Ch 1&2 notes - Manufacturing Costs 1. Direct Materials...

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Manufacturing Costs 1. Direct Materials
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2. Direct Labor-labor traced easily to individual units of product 3. Manufacturing Overhead-costs with OPERATING THE FACTORY Indirect materials (ex:lube for the machines that make the product) Indirect labor (ex: supervisors, janitors, security guards) Maintenance and repairs on production equipment Heat and light, property taxes, deprecation, rent, insurance on the FACTORY Nonmanufacturing Costs 1. Selling Costs- advertising, shipping, sales travel, sales commissions, sales salaries, cost of finished goods warehouses 2. Administrative costs- administration of an organization, management, public relations general management rather than with manufacturing or selling Ex: executive compensation, general accounting, secretarial, public relations, - Heat and light, property taxes, insurance, depreciation on selling costs and administrative costs (ex: depreciation on a sales’ persons car or delivery equipment NOT the factory) Product Costs/Inventoriable costs - All costs required to make a product - Manufactured costs direct materials, direct labor, manufacturing overhead Period Costs - Selling Costs - Administrative costs Prime Cost = direct materials cost + direct labor cost Conversion cost = Direct labor cost + manufacturing overhead cost
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This note was uploaded on 03/25/2011 for the course ACCOUNTING 010:275 taught by Professor Sahay during the Spring '11 term at Rutgers.

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Ch 1&2 notes - Manufacturing Costs 1. Direct Materials...

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