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Acct 102 Chap 1 - Manufacturing overhead is comprised of...

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Acct 102 – Chap 1 Average Cost is the total cost of making products divided by the total number of products made. Cost allocation is the process of dividing a total cost into parts and assigning the parts to relevant objects. Cost-plus-pricing strategy sets the price at cost plus a markup equal to a percentage of cost. Direct labor includes wages paid to production workers whose efforts can be easily and conveniently traced to products. Direct Materials is the costs of raw materials used to make products that can be easily and conveniently traced to those products. Finished Goods are completed products resulting from the manufacturing process; measured by the accumulated cost of raw material, labor, and overhead. General, Selling and Administrative Costs are all costs not associated with obtaining or manufacturing a product; sometimes called period costs because they are normally expensed in the period in which the economic sacrifice is incurred. Indirect costs are costs that cannot be easily traced to a specific product.
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Unformatted text preview: Manufacturing overhead is comprised of production costs that cannot be traced directly to products. Period costs are expensed in the period in which the economic sacrifice is made. They include general, selling and administrative costs. Product Costs are all costs related to obtaining or manufacturing a product intended for sale to customers. These costs are accumulated in inventory accounts and expensed as costs of goods sold at the point of sale. Product costs in a manufacturing concern include direct materials, direct labor and manufacturing overhead. Raw materials are the physical commodities (e.g., wood, fabric) used in the manufacturing process. Other Terms Number Standard Situation 1 Confidentiality Disclose confidential information 2 Objectivity Issue false or misleading financial statements 3 Competence Perform activities for which they have not been adequately prepared to do 4 Integrity Bribery and embezzlement of a company’s funds...
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