classification of manufacturing costs Flashcards
what is direct materials
raw materials that can be physically and directly associated with the finished product
what is direct labour
work of factory employees that can be physically and directly associated with converting raw materials into finished products
what is manufacturing overhead
costs that are indirectly associated with the manufacture of the finished product, AKA indirect costs
what is indirect labour
just watching that labour happen (basically a supervisor)
what are the two classifications of all costs
period costs and product costs
what is period costs
costs matched with revenue based on a specific period of time
not included in the value of inventory
examples: selling costs, administrative costs
what is product costs
costs that are necessary and integral part of producing the finished product
included as part of inventory
examples: direct materials, direct labour and overhead
