section 11 Flashcards
What are the 2 kinds of operating costs?
—product
—period
product cost
the cost of inventory purchased for resale
period costs
the selling and admin costs
product costs (manufacturing)
all costs of making the product to be sold by the business
manufacturing product costs typically include
—direct material costs
—direct labor costs
—manufacturing overhead costs
production & factory maintenance supplies are classified as
indirect material costs
indirect labor costs (4)
—manufacturing supervisors
—quality control inspectors
—equipment and maintenance personnel
—designers and engineers
other overhead costs (5)
—rent
—depreciation
—utilities
—insurance
—taxes
manufacturing product costs are accounted for as
part of the cost of INVENTORY
until the product is sold, then the costs are expensed as Cost of Goods Sold
how many phases or categories of inventory in a manufacturing business?
3
What are the 3 phases of inventory?
—Raw Materials Inventory
—Work in Process Inventory (WIP)
—Finished Goods Inventory
What are the 3 categories of cost?
direct material
direct labor
manufacturing overhead
When are the costs of manufacturing transferred to COGS?
upon the sale of a finished good
T/F both direct and indirect materials are included in raw materials inventory
true
All businesses have 2 kinds of costs:
- product
- period
The balance sheet of a manufacturing business will reflect inventory which includes
—finished goods
—work in progress/process
—raw materials