Chapter_1 - Beg Balance Beg Balance +Merchandise- COGS +...

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Cost Concepts and Classification
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Raw Factors of Expenses on Material Production Income Statement DL Conversion Full Product DM Costs Product Costs MO Cost (Inventoried) Selling Period + Costs (Expensed) DM = Direct Material Costs DL = Direct Labor Costs MO = Manufacturing Overhead Costs Elements of Product Costs
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Product Costs and Period Costs in Financial Reporting: It’s All in the Timing When Product is Produced Product cost Period cost Assign to product Record as expense Asset on B/S Expense on I/S When Product Sold Record as Expense expense on I/S
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How Inventoried Costs Become Income Statement Expenses Warehouse Finished goods inventory Income Statement Expense
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COGS: Comparison between Merchandisers and Manufacturers Merchandising Firm: Manufacturing Firm: Merchandise Inventory Finished Goods Inventory
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Unformatted text preview: Beg Balance Beg Balance +Merchandise- COGS + COGM- COGS Purchases End Balance End Balance Product Costs Different types of costs are associated with products in different ways Disposable Camera 35-mm Camera Professional Camera Direct Material Cost Direct Labor Cost Indirect Manufacturing (Overhead) Cost PRODUCTS Direct and Indirect Costs Some costs are easily allocated, since they are directly associated with their cost object. We call these costs direct costs . Other costs are not as closely tied to their cost object, so cost allocation becomes more difficult. We call these costs indirect costs . Examples of Manufacturing Overhead for Disposable Cameras...
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Chapter_1 - Beg Balance Beg Balance +Merchandise- COGS +...

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