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14 Cards in this Set

  • Front
  • Back
Manufacturing firm differences
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
Cost is payment or commitment to pay cash for future revenues
Manufacturing costs
Direct materials
Direct labor
Manufacturing overhead
Direct materials cost
Cost of direct materials is cost of raw materials used in the manufacture of a product
Goodwell Printing
Book covers
On Account, Work In Process increases and Materials decreases
Direct labor cost
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
Factory overhead cost
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
What are 2 manufacturing cost accounting systems?
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
Predetermined Overhead Rate
Predetermined O/H rate = Est. O/H costs/ Est. activity base
Period costs
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.
When 2 jobs for the same product have different costs, what is the problem?
Inexperienced labor?
Poor quality materials?
Tools need repair?
Incorrect instructions?
Just in time (JIT) manufacturing
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
Conversion costs
The sum of Direct labor and factory overhead costs
Activity-based costing
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
Total Manufacturing costs
Direct Materials Cost + Direct Labor Cost + Factory Overhead
Cost of Goods Manufactured
Beginning work in process + Total Manufacturing Costs - Ending Work in process