Chapter 2 - ACC 200 Spring 2011 Chapter 2 Product Costing...

Info iconThis preview shows pages 1–12. Sign up to view the full content.

View Full Document Right Arrow Icon
Click to edit Master subtitle style ACC 200 – Spring 2011 Chapter 2 Product Costing Christopher T. McKittrick CPA, MBA, CFE College of Management
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 2 Objectives: Product Costing: Manufacturing Processes, Cost Terminology and Cost Flows ¢ Describe the production process in a traditional manufacturing environment and a lean production (just-in-time) environment ¢ Describe the components of manufacturing costs ¢ Contrast manufacturing vs.non-manufacturing costs ¢ Describe cost flows in a manufacturing company ¢ Calculate the cost of goods manufactured and cost of goods sold using the cost of goods sold model ¢ Contrast product and period costs as they flow to the income statement
Background image of page 2
Management Decision Cycle FINANCING DECISIONS INVESTING DECISIONS OPERATING DECISIONS FUNDING OPERATING PROFIT INVESTMENTS
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Manufacturing Production Process – “Inventories” ¢ Manufacturing companies purchase raw materials from other companies and transform them into a finished product ¢ Inventories l Raw Materials l Work-in-Process (WIP) l Finished Goods ¢ There can be “other inventories” too.
Background image of page 4
Manufacturing Production Process – “Traditional” ¢ Traditional Manufacturing Environment l Materials are purchased and products are made “in anticipation” of customer demand l Process begins with projections based on past experience and “forecasts” and products are “pushed” through the process l Inventories serve as buffers in case of unexpected demand for products or unexpected problems in production
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Manufacturing in a Traditional Similar Machines Grouped Together Process 1 PUSH Additiona lProcess es PUSH Finished Goods Inventory Raw Materials Fill Customer Orders
Background image of page 6
Manufacturing Production Process – “Just In Time” ¢ Manufacturing in a JIT Environment l Materials are purchased and products are made “just in time” to meet customer demand l Process begins with customer order and products are “pulled” through the process
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Lean Production and a JIT MANUFACTURING CELLS All Machines in One Area Grouped Together PULL Contact Suppliers Customer Orders PULL
Background image of page 8
99 Advantages/Benefits of JIT ¢ Reduces costs of holding inventory , insuring inventory, risks of obsolescence, etc. ¢ Reduces production time and costs ¢ Improves quality ¢ Increases customer satisfaction ¢ Increases motivation ¢ Increases profits?
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
1010 Potential Problems with JIT ¢ Some costs may be higher due to more frequent shipment of goods and materials ¢ Risks of disruptions in the supply chain due to natural disasters, strikes, etc.
Background image of page 10
1111 Costing of Manufactured Products ¢ Manufacturing costs are defined as the costs incurred in the factory (costs incurred in manufacturing the product).
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 12
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 44

Chapter 2 - ACC 200 Spring 2011 Chapter 2 Product Costing...

This preview shows document pages 1 - 12. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online