It is suggested that where these percentages come close to 16⅔, 20, 25, 33⅓, etc., that these figures may be used to advantage. By so doing the expense calculations can be figured mentally and very rapidly, and generally without interfering with a satisfactory distribution. If, however, the overlap each month increases, these should be modified to bring closer results.
23. Journal Entry for Distribution. While it is not the intention in the consideration of this subject of Expense Distribution to depart therefrom into the general field of cost accounts and cost records, it is assumed that on whatever form of cost-sheet used, provision will be made for the proper recording of the three elements of cost: labor, material, and expense, the latter in two items. Inasmuch as only totals should be carried into the Private Ledger, it is only necessary for drawing off the amounts on the individual sheets in Production Ledger No. 2 to provide summary sheets with sufficient money columns to accommodate, among other credits, all items for each department's expense and also for general expense. This, when done and totaled, will give the total cost of production for the month, made up of the following items:
(a) Labor—amount of which should check total of productive labor shown by the dissection of the monthly pay-roll.
(b) Material—amount of which represents withdrawals from stores during month.
(c) Departmental Expense—each separate, representing the amount of expense actually distributed and thrown into production.
(d) General Expense—representing the total amount actually distributed and absorbed by production.
This done, our journal entry will be:
| Debit Production. (This may be subdivided into as many accounts as desired.) | ||||
| Credit | Labor. | |||
| Material. | ||||
| Expense Dept. | E | |||
| " | F | |||
| " | G | |||
| " | H | |||
| " | I | |||
| Gen'l Exp. Distribution. | ||||
24. Expense Ledger. The totals from the Expense Ledger should also be drawn off in a similar manner, and the same items will appear as those shown in the Production Ledger, except that no expense will be added, for it will be remembered that the entries in the Expense Ledger constitute the very items which are transferred to the Production Ledger through the percentage added.
The journal entry for this ledger will be: