ACCT 2101 Lecture Notes - Lecture 3: Income Statement, Fixed Cost, Variable Cost
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ACCT 2101 Full Course Notes
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What is given up to get something else. Pulled from current resources to get another resource/service. Raw materials, works in process, unused materials, finished goods that have not been sold yet. Consumption of assets from the purpose of generating revenue. Product costs transfers to cost of goods sold. Raw materials, work in process, finished goods. The product is broken into 3 categories. Wages paid to an automobile assembly worker. Materials used to support the production process. Examples: lubricants and cleaning supplies used in an automobile assembly plant. Cost of personnel who do not deal directly with the product sold. Property taxes, insurance, utilities, overtime premium, depreciation on plant and equipment. Direct material and direct labor are prime cost. Direct labor and manufacturing overhead is conversion cost. These 3 product costs are stored as inventory (work in process and finished goods) until products are sold. Example: you have in your wallet. Add direct labor and total manufacturing overhead.
