exam 1 Flashcards
Direct costs
Costs connected to a specific product
Indirect costs
Costs involved with maintaining and running a business
Product costs
Costs involved in creating a product
Direct Materials, Direct Labor, Manufacturing Overhead
Direct Materials
materials used to create a product
Direct Labor
labor (people’s times and talent) in creating a product
Manufacturing Overhead
Other costs incurred in creating a product that is not direct material or direct labor
Period costs
non-product related costs such as sales and marketing
Manufacturing Overhead Costs
Indirect materials, Indirect labor, supplies, depreciation on factory equipment, machine maintenance
Cost of Goods Manufactured
(Beginning WIP + Total Manufacturing Costs (DM+DL+MOH) - Ending WIP)
Cost of Goods Sold
(Beginning Inventory + Purchases - Ending Inventory)
Contribution margin
Sales - VC = CM
Breakeven (Units)
FC ÷ CM per unit
Breakeven (dollars)
FC ÷ CM ratio
operating leverage
CM ÷ income
Projected Sales
(target profit + fixed costs) ÷ contribution margin per unit