CH_2_Course_Notes - MSU ACC 202KattelusCH 2 Course Notes...

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MSU ACC 202—Kattelus—CH 2 Course Notes –Spring 2009 – Long Version Cost Terms, Concepts, and Classifications AN OVERVIEW OF COST TERMS Purpose of classification Cost classifications Preparing an income statement Product costs and balance sheet Direct materials Direct labor Manufacturing overhead Period costs (nonmanufacturing costs) Marketing and selling costs Administrative costs Predicting changes in cost Variable costs due to changes in activity Fixed costs Assigning costs Direct costs Indirect costs Making decisions Differential costs Sunk costs Opportunity costs 1
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MSU ACC 202—Kattelus—CH 2 Course Notes –Spring 2009 – Long Version COST CLASSIFICATIONSIN MANUFACTURING COMPANIES Manufacturing Costs (Also called Product Costs) Direct Direct Manufacturing Materials Labor Overhead Materials that can be Labor costs that can be All manufacturing easily traced to product easily traced to a product costs other than direct materials and direct labor. Prime Cost Conversion Cost Marketing or Selling Costs Administrative Costs All costs necessary to secure order All costs of general and get the finished product or service administration of the into the hands of the customer. company as a whole. 2 Manufacturing Costs (also called Product Costs) Nonmanufacturing Costs (also called Period Costs)
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MSU ACC 202—Kattelus—CH 2 Course Notes –Spring 2009 – Long Version COST FLOWS IN A MANUFACTURING COMPANY (Exhibit 2-6) Balance Sheet Raw materials Raw Materials purchases Inventory Direct labor Work in Process Inventory Manufacturing overhead Finished Cost of Goods Goods Inventory Sold Selling and Admin.
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This note was uploaded on 03/30/2009 for the course ACCT 202 taught by Professor Sollenberger during the Spring '08 term at Michigan State University.

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CH_2_Course_Notes - MSU ACC 202KattelusCH 2 Course Notes...

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