BUS 254 Lecture Notes - Lecture 1: Net Income, Gross Margin

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Azaela

Document Summary

Bus254 ch. 02 key notes: direct material (dm) Rm inventory + purchases rm used (i. e. dm) = end. Dl = wages rate x hours employed: manufacturing overhead (moh) Moh = indirect material + indirect labour + other manufacturing overhead. Some common moh items includes: property tax/insurance, factory building depreciation, plant utilities, overtime premium, production manager salary, cost of production employee idle time, total manufacturing cost = dm + dl + moh, cost of goods manufactured (cogm) Work-in-process inventory + (dm + dl + moh) cogm = end. Finished goods inventory + cogm cogs = end. Do not mix up cogs and cogm: when beg. You sold more than you manufactured cogs > cogm: when beg. You manufactured more than you sold cogm > cogs: when beg. Gross margin = sales cogs: net income. Net income = gross margin operating expenses (i. e. period costs)