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3 Nov 2017

2-1 What are the three major elements of product costs in a manufacturing company?

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Related questions

Product costs are manufacturing costs (all costs required toproduce something). Depending on the state of production, productcosts are recorded in one of three asses accounts (Raw Materials,Work in Process, Finished Goods). Questions:

1) If they are "costs" why are they recorded in asset accountsand not expense accounts?

2) Do these product costs ever become an expense to thecompany?

1. Name a characteristic (from an accounting standpoint) thatdistinguishes product costs from period costs.

2. Name three specific Product costs and which of the threeclassifications (DM, DL, or MOH) in which each belongs, as anexample Factory Equipment Depreciation is a product cost and it isclassified as Manufacturing Overhead.

3. The author discusses three methods of separating a Mixed Costinto its Fixed and Variable components. What are the threemethods?

4. In the Cost Equation - Y=a+b(x) - what does"a" represent? What does "b" represent?

Gundy Company expects to produce 1,200,000 units of Product XX in 2017. Monthly production is expected to range from 80,000 to 120,000 units. Budgeted variable manufacturing costs per unit are direct materials $5, direct labor $6, and overhead $8. Budgeted fixed manufacturing costs per unit for depreciation are $2 and for supervision are $1. Prepare a flexible manufacturing budget for the relevant range value using 20,000 unit increments. (List variable costs before fixed costs.)

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