cash . . . . . . . . . . . . . ... J. 12 # 18,000.00
---oOo.---
s A L A R T E S – o F F I C E R s.
Cash . . . . . . . . . . . . . . . . J. 12 & 30,000.00
--- ooo---
L E G A L E X P E N S E.
Cash . . . . . . . . . . . . . . . . J. 12 # 2,000.00
---ooo---
S U N D R Y E X P E N S E S.
Cash . . . . . . . . . . . . . . . . J. 12 $ 3,000.00
---ooo---

G B M B R A L L E D G B R (CONT"D).
s A L E s a c c ou N T - B R A K E L T N T N G.
Mar. 31 Cost of Sales . . . . . . . 71 $149,274.60 Mar. 31 Sales Summary . . . . . . . 71
---ooo---
- s L E S A C C O U N T - B R A K E S.
Mar. 31 Cost of Sales . . . . . . . 71 & 47,156.48 Mar. 31 sales summery ....... 71
---oCo---
s a L E s a c c ou m r - B R A K E B a n ps.
Mar. 31 Cost of Sales . . . . . . . 71 $ 33,682.28 Mar. 31 Sales Summery . . . . . . . 71
$276,000.00
# 96,000.00
$ 86,625.00
G E N E R A I, I, E D G E R.
T R I. A. L. B A L A N C E.
MARCH 31, 1915.
Cash . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - $ 10,030.33
Accounts Receivable . . . . . . . . . . . . . . . . . . - - - - - - - - - 64,625.00
Factory Ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - 66,209.74
Plant Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 100,000.00
Accounts Payable . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - $ 10,000.00
Bad Debts Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1,938.75
Reserve for Plant Account . . . . . . . . . . . . . - - - - - - - - ll, 625.00
Discount Reserve . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - 1,638.75
Capital Stock . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - 175,000.00
Surplus . . . . . . . . . . . • - - - - - - - - - - - - - - - - - - - - - - - - - - - 18, 797.00
Dividends . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - 35,000.00
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - 2,000.00
Postage, Printing & Stationery . . . . . . . . . . . . . . . . l, 500.00
Express, Freight & Cartage . . . . . - - - - - - - - - - - - - - - 2,800.00
Pay-Roll . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - 1,400.00
Profit & Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 561.25
Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,607.32
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,000.00
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000.00
Telegraph & Telephone . . . . . . . . . . - - - - - - - - - - - - - - - 700.00
Traveling Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000.00
Salaries - Salesmen . . . . . . . . - - - - - - - - - - - - - - - - - - - 20,000.00
Salesmen's Commissions . . . . . . . . . . . . . . . . . . . . . . . . 10,000.00
Salaries - Office . . . . . . . . . . . . . . . - - - - - - - - - - - - - - 18,000.00
Salaries - Officers . . . . . . . . . . . . . . . . . . . . . - - - - - - 30,000.00
Legal Expense . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - 2,000.00
Sundry Expense . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - 3,000.00
Sales Account - Brake Lining . . . . . . . . . . . . . . . . . . 149,274.60 276,000.00
Sales Account - Brakes . . . . . . . . . . - - - - - - - - - - - - - - 47, 156.48 96,000.00
Sales Account - Brake Bands . . . . . . . . . . . . . . . . . . . 33.682. 28 86,625.00

$682,585.75 §682,585.75
F. A. C.
T O R Y J O U R N A L.
J. E. No. l: —
Sundries to Sundries:
(Depreciation fer thre
31, 1915 on Buildings
& Sprinkler System).
JANUARY, 1915.
Raw Material . . . . . . . . . . . . . . . . . . . . . F. 103 # 34,000.00
Finished Stock . . . . . . . . . . . . . . . . . . . F. 103 34,232.10
Work in Process-Dept. 1 (Coal) ... F. 104 750. OO
Work in Process-Dept. 2 (Supplies) F. lof 3,675.00
Work in Process-Dept. 3 . . . . . . . . . . F. 105 3, 175.00
Work in Process-Dept. 4 (Supplies) F. 106 l, 150.00
Work in Process-Dept. 5: -.
Material . . . . . . . . . . . . . $1,250.00
Direct Labor . . . . . . . . . 750. OO
Overhead . . . . . . . . . . . . . 250. OO F. 106 2,250.00
General Ledger . . . . . . . . . . . . F. 104 § 79,232.10
(To open accounts on this date, per Factory
Ledger Trial Balance January 1, 1915).
---ooo---
J. E. No. 2: -
Sundries:
To General Ledger . . . . . . . . . . . . . . . . F. 104 $ 2,325.00
Depreciation Dept. 1-8% per year on
20,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . ... F. 104 $ 400.00
Depreciation Dept. 2-10% per year on
35,000 . . . . . . . . . . • - - - - - - - - - - - - - - - - - - F. 105 875. OO
Depreciation Dept. 3-10% per year on
25,000 . . . . . . . . . . . . . . . . . - - - - - - - - - - - . F. 105 625.00
Depreciation Dept. 4-8% per year on
15,000 . . . . . . . . . . . . . . . . . - - - - - - - - - . . . F. loë 300. OO
Depreciation Dept. 5–10% per year on
5,000 . . . . . . . . . . . . . . - - - - - - - - - - - - - . . . F. 106 125.00
e months ended March
and Machinery, Tools
- - -oſ)o---
- J. E. No.
J. E. No. 4 :
J.
E. No.
F A C T O R Y J.
3 : —
Sundries:
To General Ledger
Interest-Dept. 1-6%
Interest-Dept. 2-6%
Interest-Dept. 3-6%
Interest-Dept. 4-6%
Interest-Dept. 5-6%
per
per
per
per
per
(Interest for three
O U R N A I,
- - - - - F.
2OOOO F.
35OOO F.
25OOO F.
15OOO F.
5000. F.
(CONT*D).

104
104
105
105
106
106
months ended March 31,
1915 on Buildings and Machinery, Tools &
Sprinkler System).
---OOo---
- - - - - - - - - - - - - -
General Operating
To Sundries:
Indirect Labor . . . . . . . . . .
Factory Expenses
Printing,
Experimental Labor . . . . . .
Experimental Supplies .
Supplies
- - - - - - - -
- -
- - - - - - - - - - - - - - - -
Freight, Express & Cartage . . .
Repairs & Maintenance-Lab or . .
Repairs & Maintenance-Supplies
Fire & Liability Insurance . . .
Postage & Stationery
- - - - -
- - - - -
- - - - -
--- ooo---
5 : —
-
Sundries: -
To General Qperating
Dept. 1 - 38.4%
Dept. 2 38.4%
Dept. 3 – 38.4%
Dept. 4 – 38.4%
Dept. 5 38.4%
- - - - - - - -
of Direct;
of Direct
of Direct
of Direct,
of Direct;
Labor
F.
F.
F.
F.
F.
F.
- - - - -
108
108
107
LO'7
107
107
107
108
108
108
107
108
104
105
105
106
lC6
(Distribution of General Operating Expenses
on a basis of direct lab or charged to each
department.
General Operating Expenses . . . .
Direct Labor charged all Depts.
3. 808. OO ..
######
52 UCOIOC 7
---oCo---
# 23,
l,
9,
5,
3,
4,
300.00
525. OO
375. OO
225. OO
75. OO
8O8. OO
152.00
216.00
760.00
O'72. OO
608.00
38.4%
$ 1,500.00
$ 12, 500.00
500. OO
2,000.00
l,000.00
500. OO
OOO.OO
OOO. OO
OOO.OO
OOO.OO
3O8. OO
2
l
2
2
>»yº

$ 23,808.00


F. A C T O R Y J O U R N A I,
) J. E. No. 6: -
Treating Department . . . . . . . . . . . . . . . .
To Weaving Department . . . . . . . . . . . . F. 105
Material:
300,000 lbs. at 25% =$75,000.00
3. OOO " waste
297.000 " balance = $75,000.00 or
297,000 lbs. at 25-1/42 = $74,392.50
Operating Expenses:
18, 100 machine hours at
2.93.36 = 53.098. 16
Total cost to weave . . . . . . . $128,090.66
or 297,000 at .4313,
cost of weaving per pound.
---oſ)o---
J. E. No. 7 : —
Sundries:
D To Treating Dept. . . . . . . . . . . . . . . . . F. 105
Finished Stock-B.L. 1,400,000 feet BL
at 10.817.3 per foot . . . . . . . . . . . . . . . .
Brake Dept. - 90,000 feet BL at 10.817;
per foot . . . . . . . . . . . - - - - - - - - - - - - . . . . F. loë
(The above being cost of production as per
following summary of costs : )
Treating Department Costs:
Material from weaving department
Treating Cost of Production:
(CONT*D).

. F. 105 #128,090.66
$128,090.66

$161,173.30
F. 103 $151,438.00°
9,735.30°
---oOo.---
$128,090.66
'625.00
375. OO
871.06 33,082.64**
Supplies . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - $
Fire & Liability Insurance . . . . . . . . . . . . . .
Direct Labor . . . . . . . . . . - - - - - - - - - - - • * - - - - -
Indirect Labor . . . . . . . . . . . - - - - - - - - - - - - - - -
Repairs & Maintenance . . . . . . . . . . . . - - - -
General Operating Expenses . . . . . - - - - - - - - -
Power Cost . . . . . . - - - - - - - - - - - - - - - - - - - - - - - -
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . - - - - - - ------
In Process Jan. 1, . . . . . . . . . . . . $3,175.00
In Process Mar. 31st . . . . . . . . - 2,303.94
Total Cost of Production . . . . . . . . . . . . .
D + For 298,000 lbs. or l, 490,000 feet )
cost per pound 54.085% or 'ió.817% per footjºº
** Treating Cost per lb. 11.1% per foot 2.22%
§IEITV3.30
basis of 5 ft. to 1 lb.

F A C T O R Y J O U R N A I, (CONT* D).
J. E. No. 8 : –
Brake Department (Dept. 4) . . . . . . . . . . F. 106 $ 1,622. 55
To Finished Stock BL . . . . . . . . . . . . . F. 104 # 1,622.55
(15,000 ft. BL at 10.817%).
---oCo---
J. E. No. 9:-
Assembling Department . . . . . . . . - - - - - - - F. 106 # 53,380.82
To Brake Department . . . . . . . . . . . . . . F. loë # 53,380.82
---ooo---
14,000 Brakes at 2.26423 = # 31,699.22
16,000 Brake Bands at 1.355105 = 21, 68l-60
# 53.380-82
The above being the cost of production as perT
the following summary of costs.
14,000 Brakes, each containing - -
4 lbs. steel at 33-1/34 = l. 33333
3 ft. lining at 10.8.17% = ... 32.451.
Weaving, Treating & Steel cost
per Brake 1.65784
Brake Department Operating Cost
per Brake - . 60639
Total cost and rate per brake $2.26423
16,000 Brake Bands each containing - -
l-l/2 lbs. steel at 33–1/32 = .50
3 ft. lining at 10.817% = .32451
Weaving, Treating & Steel Cost
per Brake Band - 82451
Brake Department Operating cost
per Brake Band - 53O59
Total cost and rate per brake
band l. 35510
Brake Department Cost of Operation:
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . # 3, 150.00
Fire & Liability Insurance . . . . 10.00
Direct Labor . . . . . . . . . . . . . . . . . . . . . 8,000.00
Indirect Labor . . . . . . . . - - - - - - - - - - - 2,000.00
Repairs & Maintenance . . . . . . . . . . . . 100.00
General Operating Expenses . . . . . . . 3,072.00
Depreciation . . . . . . . . . . . . . . . . - - - - - 500.00
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 225.00
Power Cost . . . . . . . . . . . . . . . . . . . . . . . 121.91 # 16,978.91
Total machine hours 36,000 equal to 47.163% per machine hour.
Brakes: Production 14,000; machine hours 18,000 at 47.1633 =
$8489.45 or .606388 per brake.
Brake Bands: , Production 16,000; machine hours lº,000 at
47.1632 = $8489.46 or .53059 per brake band.
---ooo----
_º

F A C T O R Y J O U R N A I. (CONT* D).
) J. E. No. 10: –
Sundries:
to Assembling Department . . . . . . . . . . F. 106 $ 69,931.41
Finished Stock Brakes . . . . . . . . . . . . . . . . F. 103 # 41, 556.65
(14,100 Brakes at 2.94728 = 42646.15)
Finished Stock Brake Bands . . . . . . . . . . . F. 104 28,374.76
(13,900 Brake Bands at 2.04135 = 28374.76).
The above being the cost of Finished Stock as
per following summary of costs:
14.100 Brakes:
Department cost each . . . . . . . . . . . . . . 2.26423
Direct Labor cost each . . . . . . . . . . . . . 42553
Operating Expenses cost each . . . . . . . .25752
Total cost per finished Brake . . 2.94.728
l3.900 Brake Bands: -
Department cost each . . . . . . . . . . . . . . 1.35510
Direct Labor cost each . . . . . . . . . . . . . 35971
Operating Expenses cost each . . . . . . ... 32.654
2.04I35
Assembling Department cost of Operation and Material Charges:
Direct; Labor. Overhead. Material.
* Inventory, Jan. 1, 1915 . . . 750. OO 250.00 I,250.00
Supplies . . . . . . . . . . . . . . . . . . 200.00
Labor for Period. . . . . . . . . . . 12,000.00
Fire & Liability Insurance. 90. OO
Brakes . . . . . . . . . . . . . . . . . . . . 31,699.22
Indirect Labor . . . . . . . . . . . . 2,500.00
Repairs & Maintenance . . . . . 2OO.OO
Brake Bands . . . . . . . . . . . . . - - 21,681.60
General Operating Expenses. 4,608.00
Depreciation . . . . . . . . . . . . . . 125.00
Interest . . . . . . . - - - - - - - - - - - 75. OO
Power Cost . . . . . . . . . . . . . . . . 121.9l
12,750.00 8, 169.91 54,630.82
Less Inventory, Mar. 31, 1915_l. 750.00 - - - 3,861.54
ll,000.00 8, 169.91 50,769.28
Brakes 20,000 hrs. at 302 = 6,000.00
Brake Band's 25,000 hrs. at
20% = 5,000.00
ll. OOO.OO
45,000 labor hours at 18.1554 per labor
hour = 8, 169.91
14, 100 Brakes made in 20,000 hours = (1 Brake = 1.4.1844 Hr.)
Labor at 30% = . 42553
Overhead at 18.1554% = - 25752
13,900 Brake Bands made in 25,000 hours = (1 Brake Band = 1.79856 Hr.)
Labor at 25% = . 35971
Overhead at 18.1554% = ... 32.654

R E G T S T E R O F A C C O U N T S P A Y A B L E.
C r e d i t s D e i tº s
A c c o u m t s P a y a b le When & How Paid Miscellaneous. Accounts—-General operating Aeeeººts== air;
- * , * * - Cº-º-º-
Wou. Voucher Check Factory Print Experit Sup- Frt. Expº 8.
Date Nc. Favor of Terms Fo: Payable Date No. 1 Bank || Amount Name Fo. Amount Expense & Sta.mental plies& Qart Maºri:
1915
Mar 71287|Various Crs. Raw Material F103 "500000
Raw Material F10; 2500000
Dept. 1-Supplies F104 795.800
" l–Supplies F1C4 40000
| 3-ºpplies Flº loº,
| 3-Supplies F105 50000 |
- | " 4-šupplies F106 200000
| - | 5-šº plies |E|2% 2OOOO
" 1-F & L Ins. F104 10000
º - 17 º F105 *::::
* 3– " " F105 10000
- * " 4- " " F106 1000
* 5– " " F106 9000 i
| Fire & Lia. Ins. F107 3O800
11286600
Insurance G 13 200000
Printing, Postage
& Stationery G 13 15 O
Freight, Express & -
Cartage G 13 28OOOO
53COOC
|
11916600
G e n e r a 1 L e d g e r. F a c t o r y I, e d g e r.
Factory Ledger Account T.T.T. Dr. G 10 . . . . . . . . . . . $120,866.00 Miscellaneous Factory Accounts . . . . . • Dr. V. . . . . . . . . . . . $112,866.60
Sundries . . . . . . . . . . . . . . . . . . . . . . . . Dr. / . . . . . . . . . . . 6 3OO. OO General 01/erating Accounts . . . . . . . . . . Dr. V. . . . . . . . . . . . 8,000 00
Accounts Payable . . . . . . . . . . . Cr. . . . . . . . . . . . $137 IEEICC General Ledger Account . . . . . . . . . Cr. - - - - - - - - - - - $120,566. Cº.
GTI TETSAT

S T O C K R E C O R. D.
Style —r - - - - Maximum
Article - Minimum
_P r o d u c e d | Used or sold Balance
- - | Date Quantity Cost Amount || Quantity Amount ||Quantity Amount
I915 - |
Raw Material (Yarn) Jan. 1 64,000 .25 16,000 00 - 64,000 16,000 00
- Mar. 31 300,000 .25 75,000 OO 310,000 77, 50000 || 54,000 13,600 00
Raw Material (Steel) Jan. 1 54,000 .334/3, 18,909 |QQ 54,000 18,000 00
" . Mar. 31 75,000 .33-1/3 25,000 |00|| 81,000 27,00000|| 48,000 16,000 00
Finished Stock Jan. 1 3,680 2.94728 10,846 |42 3, 680 19,846 42.
(Brakes) - Mar. 31 14,100 2.94728 (41,556 (65. 16,000 47,15648, 1,780 5,246 59.
Finished Stock Jan. 1 | *140,166 .10817 | 15, 161||78 140,166 15,161 78
(Brake Lining) Mar. 31 |l, 400,000 | . 10817 * 00|| 15,000 1,622551,525, 166 164,977 23
- - 1,350,000 145,37460|| 145166 ſi6,702 63
Finished Stock Jan. 1 * 4,029 2.04135 8, 223 |90 4,029 8, 223 90
(Brake Bands) Mar. 31 13,900 2.04135 28.374 |76 lb, 500 33,68228|| 1,429 2,916 (38.
| | | | |
* Quantities are not given in problem. These figures are based on the rate ShoWn.

SUMMARY OF MATERIAL REQUISTITIONS.
For three months ending 191.
Founds classi- #####: m e a t s.
|Delivered fication. Rate. Amoun =Weav.5-Treat;4-Brakº-Assem.
- - --- I -
|
310,000 Yarn .257500067750000
81,000 Steel .33-
i/32700000
2700000
104500 º 27OOOOO
|
I
F-103 F-16s
Raw Stock Acct. F-107

Power cost & DrSTRIBUTION.
For three months ending March 31, 1915.
- - |Running H. P. l. |Power
Analysis cost Dept. H.F. Time Hours * Così.
Supplies 7958 |00 2 50 LSOOO 900000 106 ºnal 48
Fire & Liability -
Insurance 1OO |OO 3 40 18000 720000|106 585.1 58
Repairs & Mainte-
nance 500 OO 4 5 3OOO 15000107 121 91
Direct Lab or 300000
General Operating 5 5 3000 150001107 121 °l
Expenses 1152 00 O
Depreciation 40000 1650000 P409, 88
Interest 300 00
1341000
F 105
Horse Power Hours . . . . . . . . . . . . . . . . . . . . . . 1,650,000
Horse Power Distribution . . . . . . . . . . . . . . . l, 650,000
Cost per Horse Power Hour . . . . . . . . . . . . . . .OO81272
Coal on hand March 31, 1915 . . . . . . . . . . . . $750.00


P A Y R O L L - - Week ending March 31, 1916.
|
|-ºr- 0 m er a t in a D e p a r + m e º t s, General Operatin;
Tepartment I. Department 2. Department 3. | Department 4. Department 5. Experi- -
- - -- |-- Indir...incrital R&M
Name | Total DirectIndir. R&M Direct |Indir. R & M Direct Indir.R & M. Direct Indir. R&M Direct Indir. R&M | Labor *ſº
sº -
24OOOOO 2400000
40OOOO 4OOOOO
1500063 15OOOOO
3OOOOO 3OOOOO
800000 8000|od
200000 -
12OOOOO 12OOOOO
sº 25OOOO
LOOOO 10000
200000 2OOOOO
100000 J.OOOOO !
LOO
2OOOOO
OO LOOOO
2OOOO sº
12599.99 1250,000
10OOOO 1OOOOO
- 2OOOOO 2OO
|
~}º L
924OOOO3OOOOO ––– icº º
— | - | ſt |
Pay-Roll
Cr. G 13 F104 FLO4 F105 F105 F105 F105 F105 F105 F106 F106 F106 F106 Floé F103 Flc8 F107 Fiel
- Factory L.
Dr. G 10
º cº, &
O
O
8
O
O
O

s U M M A R Y 0 F S A L E S & C o S T S.
- - - For three months ending March 31, 1915.
S a l e s C o S tº o f S a l e s Gross Profit cost
TE
- |####| Brake Brake || Brake Brake per
|- Item | à5Ié. Lining Brakes | Bands ||Lining Brakes Bands || Total Amount % Unit
- _ - | - - -
l, 380,000 ft. 2760000027600000 labezasó 1492.74 12gºs O ... 10817
B.L. at 20%
13,900. Brakes||960000 96.OOO OC 47156 48. 47.15648 488.4352 2.94.728
at 6.00 - -
16, 500 Brake 866250C | 86625 OO 3368228 3368328 5294212 *.cºgee
Bands at 5.25
#58625002/60000096000 CO 86625 OG14927480 4.7.15648 3368228 2301336 2285.164 - -
G lo G 17 g 17 g 18 g 17 g 17 g 18 G 10
F 103
F 104


1915.
Jan.
Jan.
Mar.
Mar.
1
l
31
31
31
31
F. A C T O R Y L E D G E R.
R A w M A T E R T A L.
- 1915
Balance . . . . . . . . . . . . . J. 1 # 34,000.00 Mar. 31 Summary of Mat. Req. . . 44
Reg. Accts. Payable .. 56 75,000.00 -
Reg. Accts. Payable .. 56 25, OOO. OO
$29,500.00 #Tº
---ooo---
F I N T S H E D S T O C. K.
Balance . . . . . . . . . . . . . J. 1 # 34,232.10 Mar. 31 Brake Dept. . . . . . . . . . J.
Treating Department. : J. 9 151,438.00 31 Cost of Sales . . . . . . . 71
Brakes . . . . . . . . . . . . . . J. lºt 41, 556.65 -
Brake Bands. . . . . . . . . . J. 14 28, 374. 76
$23,865.60 #355, EOIEI
---oCo---
G E N E R A L L E D G E R A C C O U N Tº.
Cost of Sales . . . . . . , 71 $230, 113.36 Jan. 1 Trial Balance . . . . . . . J.
Mar. 31 Reg. Accts. Payable. , 56
Pay Roll . . . . . . . . . . . . 67
Depreciation . . . . . . . . J.
Interest . . . . . . . . . . . . J.
$66,209.74
---oOo.---
$104,500.00

10 # 1,622. 55
230, 113.36

232 - 10
866.00
92 - 400. OO
3 2. 325. OO
4. 1 - 500. OO
$335.333io
1 $ 79
*120
-ºº>

F A C T O R Y L E D G E R (CONT*D).
D. E. P. A R T M E N T l - P 0 W E R .
Jan, l Balance-Coal . . . . . ...T.J. Tº 750. OO Mar. 31 Distribution – Power
Mar. 31 Supplies-Register of
Cost & Distribution
Accounts Payable . . . 56 7, 958.00 Sheet . . . . . . . . -- - 39
Fire & Liability In-
surance-Register of
Accounts Payable . . . 56 100.00
Direct Labor-Pay Roll 67 3,000.00
Repairs & Maintenance-
Supplies . . . . . . . . . . . P. 56 400. OO
Repairs & Maintenance-
Labor . . . . . . . . . . . . . . 67 100.00
General Operating Ex-
periS6S . . . . . . . . . . . . . J. 7 l, 152.00
Depreciation-8% on
$20,000. . . . . . . . . . . . J. 3 400.00
Interest–6% on $20,000J. 4 300.00
$750. 12 $TAI30.00
---ooo---
D E P A R T M. E. N. T. - W E A W I N G.
Jan. 1 Supplies-Balance . . . . J. 1 $ 3,675.00 Mar. 31 Treating Department. . J. 8
Mar. 31 Supplies-Reg. Accts. - -
Payable . . . . . . . . . . . . 56 1,000.00
Fire & Liability In-
surance-Reg. Acct s.
Payable . . . . . . . . . . . . 56 200.00
Direct Labor-Pay Roll 67 24,000.00
Indirect Labor-Pay -
Roll . . . . . . . . . . . . . . , 67 4,000.00
Repairs & Maintenance-
Labor - Pay Roll . . . 67 2,000.00
General Operating Expenses J7 9, 216.00
Depreciation-10% on -
$35,000. . . . . . . . . . . . J. 3 875.00
Int. -6% on $35,000... J. 4 525.00
Power Cost; D is tribution 39 7, 314.48
77 500.00
Summary Material Req. 44
tº a 2+ 4, §2
sº ºn R 45
$ 13,409.88
$128,090.66

Jan.
Mar .
Jan.
Mar.
l
31
l
31
F A C T O R Y
D E P A R T M E N T
I, E D G E R (CONT D).
T R E A T I N G
31 Finished Stock-BL
Brake Department
In Process (Balance). . J. l $ 3, 175.00
Supplies-Reg. Accts.
Payable . . . . . . . . . . . . . 56 500. OO
Fire & Liability Ins. .. 56 100. OO
Direct Labor-ray Roll. 67 15,000.00
Ind. Labor-Pay Roll . .67 3,000.00
R & M - Pay Roll . . . . .67 1,000.00
General Operating Exp. J. 7 5, 760.00
Depr. -10% on $25000. J. 3 625. OO
Int. - 6% on $25000. J. 4 375. OO
Power Cost Distribution 39 5,851.58
Weaving Department . . J. 8 128. O90.66
$2,303.94 §I53. 477.34
---ooo---
D E P A R T M. E. N. T. B R A K E.
Supplies-Balance . . . . J. l $ 1,150.00
Supplies-Reg. Accts.
Payable . . . . . . . . . . . . 56 2,000.00
Fire & Lia. Ins. --Reg.
Accounts Payable . . . 56 10. OO
Direct Labor-Pay Roll 67 8,000.00
Ind . Labor-Pay Roll . 67 2,000.00
R & M - Pay Roll . . . . 67 100. OO
General Operating Ex-
Perls eS . . . . . . . . . . . . . . J. 7 3,072.00
Depr. -8% on $15,000. J. 3 3OO . OO
Int. -6% on $15,000. J. 4 225. OO
Power Cost. Distri- -
but ion . . . . . . . . . . . . 39 121.9l
Summary Mat. Req . . . 44 27,000.00
Treat. Dept. -BL . . . . J. 9 9,735.30
Finished Stock – BL. J. LO 1. 622. 55
$1,955.94 § 55.335.75
––– OCo---
Mar. 31 Assembly Dept. -B . . . .
Assembly Dept. -BB . . .
$151,438.09
9,735.30
§IEII/3.30

$ 31,699. 22
21, 68l. 60
#T53.350.82

F. A C T O R Y L E D G E R (CONT D).

D E P A R T M E N T 5 - A S S E M B L I N G.
Jan. l Balance (Material l, 250. Mar. 31 Finished Stock-Brakes J. 14 § 41, 556.65
Direct Labor $750. Ó0, Finished Stock-Brake
Overhead $250.00) . . . J. l $ 2,250.00 Bands . . . . . . . . . . . . . . J. 14 28,374.76
Mar. 31 Supplies-Reg. Accts.
Payable . . . . . . . . . . . . 56 200. OO
Fire & Liability Ins. –
Reg. Accts. Payable. 56 90.00
Direct Labor-Pay Roll 67 12,000.00
Ind . Labor-Pay Roll . . 67 2,500.00
R & M - Pay Roll . . . . 67 2OO. OO
General Operating Exp. J. 7 4,608.00
Depr. -10% on #5, Ö00. J. 3 125. OO
Int. – 6% on $5,000. J. 4 75. OO
Power Cost Distribu-
tion . . . . . . . . . . . . . . . 39 121.9l
Brake Dept. - B . . . . . J. 13 31,699.22
Brake Dept. - BB . . . . J. lº 21 68l. 60
$5,619.32 5-75. 550.73 § 53.93I.TI
--- ooo---
F I R E & L I. A B I L I T Y I N S U R A N C E.
Mar. 31 Register of Accounts Mar. 31 General Operating . . . J. 6 # 3O8 , CO
Payable . . . . . . . . . . . . 56 $ 3O8. OO
---oCo---
R A C T O R Y E X P E N S E.
Mar. 31 Register Accts. Pay. 56 § 500. OO Mar. 31 General Operating . . . J. 6 # 500.00
---oſ)o---

F. A C T O R Y L E D G E R (CONT' D).
---000---
P_0 S T A G E, P R I, N T I N G & S T A T I_0 N E R Y.
Mar. 31 Reg. Accts. Payable 56 $ 2,000.00 Mar. 31 General operating ... J. 6 $ 2,000.00

---oCo---
E X P E R I M E N T A L W. O. R. K.
Mar. 31 Supplies-Reg. Accts. Mar. 31 General operating ... J. 6 & 500.00
Payable . . . . . . . . . . . . 56 $ 500.00 General Operating . . . J. 6 1,000.00
Labor-Reg. Accts. Pay, 67 l,000.00
--- oOo.---
S U P P L I E S.
Mar. 31 Reg. Accts. Payable 56 $ 2,000.00 Mar. 31 General Operating . . . J. 6 # 2,000.00
---ooo---
F. R. E. I. G. H. T., E X P R E S S & C A R T A G E.
Mar. 31 Reg. Accts. Payable 56 $ 1,000.00 Mar. 31 general operating . . . J. 6 + 1,000-09

---oCo---
F. A C T O R Y I, E D G E R (CONT'D).
R E P A T R & M A I N T E N A N C E .
Mar. 31 Supplies-Reg. Accts. Mar. 31 General Operating . . . J. 6 $ 2,000.00
Payable . . . . . . . . . . . . 56 $ 2,000.00 General Operating . . . J. 6 2,000.00
- Labor-Pay Roll . . . . . . 67 2,000.00
---OOO---
I N ID I R E C T L A B O R.
Mar. 31. Pay Roll . . . . . . . . . . . . 67 § 12,500.00 Mar. 31 General Operating ... J. 6 # 12,500.00
---ooo---
G E N E R A L O P E R A T T N G.
Mar. 31 Sundries . . . . . . . . . . . . J. 6 # 23, 808.00 Mar, 31 Sundries . . . . . . . . . . . . J. 7 $ 23, 808.00
---oCo---

F A C T O R Y I, E D G E R .
T. R. I. A. L. B. A. L. A. N. C. E.
MARCH 31, 1915.
Raw Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . § 29, 500.00
Finished Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 865-60
General Ledger Account . . . . . . . . . . . . . . . . . . . . . . . . $ 66,209.74
Department l - Power . . . . . . . . . . . . . . . . . . . . . . . . . . 750. 12
º 2 - Weaving . . . . . . . . . . . . . . . . . . . . . . . . 2,214.82
17 3 - Treating . . . . . . . . . . . . . . . . . . . . . . . 2,303.94
ty 4 - Brake . . . . . . . . . . . . . . . . . . . . . . . . . . 1,955.94
11 5 - Assembling . . . . . . . . . . . . . . . . . . . . . 5,619.32
Total . . . . . . . . . . . . . . . . . . . . . $ 66,209.74 $ 66,209.74
RAW MATERIAL:
Yarn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,500.00
Steel . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - 16 OOO.00
Total . . . . . . . . . . . . . . . . . . . . . § 35.505.05
FINISHED STOCK : —
Brakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5, 246.59
Brake Lining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 702.63
Brake Bands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.916.38
Total . . . . . . . . . . . . . . . . . . . . . § 23:555 55

P R O F I T & I, O S S S T A T E M E N T.
For the three months ended March 31, 1915.

Brake
Lining. Brakes. Brake Bands. Total.
SALES . . . . . . . . . . . . . . . . . . . $276,000.00 #96,000.00 $ 86,625.00 #458,625.00
COST OF SALES . . . . . . . . . . . 149, 274.60 47,156.48 33,682. 28_230, ll:3.36
#136.725.40 （45.543.52 : 52.342.72
GROSS PROFIT . . . . . . . . . . . . $228,511.64
SELLING EXPENSES: -
Salesmen's Salaries . . . . . . . . . . . . . . $20,000.00
Salesmen's Commissions . . . . . . . . . . . 10,000.00
Traveling Expenses . . . . . . . . . . . . . . . 10,000.00
Advertising . . . . . . . . . . . . . . . . . . . . . . 65 OOO. OO
Total Selling Expenses . . . . . . . . $105,000.00
GENERAL EXPENSES: -
Officers' Sºlaries . . . . . . . . . . . . . . . $30,000.00
Office Salaries . . . . . . . . . - - - - - - - - - 18,000.00
Legal Expense . . . . . . . . . . . . . . - - - - - - 2,000.00
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000.00
Telegraph & Telephone . . . . . . . . . . . . 700. OO
Sundry Expenses . . . . . . . . . . . . . . . - - - 3,000.00
Discounts . . . . . . . . . . . . . . . . . . . . . . . . 9,607.32
Insurance . . . . . . . . . . . . . . . . . . . . . . . . 2,000.00
Postage, Printing & Stationery . . . 1,500.00
Express, Freight & Cartage . . . . . . . 2.800. OO
Total General Expenses . . . . . . . . 71.607-32
Total Selling & General Expenses 176.607-32
NET PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,904.32
OTHER INCOME: –
Interest . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,500.00
Adjustment of Bad Debts . . . . . . . . . . 2,061.25 3,561.25
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55,465.57
--
EXHIBIT "A"
B. A. L. A N C E S H E E T.
MARCH 31, 1915.
A S S E T S
CURRENT ASSETS : –
Cash on hand and in bank . . . . . . . . . . . . . . . . . . . . $ 10,030.33
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . 64.625.00 $ 74,655.33
MERCHANDISE INVENTORY: –
Finished Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23, 865.60
Work in Process . . . . . . . . . - - - - - - - - - - - - - - - - - - - - 12, 844.14
Raw Material . . . . . . . . . . . . . . . - - - - - - - - - - - - - - . . . 29.500.00 66,209.74
FIXED ASSETS : – -
ant; . . . . . . . . - - - - - - - - - - • . . - - - - - - - - - - - - - - - - - - - 100,000.00
Total Assets . . . . . . . . . . . . - - - - - - - - $240,865.07
I, I A B I L I T I E S & C A P I T A L.
CURRENT LIABILITIES : —
Accounts Payable . . . . . . . . . - - - - - - - - - - - - - - - - - - - $ 10,000.00
Wages Unpaid . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - 1. 400.00 ll, 400.00
RESERVES : —
Bad Debt Reserve . . . . . . . . . - - - - - - - - - - - - - - - - - - - $ 1,938.75
Reserve for Plant Account . . . . . . . . . . . . . . . . . . . ll, 625.00
Discount Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 638. 75 15, 202.50
CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,000.00
SURPLUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18, 797.00
NET INCOME for three months ended March 31, 1915 55. 465. 57
Total . . . . . . . . . . . . . . - - - - - - - - - - - - - $ 74,262.57
DIVIDENDS PAID . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - 35,000.00 39,262.57
Total Liabilities & Capital . . . . . $240,865.07



EXHIBIT "B"
THIRTY-FIRST SESSION.
REVIEW OF PROBLEM 12.
GENERAL REVIEW.
THIRTY-SECOND SESSION.
FINAL EXAMINATION.

| FINAL EXAMINATION,
NOTE: Answer all questions in full in the order specified. Do not
repeat the question upon your paper but designate your answer by
the question number.
1. Describe briefly the following terms as used in cost accounting -
Defective Work Report, Over, Short & Damage Account, Bill of Mater-
ial, Factory Order, Pay-Roll Analysis, Part-Finished Stock, State-
ment of Factory Expenditures, Cost Period, Special Order System,
Accounts Payable Voucher.
2. State in journal entry form, without figures, each step in the oper-
ation of a special order cost system beginning with the charging of
expenditures to the factory.
3. Design a statement of factory expenditures which would show the raw
material operations, the operations of the work in process and the
finished stock and the items composing the factory overhead. This
statement should also provide columns for showing the results for
the current month, as well as the current fiscal period to date.
The form should contain all the necessary information so that it
would only be necessary for the factory cost clerk to fill in the
amounts at the end of each month.
4. Mention five detailed factory reports which would be used for
} recording the material cost information in a factory cost system
and describe each report. -

5. (a) Describe and compare two methods of ascertaining depreciation.
(b) Describe fully the New Machine method of distributing factory
Over head.
6 & 7 Describe a detailed method for recording material costs. State
fully each detail of the operation of the system, showing how re-
ports are obtained from the factory, how they are checked, what
disposition is made of the information and how same is proven at
the end of the month. In describing the system, mention all the
reports which will be necessary to provide an accurate check on
the material costs.
8. (a) Describe the main points to be considered in choosing and de-
signing time reports which may be used in a cost system. (b) Draw
an accounts payable voucher form to be used in a cost system which
provides for two separate ledgers; that is, general and factory
ledgers. Show both sides of the form and provide space for record-
ing all necessary information.
9. Design a process cost and distribution record showing all items
composing the process costs and the method of distributing same.
Explain the use of the form in detail.
10. Mention and describe the subsidiary records showing the details of
the factory inventory which should be in agreement with each of
the following accounts, these accounts being the controlling ac-
counts for such subsidiary records: Raw Material and Supplies
Account, Work in Process Accounts; Part-Finished Stock Accounts;
Finished Stock. Accounts.
Apr 2, 1917
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