ACIS 2116 Chapter 3 Powerpoints Spring 2009

ACIS 2116 Chapter 3 Powerpoints Spring 2009 - ACIS 2116...

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1 ACIS 2116 Chapter Three Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows
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2 Merchandising Firm vs. Manufacturing Firm Merchandisers . . . Buy finished goods. Sell finished goods. Manufacturers . . . Buy raw materials. Produce and sell finished goods. MegaLoMart
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3 Balance Sheet Merchandiser Current assets Cash Receivables Prepaid Expenses Merchandise Inventory Manufacturer Current Assets Cash Receivables Prepaid Expenses Inventories Raw Materials Work in Process Finished Goods
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4 Inventory Raw Materials – used to make a product Work in Process – partially complete products Finished Goods – completed products awaiting sale
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5 Service Firm Service Firm . . . Perform a service for a customer Inventory is not significant
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6 Manufacturer - Traditional Similar machines grouped together. Inventory “pushed” from area to area. Inventory buffers maintained. Difficult to switch to a different product (high setup time).
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7 Lean Production and JIT Lean production Eliminate waste Manage inventory JIT Starts with customer order Products are “pulled” Rely on dependable, quick suppliers
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8 The Product The Product Direct Materials Direct Labor Manufacturing Overhead Manufacturing Costs
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9 Cannot be traced directly to specific units produced. Manufacturing Overhead Examples: Indirect labor and indirect materials Examples: maintenance workers, janitors and security guards. Examples: lubricants and cleaning supplies used in the automobile assembly plant. Also called Factory Overhead
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10 Manufacturing Costs Direct Material Direct Labor Manufacturing Overhead Manufacturing Costs (Product or Inventoriable Costs) Added to units of product as costs are incurred. Considered assets until product is sold.
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Nonmanufacturing Costs Marketing or Selling Cost Costs necessary to get the order and deliver the product. Administrative
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ACIS 2116 Chapter 3 Powerpoints Spring 2009 - ACIS 2116...

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