Ch 14 - 18 Flashcards
Total Manufacturing Costs =
Direct materials + Direct labor + Factory Overhead
Factory Overhead
All manufacturing costs that are not direct materials or direct labor. Ex: indirect materials, indirect labor, factory utilities, rent, depreciation on factory building and equipment, etc.
Prime Costs
direct materials costs + direct labor costs
Conversion Costs
direct labor + factory overhead
(costs incurred in converting raw materials to finished goods)
Product costs
Direct materials + Direct labor + Factory
Overhead, Added to inventory or capitalized, during the manufacturing process. When sold, the costs become COGS.
Period Costs
nonproduction costs linked to to a time period (not a specific product). Expensed when incurred and reported on the income statement as selling expense or general and administrative expense. EX: advertising, office employee wage, commissions, travel expenses, office rent, office manager salary, etc.
All Costs =
Product Cost + Period Cost
Total manufacturing costs (w/nonmanufacturingcosts) =
Nonmanufacturing costs + selling expenses + General & admin. expenses
Work in process inventory (WIP)
direct materials, direct labor, and overhead costs for partially completed products.
Finished goods inventory
direct materials, direct labor, and overhead costs for products ready to be sold
Total raw materials (rm) ready for use =
RM inventory, beginning + RM purchases
Total finished goods (fg) available for sale =
FG inventory, beginning + COG manufactured
Cost of goods manufactured =
Total manufacturing costs + Beginning WIP inventory - Ending WIP inventory
Triple bottom line
Profits, People, Planet (Financial, Social, Environmental measures)
Raw materials inventory turnover =
Raw materials used / Avg. raw materials inventory
