ACCOUNTG 331 Lecture Notes - Lecture 2: Finished Good, Income Statement
13 Sep 2016
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Accounting 331 lecture 2 cost flows. Inventoriable costs (aka product costs: costs used in the manufacturing of product. Costs stay on balance sheet as assets (i. e. capitalized) until they are sold, then hit cost of goods sold (cogs: our main focus in this class. Period costs: sg&a costs that generally don"t hit the balance sheet. E. g. sales commissions, ceo salary, advertising costs, etc. Important for decision-making, but not our main focus since it"s not part of cogs. Direct material (dm) raw materials that will be turned into finished goods, can be traces to individual jobs. Direct labor (dl) labor costs that can be traced to individual jobs. Manufacturing overhead (moh) all other manufacturing costs: all indirect costs, all fixed costs: sometimes split into variable (voh) and fixed (foh) Prime costs = dm + dl (everything but moh; aka direct costs) Conversion costs = dl + moh (everything but dm; cost of turning dm into. Merchandising companies: merchandise inventory (purchased inventory)
