Chapter 15 - Manufacturing and Non Manufacturing Costs

Ace your homework & exams now with Quizwiz!

Prime costs

Are direct labor and direct materials

COGS calculation

Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory

Direct materials used

Beginning Raw Materials Inventory + Raw Material Purchases - Ending Raw Materials Inventory - Indirect Materials Used

Direct material

Cost of significant raw materials and components that are directly incorporated in the finished product. For example, direct material costs of a leather briefcase include cost of leather (raw material) as well as buckles and zippers (purchased components). Make up a significant part of the total cost of a finished product.

Period costs

Cost that are not part of the manufacturing process, also called selling and administrative costs. Selling costs are the costs involved in the marketing and delivering the product to customers. Administrative costs are the costs involved with managing the company.

Conversion costs

Costs that are incurred converting raw materials into a finished product, direct labor and factory overhead

Direct Costs

Costs that can be traced to specific units of production. Direct materials are actually incorporated into the product. Direct labor is comprised of the salary costs of workers who make the product.

Plant Mangers Salary

Factory Overhead

Indirect costs

Necessary costs of the manufacturing process that cannot be easily associated with specific units. These include all manufacturing costs other than direct material and direct labor. Indirect materials such as custodial and maintenance supplies, depreciation, and scrap are also overhead.

Financial Accounting

Reports created at fixed intervals, must follow GAAP. Info created for both external and internal viewers (Stockholders, investors)

Factory overhead

The cost of indirect labor, indirect materials, and other manufacturing costs other than direct material and direct labor that are necessary to support the production process but are not easily traceable to the finished product. Salaries paid to the production line supervisors, wages paid to mechanics who maintain the equipment, wages paid to custodians who maintain the factory, thread used to sew the briefcase together, electricity used to power the equipment and provide lighting to the factory, and depreciation on the factory building and equipment.

Total Manufacturing Cost

The sum of direct materials, direct labor, and manufacturing overhead incurred in the current period.

Direct labor

The wages and salaries paid for work that directly converts raw materials into a finished product. Wages paid to workers who cut the leather, finish the leather, and sew the briefcase.

Direct materials, direct labor, factory overhead (DLDMFO)

Three manufacturing costs

Cost of Goods Manufactured (COGM)

Total Manufacturing Cost (Direct Materials + Direct Labor + Overhead applied) + Beginning Work In Process Inventory - Ending Work in Process Inventory

Controller

chief management accountant of a company

depreciation on factory machinery

conversion cost

materials inventory (raw materials)

cost of materials that have been purchased but not put into the production process

Factory Assembly Line workers

direct labor

work in process inventory

goods that are partway through the manufacturing process but not yet complete

Factory Heat and Electric costs

indirect cost

finished goods inventory

manufactured items that are completed and ready for sale (but not sold yet)

Depreciation on corporate headquarter building

period cost

Shipping Expenses

period cost

Managerial Accounting

reports created at management discretion, for individual departments, products, territories, whole company or whatever managements desires. No specific requirements are necessary. Do not need to follow GAAP. Reports created for internal viewers only

Cost of Goods Sold (COGS)

the cost of the merchandise inventory that the business has sold to customers.


Related study sets

palabras simples, las compuestas y las parasinteticas

View Set

Module 6: Troubleshooting Windows Startup

View Set

Unit 9- Cultural Competence/Spiritual Health

View Set

Muscles of the Arm - Muscles of the Anterior Arm

View Set

QUESTIONS AND ANSWERS FOR CONFLICT MANAGEMENT

View Set