Ch03 ManAcct4eupdated

Ch03 ManAcct4eupdated - Chapter3 ProductCosting:...

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1 Chapter 3 Product Costing:  Manufacturing Processes,  Cost Terminology, and Cost  Flows
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2 Manufacturing, Merchandising  and Service Organizations Manufacturing:  Take raw materials and  produce new products from them. Merchandising:  Retail and wholesale  merchandising companies sell products that  someone else has manufactured. Service:  Provide a service such as airlines,  hospitals, repair shops, law firms, CPA firms.
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3 The Production Process Manufacturing companies purchase  raw materials from other companies  and transform them into a finished  product by adding labor and other  costs, such as utilities, depreciation  or supplies.
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4 The Production Process Inventories in a Traditional Environment Raw Materials Work-in-Process (WIP) Finished Goods Inventories serve as buffers in case of  unexpected demand for products or  unexpected problems in production.
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5 The Production Process Lean production and  manufacturing in a JIT environment Lean production Is focused on eliminating waste and managing  inventory Materials are purchased and products are made  “just in time” to meet customer demand Process begins with customer order and products  are “pulled” through the process Aims to reduce costs and increase efficiency
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6 The Production Process Lean production and JIT are  more than inventory  management tools.
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Additional Benefits of JIT 1. Reduction in waste and scrap 2. Improvement in quality 3. Lower overall production costs 4.
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This note was uploaded on 08/30/2011 for the course ART 3514 taught by Professor Dhbannan during the Summer '03 term at Virginia Tech.

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Ch03 ManAcct4eupdated - Chapter3 ProductCosting:...

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