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14 Cards in this Set
- Front
- Back
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Manufacturing firm differences
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Service firms earn revenue from providing services
Merchandising firms earn revenue from selling merchandise inventory Manufacturing firms Earn revenue from manufacturing and selling finished goods Have 3 inventories: materials, work-in-process, finished goods |
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Costs
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Cost is payment or commitment to pay cash for future revenues
Manufacturing costs Direct materials Direct labor Manufacturing overhead |
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Direct materials cost
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Cost of direct materials is cost of raw materials used in the manufacture of a product
Goodwell Printing Paper Book covers On Account, Work In Process increases and Materials decreases |
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Direct labor cost
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Direct labor is
Labor used to convert materials into product Goodwell Printing Wages of employees who operate printing presses On Account, Work In Process increased and Wages Payable increases |
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Factory overhead cost
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Factory overhead is costs other than materials, labor incurred in manufacturing process
Machine depreciation Factory insurance On Account, Work In Process increases and Factory Overhead decreases |
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What are 2 manufacturing cost accounting systems?
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Job order costing
Costs accumulated by job for Custom products, large variety of products Levi Strauss Process costing Costs accumulated by department, process Oil refineries |
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Predetermined Overhead Rate
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Predetermined O/H rate = Est. O/H costs/ Est. activity base
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Period costs
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Period costs are non-manufacturing costs
Selling Expenses: Advertising, sales salaries, and commission expense. Administrative expenses: Office salaries, Office supplies, and Depreciation expense-Office build. and equip. |
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When 2 jobs for the same product have different costs, what is the problem?
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Inexperienced labor?
Poor quality materials? Tools need repair? Carelessness? Incorrect instructions? |
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Just in time (JIT) manufacturing
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Just in time (JIT) reduces costs, requires new approach.
Reduce lead time Reduces inventory Reduces Setup time Emphasizes product oriented layout Emphasizes team-oriented employee involvement Emphasizes pull manufacturing Emphasizes zero defects Emphasizes supplier partnering |
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Conversion costs
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The sum of Direct labor and factory overhead costs
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Activity-based costing
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can be applied in service settings to determine the cost of individual service offerings.
Service costs are determined by multiplying activity rates by the amount of activity-base quantities consumed by the customer using the service offering |
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Total Manufacturing costs
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Direct Materials Cost + Direct Labor Cost + Factory Overhead
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Cost of Goods Manufactured
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Beginning work in process + Total Manufacturing Costs - Ending Work in process
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