test 2

Work in Process

units of product materials that are only partially complete and will require further work before they are ready for sale to a customer.

process costing

used by manufacturers who mass produce large quantities of a single product in a continuos flow.

job order costing

used when many different products are produced each period.

when do product costs become an expense

when the goods are sold, costs are released from inventory on the balance sheet and matched against sales revenue on the inc

examples of period costs

advertising, executive salaries, sales commissions, public relations and other non-manufacturing costs.

Product Costs

al costs involved in acquiring or making a product. include direct material and direct labor. these costs are initially assigned to the inventory account on the balance sheet. once sold, the costs are released from inventory as expenses (cost of goods sold) and matched to sales revenue

examples of manufacturing overhead

maintenance and repairs on production equipment, heat and lighting of factory, property taxes, depreciation, insurance on manufacturing facilities.

Cost of Goods Manufactured

manufacturing costs assosciated with goods that were finished during the period. derived from the schedule of COGM

Raw Materials

materials used to make the product.

working capital

measures liquidity of a company. includes PP&E and other fixed assets. calculated by Current Assets - Current Liabilities

merchandising inventories

only one, finished goods

COGM Schedule

BM + Purchases - Ending Materials= Materials Used +Direct Labor + MOH= Total Manufacturing Cost + BWIP - EWIP=COGM

Finished Good T Chart

Beginning Finished Goods + Cost of Goods Manufactured - Cost of Goods Sold= Ending Finished Goods.

Raw Materials T Chart

Beginning Raw Materials + Purchases-Direct Materials=Ending Raw Materials.

Work in Process T Chart

Beginning Work In Process + Direct Labor + Direct Materials + Manufacturing Overhead - Cost of Goods Manufactured= Ending Work In Process

Finding Cost of Goods Manufactured with Total Manufacturing Cost

Total Manufacturing Cost + Beginning Work In Process=X-Ending Work in Process=Cost of Goods Manufactured

Total Manufacturing Costs (TWC)

Total costs of materials, direct labor, and manufacturing overhead incurred and charged to production during an accounting period.

Period Costs

all costs that are not product costs. they are expensed on the income statement in the period in which they are incurred using accrual accounting. all selling and administrative expenses are considered to be period costs. expensed directly to selling and administrative costs on the income statement.

cash equivalents

assets that can be quickly turned into cash.

common stockholders equity formula

common stock + retained earnings.

finished goods

completed units of product that have not yet been sold to customers.

predetermined overhead rate

estimated total manufacturing overhead cost/estimated total amount of the allocation base.

job cost sheet

form prepared for a job that records the materials, labor and manufacturing costs charged to that job.

when do period costs become an expense

in the income statement in the period in which they are incurred

manufacturing overhead

includes all manufacturing costs except direct materials and direct labor. includes indirect material and indirect labor used in manufacturing of a product. only the costs associated with operating the factory.

inventorial cost

product cost. called this because it is in the inventory portion of the balance sheet before it is expensed after the sale of the product

manufacturing inventories

raw materials, work in process, finished goods