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22 Cards in this Set
- Front
- Back
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Cost of direct materials
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Beginning Inventory
+ Purchases of direct material - Ending Inventory of direct materials = Direct Materials Used |
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Total Manufacturing Costs Incurred
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Direct Materials Used
+ Direct Manufacturing Labor + Manufacturing Overhead Costs = Total Manufacturing Costs Incurred |
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Costs of Goods Manufactured
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Beginning work-in-process
+ total manufacturing costs incurred = Manufacturing costs to account for - ending work-in-process = Costs of Goods Manufactured |
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Costs of Goods Sold
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Beginning inventory of finished goods
+ costs of goods manufactured - Ending inventory of finished goods = Cost of Goods Sold |
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Gross Margin
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Revenues
- Cost of goods sold = Gross Margin |
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Prime Costs
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Direct material costs
+ direct manufacturing labor costs = Prime Costs |
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Conversion Costs
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Direct manufacturing labor costs
+ Manufacturing overhead costs = Conversion Costs |
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Define Prime Costs
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All direct manufacturing costs
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Define Conversion Costs
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All manufacturing costs other than direct material costs. Represent all manufacturing costs incurred to convert direct materials into finished goods.
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Define Product Cost
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Sum of the costs assigned to a product for a specific purpost.
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Direct Costs
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Costs related to a particular cost object and can be traced to it in an economically feasible way.Example - Keys for computer keyboard.
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Indirect Costs
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Costs related to a particular cost object but cannot be directly traced to it in an economically feasible way. Example - Lubricants
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Cost Allocation
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Used to describe the assignment of indirect costs to a particular cost object.
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Cost Assignment
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Tracing direct costs to a cost object and allocation of indirect costs to a cost object
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Cost Tracing
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Assignment of direct costs to a particular cost object
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Factors that affect direct/indirect cost classification
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-The materiality of the cost in question
-Availalbe information gathering technology -Design of operations |
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Variable costs
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# of units produced
x variable cost = total variable costs |
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Fixed Costs
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Total fixed costs / # of units produced = total fixed cost per unit
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Unit Cost or Average Cost
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Total manufacturing costs / # of units manufactured = Unit Cost
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Total Manufacturing Costs
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(Costs of goods sold x $ per unit) + (Ending inventory x $ per unit) = Total Manufacturing Costs
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Unit costs are useful to managers to...
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decide the products in which they should invest more resources, such as R&D and marketing, and the prices they should charge.
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Period Costs
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All costs on the income statement other than costs of good sold. Period costs, such as marketing, distribution, and customer service costs, are treated as expenses of the accounting period in which they are incurred.
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