33:010:275 Lecture Notes - Lecture 2: Earnings Before Interest And Taxes, Fixed Cost, Pizza Hut

• School: Rutgers University
• Department: Accounting
• Course: 33:010:275
• Professor: S A V I T A S A H A Y

Document Summary

Lecture 2 chapter 2 continued: 3 types of firms. Manufacturing-sector companies purchase materials and components and convert them into finished products. Merchandising-sector companies purchase and then sell tangible products without changing their basic form. Ex) yahoo, gold gym, citi bank: manufacturing costs. The product = direct materials, direct labor, manufacturing overhead. Manufacturing overhead anything required in manufacturing but not the first two: product costs (inventoriable costs or manufacturing costs) Direct costs direct materials and direct labor. Indirect costs indirect materials, indirect labors, other manufacturing overheads. Indirect materials materials used to support the production process. Indirect labor costs (cid:449)ages paid to e(cid:373)ployees (cid:449)ho are(cid:374)"t dire(cid:272)tly i(cid:374)(cid:448)ol(cid:448)ed i(cid:374) production work. Indirect manufacturing overhead costs property taxes, depreciation on ppe: period costs (non-manufacturing costs) Produ(cid:272)t (cid:272)osts (cid:862)follo(cid:449) the produ(cid:272)t, period (cid:272)osts (cid:862)follo(cid:449)(cid:863) the period. Financial reporting on income statement as cogs: inventory in manufacturing companies. Beginning balance + additions to inventory = ending balance + withdrawals from.