ch 10 class notes[1]

ch 10 class notes[1] - c) Values are not added to inventory...

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Accounting: Chapter 10 class notes I. Review of costs A. Product costs: costs that add value to a product 1. Added to inventory (inventory-able) 2. Expensed with COGS B. Period costs: costs that do not directly add value to a product 1. Is expensed in the current period, paid for in the month incurred 2. Never inventoried C. Variable costs 1. Always includes DL and DL 2. Per unit = constant 3. Total = changes D. Fixed costs 1. Per unit = changes 2. Total = constant II. Methods for computing income a. Variable costing 1. More sound because we incur fixed MOH regardless of the capacity we produce 2. Variable manufacturing costs (DM, DL, variable MOH) a) Treated as a product cost b) Values are added to inventory and expensed with COGS 3. Fixed MOH a) Treated like a period cost b) Paid for in the month incurred
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Unformatted text preview: c) Values are not added to inventory 4. SGA (variable and fixed) a) Treated like a period cost b) Paid for in the month incurred c) Values are not added to inventory B. Absorption (aka product or period ) 1. Required by GAAP 2. Variable manufacturing costs (DM, DL, variable MOH) a) Treated as a product cost b) Values are added to inventory and expensed with COGS 1. Fixed MOH a) Treated like a product cost b) Values are added to inventory and expensed with COGS c) Requires calculation on a per unit basis, falsely suggesting that fixed MOH is incurred because we product a given number of units 2. SGA (variable and fixed) a) Treated like a period cost b) Paid for in the month incurred c) Values are not added to inventory...
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This note was uploaded on 02/09/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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ch 10 class notes[1] - c) Values are not added to inventory...

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